Health Clubs Typically Experience an Increase in One-Year Memberships in January

question 97

Multiple Choice

Health clubs typically experience an increase in one-year memberships in January, but many new customers cancel their memberships before the end of the year.Which of the following is the best explanation for this behaviour?

• A)Some health club members suffer minor injuries that prevent them from working out.
• B)Some people are overly optimistic about their future behaviour.
• C)Some people fail to treat their membership fees as sunk costs.
• D)Some members receive utility from activities they believe are popular.

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Definitions:

Make-Whole

A provision that compensates bondholders for the loss of anticipated interest, typically in the event of an early redemption.

Floating-Rate Bonds

Bonds with variable interest rates that adjust periodically according to a standard market rate.

Market Rate

refers to the usual rate charged or paid for a good or service in a particular market, or the rate of interest available in the marketplace for investment funds.

Coupon Payment

A periodic interest payment made to the bondholders during the life of the bond.