List the Three Basic Pricing Methods

question 103

Essay

List the three basic pricing methods.Name one advantage and one disadvantage associated with using each method.

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Definitions:

Marginal Tax Bracket

The tax rate that applies to the next dollar of taxable income, indicating the percentage of tax paid on the last dollar earned.

Taxable Yield

The yield on an investment before the effects of taxes are taken into account, relevant for investors in taxable accounts.

Futures Contract

Standardized legal agreements to buy or sell a specific commodity or financial instrument at a predetermined price at a specified time in the future.

Short Position

Entering a financial transaction where the investor benefits from a decline in the value of an asset.