​The Cumulative Sales (In Thousands of Units)of a New Product

question 387

Multiple Choice

​The cumulative sales (in thousands of units) of a new product after it has been on the market for t years may be modeled by During the first year,5000 units were sold.What is the saturation point for this product? How many units will be sold after 5 years? ​

• A) ​The saturation point for the market is 3,000 units and 17,944 units will be sold after 5 years.
• B) ​The saturation point for the market is 30,000 units and 26,049 units will be sold after 5 years.
• C) ​The saturation point for the market is 30,000 units and 17,944 units will be sold after 5 years.
• D) ​The saturation point for the market is 30,000 units and 18,067 units will be sold after 5 years.
• E) ​The saturation point for the market is 3,000 units and 26,049 units will be sold after 5 years.

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Definitions:

Risk Premiums

Additional returns expected by investors for taking on higher risk compared to a risk-free asset, to compensate for the increased uncertainty.

Multifactor Model

A financial model that evaluates securities by considering multiple economic and financial factors to explain market phenomena and/or rates of return.

Expected Return

The mean value of the probability distribution of possible returns from an investment or portfolio.

Expected Return-Beta Relationship

A concept in finance that describes the relationship between the risk of an investment and its expected return, based on the beta coefficient.