Consider the Following to Answer the Question(s) Below

question 36

Multiple Choice

Consider the following to answer the question(s) below:
A company that sells eco-friendly cleaning products is concerned that only 19.5% of people who use such products select their brand. A marketing director suggests that the company invest in new advertising and labeling to strengthen its green image. The company decides to do so but in a test market so that the effectiveness of the marketing campaign may be evaluated.
-In this context, committing a Type I error

• A) occurs when they conclude that the percentage of customers purchasing the company's brand has decreased when in fact it has not.
• B) occurs when they conclude that the percentage of customers purchasing the company's brand has not increased when in fact it has.
• C) would result in the company spending money on a new marketing campaign that does increase the percentage of customers buying their brand.
• D) occurs when they conclude that the percentage of customers purchasing the company's brand has increased when in fact it has not and would result in the company wasting money on a new. marketing campaign that does not increase the percentage of customers buying their brand
• E) would have absolutely no effect on the company.

---

Definitions:

Target Capital Structure

The optimal mix of debt, equity, and other securities that a firm aims to hold, which minimizes its cost of capital and maximizes its stock price.

Capital Budget

Planning for the acquisition and use of long-term assets to achieve a company’s strategic goals.

Payout Ratio

A financial metric indicating the percentage of a company's earnings paid out as dividends to shareholders, typically expressed as a percentage of net income.

Residual Dividend Policy

A strategy in which a company pays dividends to its shareholders from the residual or leftover equity once all project and operation costs have been met.