Target-Return Pricing Adds One Critical Element to the Pricing Equation

question 42

Multiple Choice

Target-return pricing adds one critical element to the pricing equation over mark-up pricing.Which is this additional cost element?

• A)The price sensitivity of demand
• B)An evaluation of competitors' prices
• C)The other products in the product line
• D)The cost of invested capital

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Definitions:

Market Efficiency

A concept that describes the degree to which stock prices and other securities' prices reflect all available, relevant information.

Portfolio Manager

A professional responsible for making investment decisions and carrying out investment activities on behalf of vested interests.

Interest-Rate Changes

Adjustments made by central financial authorities to the cost of borrowing money, which can influence economic activity and financial markets.

Coupon Bond

A debt security that pays the holder a fixed interest rate (coupon) periodically until the maturity date, at which time the principal is repaid.