How Can the Use of an EDLP Strategy Increase a Retailer's

question 65

Multiple Choice

How can the use of an EDLP strategy increase a retailer's profit margin?

• A)A more predictable demand increases the likelihood of stockouts.
• B)EDLP increases the large variations in demand caused by frequent sales.
• C)The stable prices caused by EDLP require the use of more weekly advertising.
• D)Employees provide less customer service because of the sale-stimulated throngs of people.
• E)EDLP reduces the retailer operating expenses because employees do not have to spend time continually making price changes.

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Definitions:

Interest Payments

Regular payments made to bondholders, representing the interest earned on the bond's face value for a certain period.

Reinvestment Rate

The rate of return available to investors when they reinvest the earnings from an investment during the life of that investment.

Coupon Interest

The periodic interest payment that bondholders receive from the bond's issuer during the bond's life.

Prevailing Reinvestment Rate

The current market interest rate at which cash flows from an investment can be reinvested.