The Following Information Is Provided for Two Products Assume the Products Will Be Sold in a Store Where

question 41

Multiple Choice

The following information is provided for two products: $$\begin{array} { l c c } & \text { Product X } & \text { Product } Y \\\text { Selling price per unit } & \$ 3 5& \$ 2 5 \\\text { Variable cost per unit } &2 0& 15\end{array}$$ Assume the products will be sold in a store where shelf space is a scarce resource and there is sufficient room for only one of the two products.Expected sales for Product X are 6,000 units,and expected sales for Product Y are 8,000 units.Which product should be sold and why?

• A) Product Y should be sold solely because the expected demand for this product is greater than the expected demand for Product X.
• B) Product Y should be sold because sales of this product will provide a greater profit.
• C) Product X should be sold because it provides a greater contribution margin per unit.
• D) Product X should be sold because sales of this product will provide a greater profit.

Recognize the role and mechanics of margin in futures trading.

Grasp the concept of hedging with futures and its applications in various industries.

Understand the concept of basis in futures contracts and basis risk.

Know the entities responsible for guaranteeing futures contracts and their fulfillment.

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Definitions:

Net Cash Flows

The amount of cash generated or used by a business during a given period, calculated as cash received minus cash spent.

Desired Rate

The target interest rate set by a company or investor for a specific investment or project.

Internal Rate

Often referred to as Internal Rate of Return (IRR), it's a metric used in financial analysis to estimate the profitability of potential investments.

Compound Interest

A method of interest computation that involves charging interest on the original loan or deposit amount as well as on any interest that has built up during past periods.