Which of the Following Statements Describes a Weakness Inherent in the Use

question 77

Multiple Choice

Which of the following statements describes a weakness inherent in the use of the marginal analysis model for establishing an advertising budget?

• A)It is unsuitable as a basis for budgeting in case of direct response advertising.
• B)Only environmental factors that are considered by the model will affect the effectiveness of the promotional program.
• C)Budgetary amount is often set by fiat.
• D)The budget is determined by management solely on the basis of what is felt to be necessary.
• E)It is very illogical and virtually no theoretical base is used to determine the budgets.

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Definitions:

Positive-earnings Surprises

Situations where the reported earnings of a company exceed the expected earnings, often leading to a positive reaction in the stock market.

Overly Optimistic

This term refers to an excessive belief in the favorable outcomes of events or conditions, often disregarding the likelihood of negative outcomes.

Technical Analyst

A professional who evaluates securities or market trends based on historical price and volume data to predict future movements.

Passive Approach

An investment strategy that aims to replicate the performance of a market index or benchmark, minimizing buying and selling actions to reduce costs.