Carlton Has Developed a New Cell Phone That Projects onto a Surface

question 63

Multiple Choice

Carlton has developed a new cell phone that projects onto a surface instead of having a screen;this permits the user to attach it to a stand or lean it on one surface and use the surface it projects onto for the screen.By eliminating the screen,it can be made watch-size and worn on the wrist,as a pendant on a necklace,attached to a set of keys,or carried comfortably in one's pocket.Because he is certain the demand for the product will be high,he is setting the highest possible price for the new product.What pricing strategy is he using?

• A) Price skimming
• B) Penetration pricing
• C) Differential pricing
• D) Negotiated pricing

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Definitions:

Volatility

Volatility is a statistical measure of the dispersion of returns for a given security or market index, indicating the degree of variation from the average over a certain period.

CAPM

The Capital Asset Pricing Model is a formula used to determine the expected return on an investment, factoring in its risk compared to the market.

Required Return

The smallest yearly percentage gain from an investment necessary to entice people or corporations to invest in a certain security or endeavor.

Risk Aversion

The tendency of investors to prefer lower risk or safer investments to avoid potential losses.