The Concept of the Diffusion of Innovation Shows How a Product

question 250

Multiple Choice

The concept of the diffusion of innovation shows how a product "diffuses" or spreads through the population over time. The consumer population is divided into five categories of product adopters based on when they adopt (i.e., first buy) a new product. Each product adopter category has a unique profile. Consumers who have a fear of debt and depend on neighbors and friends as their information sources are called __________ product adopters.

• A)innovators
• B)early adopters
• C)early majority
• D)late majority
• E)laggards

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Definitions:

WACC

Weighted Average Cost of Capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets.

Cost of Equity

Cost of equity is the return a company requires to decide if an investment meets capital return requirements and can be seen as the return on equity that shareholders expect for their investment risk.

Flotation Cost

The total costs incurred by a company in issuing new securities, including underwriting, legal, registration, and other expenses.

Cost of Capital

The rate of return a company must pay to its shareholders and debt holders, representing the cost of obtaining funds to finance its operations.