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question 181

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Use the following to answer the questions.
The Presto Company manufactures several types of household appliances,including blenders,waffle makers,and home deep fryers.Presto sells its products to retail stores such as Kohl's,Macy's,and J.C.Penney's,through its own salesforce.Kerry Wilson is one of Presto's salespeople,and is responsible for stores headquartered in Region 1 of the U.S.Kerry has just come from a monthly meeting where she has been informed about the new stovetop grill that will be part of next season's lineup.Presto's marketing department has developed a promotional plan for the new grill and outlined that plan for the sales staff in the meeting.The promotional plan for the next 60 days will include television commercials which demonstrate the new grill,in-store rebates,and a customer contest for the best grilled sandwich recipe.In addition,Kerry and other members of the salesforce will be given a free grill for their own home use so they can become more familiar with the product.Presto is also offering a free trip to New York City for their staff salesperson who has the highest dollar in sales to his or her stores.To encourage the retail stores to push this product,Presto will offer the retail store a $5 discount for each grill that the store purchases after the 60-day promotion is over.
-Refer to Scenario 18.2.Presto's use of a free trip to New York is an example of ____,while the $5 discount to its retail stores is an example of ____.

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Definitions:

Equity

Equity represents ownership interest in a corporation, measured by the portion of the company's capital that comes from the shareholder's investment.

Risk-Free Rate

The theoretical return on an investment with zero risk, often represented by the yield on government bonds.

Strike Price

The strike price, in options trading, is the price at which the holder of an option contract can buy (call option) or sell (put option) the underlying security or commodity.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase an asset at a specified price within a particular time frame.

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