If the Price of Coke Decreases and That of Pepsi

question 191

Multiple Choice

If the price of Coke decreases and that of Pepsi stays the same, the demand curve for Pepsi will shift to the ______ and the price will ______.

• A) right; fall
• B) right; rise
• C) left; fall
• D) left; rise

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Definitions:

Yield-to-maturity

The total return anticipated on a bond if it is held until the end of its lifetime, taking into account both interest payments and capital gains or losses.

After-tax Rate

The rate of return on an investment after accounting for taxes, giving a more accurate reflection of the actual take-home returns.

Marginal Tax Rate

The percentage of tax applied to your income for each tax bracket in which you qualify, essentially the tax rate you would pay on one additional dollar of income.

Weighted Average Cost

Weighted average cost often refers to the weighted average cost of capital (WACC), a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.