Ian Has an MBA and Is Being Recruited by an Investment

question 55

Multiple Choice

Ian has an MBA and is being recruited by an investment banking firm as a sales representative. He has had ten years of experience in selling industrial supplies. He was quite successful in this job but is worried that selling investment strategies may be more difficult. What factor would be the major reason for this worry?

• A)Services are intangible and, therefore, different from his previous experience.
• B)His services and the products he sells are inseparable.
• C)The cost inventory management system of reimbursing him may cause a problem when he makes investments.
• D)The extensiveness of distribution is unimportant when selling an investment service.

---

Definitions:

Net Operating Income

The total profit of a company after operating expenses are subtracted from operating revenues, excluding non-operating income and expenses.

Contribution Margin Ratio

The percentage of each sales dollar that contributes toward covering fixed costs and generating profit.

Fixed Monthly Expenses

Recurring expenses that do not change in amount from month to month, such as rent, salaries, and insurance premiums.

Net Operating Income

Income from operations after deducting operating expenses but before interest and taxes.