Being the Overall Low-Cost Provider in an Industry Has the Attractive

question 54

Multiple Choice

Being the overall low-cost provider in an industry has the attractive advantage of

• A) building strong customer loyalty and locking customers into its product (because customers have such high switching costs).
• B) giving the firm a very appealing brand image.
• C) putting a firm in a position to win the business of price sensitive customers, set the floor on market price, and still earn a profit.
• D) putting the company in a strong position to be more profitable than companies pursuing a differentiation strategy.
• E) greatly reducing the strong bargaining power of key suppliers.

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Definitions:

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, usually expressed in years.

Bond Duration

A measure of the sensitivity of a bond's price to changes in interest rates, expressed in years.

Time To Maturity

The remaining duration until the expiration date of a financial instrument, when its principal is due to be paid to holders.