Regarding Product Classes

question 358

Multiple Choice

Regarding product classes,

• A) Business product classes are based on how buyers think about products and how the products will be used.
• B) Consumer product classes are based on how consumers think about and shop for products.
• C) The same product may be a consumer product and a business product.
• D) Products are classified by what type of customer will use them.
• E) All of these statements about product classes are true.

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Definitions:

Straight-Line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its useful life.

Effective Interest Rate

The actual cost of borrowing or the actual return on investment, taking into account the effect of compounding interest as opposed to the nominal rate.

Amortization

The gradual reduction of a debt over a period of time by periodic payments of principal and interest sufficient to repay the loan by maturity.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes (EBIT) to its interest expenses.