Q&A Hero

Q: KidCo bought forward contracts on 20,000 bushels of corn at $1.65 per bushel. Corporate tax rates are 35.00%. Revenue is $100,000 and other costs are $60,000. Spot prices on corn are $1.75 per bushel. Calculate the after-tax net income. A) $7,000 loss B) $7,000 gain C) $4,550 loss D) $4,550 gain

Q: KidCo Cereal Company sells "Sugar Corns" for $2.50 per box. The company will need to buy 20,000 bushels of corn in 6 months to produce 40,000 boxes of cereal. Non-corn costs total $60,000. What is the company's profit if they purchase call options at $0.12 per bushel with a strike price of $1.60? Assume the 6-month interest rate is 4.0% and the spot price in 6 months is $1.65 per bushel. A) $6,504 profit B) $8,005 loss C) $12,064 profit D) $11,293 loss

Q: Which of the following situations does NOT describe someone who should implement a hedge strategy? A) Mary is very nervous about losing profits if selling prices drop B) Melanie's creditors will not lend her money if her crops might lose money C) Katherine's board of directors will not tolerate losses, even if it means profits are smaller D) Dawn wants to reduce price fluctuations, but will need to conduct many transactions to achieve her goals

Q: When selecting among various put options with different strike prices, in order to hedge a long asset position, which of the following statements is true? A) Higher strike puts cost more and provide higher floors B) Higher strike puts cost less and provide higher floors C) Lower strike puts cost more and provide higher floors D) Lower strike puts cost less and provide higher floors

Q: Corn call options with a $1.70 strike price are trading for a $0.15 premium. Farmer Jayne decides to hedge her 20,000 bushels of corn by selling short call options. Six-month interest rates are 4.0% and she plans to close her position and sell her corn in 6 months. What is her profit or loss if spot prices are $1.60 per bushel when she closes her position? A) $1,000 loss B) $2,000 gain C) $2,120 loss D) $2,120 gain

Q: Two 6-month corn put options are available. The strike prices are $1.80 and $1.75 with premiums of $0.14 and $0.12, respectively. Total costs are $1.65 per bushel and 6-month interest rates are 4.0%. Farmer Jayne wishes to hedge 20,000 bushels for 6 months. What is the highest profit or minimum loss between the two options if the spot price in 6 months is $1.70 per bushel? A) $88 loss B) $88 gain C) $496 loss D) $496 gain

Q: Corn call options with a $1.75 strike price are trading for a $0.14 premium. Farmer Jayne decides to hedge her 20,000 bushels of corn by selling short call options. Six-month interest rates are 4.0% and she plans to close her position in 6 months. What is the total premium she will earn on her short position? A) $2,800 B) $2,912 C) $800 D) $1,600

Q: A 6-month forward contract for corn exists with a price of $1.70 per bushel. If Farmer Jayne decides to hedge her 20,000 bushels of corn with the forward contract, what is her profit or loss if spot prices are $1.65 or $1.80 when she sells her crop in 6 months? Her total costs are $33,000. A) $1,000 gain or $1,000 loss B) $0 gain or $3,000 gain C) $0 loss or $3,000 loss D) $1,000 gain or $1,000 gain

Q: Farmer Jayne decides to hedge 10,000 bushels of corn by purchasing put options with a strike price of $1.80. Six-month interest rates are 4.0% and the total premium on all puts is $1,200. If her total costs are $1.65 per bushel, what is her marginal change in profits if the spot price of corn drops from $1.80 to $1.75 by the time she sells her crop in 6 months? A) $248 loss B) $0 C) $252 gain D) $1,500 loss

Q: To plant and harvest 20,000 bushels of corn, Farmer Jayne incurs fixed and variable costs totaling $33,000. The current spot price of corn is $1.80 per bushel. What is the profit or loss if the spot price is $1.90 per bushel when she harvests and sells her corn? A) $3,000 gain B) $3,000 loss C) $5,000 gain D) $5,000 loss

Q: Compare the butterfly spread, bear spread, bull spread, covered call, straddle, and other strategies. Is any one strategy better than another? Are there trade-offs between each that is almost perfect or do significant advantages exist from one strategy to another?

Q: Why is a straddle position considered a speculation on the asset's volatility?

Q: What are the similarities and differences between bear and bull spreads?

Q: What is the difference between naked and covered call writing?

Q: Why might the manager of a portfolio employ a protective put strategy?

Q: Explain how a long stock and long put strategy equals the cash flow from a long call strategy.

