Suppose That You Work for the Advertising Division of a Car

question 31

Multiple Choice

Suppose that you work for the advertising division of a car company, and that you and your team are reviewing advertisements for a new safety feature. You are deciding between an ad with a low-fear message (which simply mentions the feature without demonstrating it) , an ad with a moderate-fear message (which shows how the feature can help drivers avert accidents) , and an ad with a high-fear message (which shows a horrific collision resulting from driving in a car without the feature) . All else being equal, research on fear-based messaging would suggest that you should air ____.

• A) the low-fear ad
• B) the high-fear ad
• C) the moderate-fear ad
• D) either the low-fear ad or the high-fear ad, but not the moderate-fear ad

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Definitions:

Stop-buy Orders

An order to purchase a security when its price reaches a specific level, used to limit loss or enter a market as prices rise.

Short Sales

The selling of a security that is not owned by the seller, with the intention of buying it back later at a lower price.

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account after a purchase has been made, to ensure account stability against market fluctuations.

Margin Loan

A loan from a brokerage firm that allows investors to borrow money to buy securities, using the securities as collateral.