A Company Makes Several Different Kinds of Shampoo, but It

question 49

Multiple Choice

A company makes several different kinds of shampoo, but it did not have a dandruff shampoo designed for women until it added Pro-Women antidandruff shampoo. This is an example of a(n) ________.

• A) downward line stretch
• B) upward line stretch
• C) cannibalization strategy
• D) filling-out strategy
• E) product line contraction

---

Definitions:

Security Market Line

A line that represents the relationship between the expected return of a security and its systemic risk, illustrating the risk-return tradeoff in the capital asset pricing model.

Expected Return

The average of all possible returns for an investment, weighted by the probability of each outcome, indicating the potential return over time.

Capital Asset Pricing Model

A theory detailing how systematic risk correlates with the expected return for investments, mainly in the stock market.

Stock Correlation

A statistical measure that describes how the movements of two stocks are related to each other.