John Diaz Immigrated to Tallahassee from Cuba in the 1980s

question 77

Multiple Choice

John Diaz immigrated to Tallahassee from Cuba in the 1980s.He set up a coffee shop called Diaz in a small upper-middle-class neighborhood.It rapidly became popular because of the wonderful coffee it brewed.Soon Diaz was selling the finest coffees from around the world,plus coffee-making necessities such as grinders and brewers.Within ten years,Diaz was operating a lucrative mail-order business in addition to his coffee shop.
Upon entering the shop,the first thing the customer sees is a countertop crowded with all of the machinery needed for making a perfect cup of coffee.Marble-topped tables are set in cozy nooks with overstuffed chairs.Bookshelves on one wall hold books about coffee for patrons to read while they sip.The smell is intoxicating to a real coffee lover.Coffee drinkers can take home a pound when they leave.The store carries all types of coffee from $300 per pound Kopi Luwak from Sumatra to Brazilian Cerrado for $8 a pound.
-Refer to Diaz.The type of merchandise carried by Diaz is deep but with a narrow assortment.The store would most likely be classified as a:

• A) convenience store
• B) mass merchandiser
• C) specialty store
• D) category killer
• E) membership club

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Definitions:

Cost of Equity

The presumed income given to a firm's equity investors to reimburse them for the risk undertaken with their investment.

Yield-to-maturity

The total return anticipated on a bond if it is held until the end of its lifetime, taking into account both current income and principal repayment.

Weighted Average Cost

A calculation that takes into account the varying costs of goods or capital across different sources, weighted by their respective proportions in the total.

Marginal Tax Rate

The rate of tax applied to the next dollar of taxable income.