Q: An investor purchases a call option with an exercise price of $55 for $2.60. The same investor sells a call on the same security with an exercise price of $60 for $1.40. At expiration, 3 months later, the stock price is $56.75. All other things being equal and given an annual interest rate of 4.0%, what is the net profit or loss to the investor?A) $1.21 lossB) $1.50 lossC) $0.54 gainD) $1.65 gain

Q: Using option strategy concepts, what is the value of an insured home, if the value of the uninsured home is $220,000, the house was purchased for $180,000 and the house has a casualty policy costing $500 with a $2,000 deductible? Ignore interest costs. A) $180,000 B) $217,500 C) $220,000 D) $222,500

Q: The owner of a house worth $180,000 purchases an insurance policy at the beginning of the year for a price of $1,000. The deductible on the policy is $5,000. If after 6 months the homeowner experiences a casualty loss valued at $45,000, what is the homeowner's net gain/loss? Assume an opportunity cost of capital of 4.0% annually. A) $0 B) $1,000 C) $5,000 D) $6,020

Q: What is the breakeven point that an investor can obtain from a 6-month strategy employing a long 830 call and a short 850 call? Interest rates are 0.5% per month. A) $832.82 B) $842.32 C) $852.22 D) $862.92

Q: What is the maximum loss that an investor can obtain over 6 months from a strategy employing a long 830 call and a short 850 call? Interest rates are 0.5% per month. A) $6.80 B) $7.68 C) $9.24 D) $12.32

Q: What is the maximum profit that an investor can obtain from a strategy employing a long 830 call and a short 850 call over 6 months? Interest rates are 0.5% per month. A) $6.80 B) $7.68 C) $9.24 D) $12.32

Q: The $850 strike put premium is $25.45 and the $850 strike call is selling for $30.51. Calculate the breakeven index price for a strategy employing a short call and long put that expires in 6 months. Interest rates are 0.5% per month. A) $822.67 B) $824.79 C) $830.76 D) $875.82

Q: At the 6-month point, what is the breakeven index price for a strategy of longing the market index at a price of 830? Interest rates are 0.5% per month. A) $802.12 B) $830.00 C) $855.21 D) $866.32

Q: A strategy consists of longing a put on the market index with a strike of 830 and shorting a call option on the market index with a strike price of 830. The put premium is $18.00 and the call premium is $44.00. Interest rates are 0.5% per month. What is the breakeven price of the market index for this strategy at expiration (in 6 months)? A) $802.12 B) $830.00 C) $855.21 D) $866.32

Q: A strategy consists of longing a put on the market index with a strike of 830 and shorting a call option on the market index with a strike price of 830. The put premium is $18.00 and the call premium is $44.00. Interest rates are 0.5% per month. Determine the net profit or loss if the index price at expiration is $830 (in 6 months). A) $0 B) $23.67 loss C) $26.79 gain D) $28.50 gain

Q: A strategy consists of buying a market index product at $830 and longing a put on the index with a strike of $830. If the put premium is $18.00 and interest rates are 0.5% per month, what is the estimated price of a call option with an exercise price of $830? A) $42.47 B) $45.26 C) $47.67 D) $49.55

Q: A strategy consists of buying a market index product at $830 and longing a put on the index with a strike of $830. If the put premium is $18.00 and interest rates are 0.5% per month, compute the profit or loss from the long put position by itself (in 6 months) if the market index is $810. A) $3.45 gain B) $1.45 gain C) $2.80 loss D) $1.36 loss

Q: A strategy consists of buying a market index product at $830 and longing a put on the index with a strike of $830. If the put premium is $18.00 and interest rates are 0.5% per month, compute the profit or loss from the long index position by itself expiration (in 6 months) if the market index is $810. A) $45.21 loss B) $21.22 loss C) $18.00 gain D) $24.25 gain

Q: A strategy consists of buying a market index product at $830 and longing a put on the index with a strike of $830. If the put premium is $18.00 and interest rates are 0.5% per month, what is the profit or loss at expiration (in 6 months) if the market index is $810? A) $20.00 gain B) $18.65 gain C) $36.29 loss D) $43.76 loss

Q: Engage the class in a conversation about auto insurance. Why do people feel their premium is wasted if they do not file a claim?

Q: As with Chrysler Corp. many years ago, the government occasionally guarantees loans. What option is the government granting and to whom in a loan guarantee?

Q: Develop the payoff table for the previous question, using at least five different possible index prices, in addition to the strike price and breakeven price.

Q: The spot price of the market index is $900. After 3 months the market index is priced at $920. The annual rate of interest on treasuries is 4.8% (0.4% per month). The premium on the long put, with an exercise price of $930, is $8.00. Draw the payoff graph for the long put position at expiration. Include strike price, breakeven price, and max loss.

Q: An investor has a long call option on the market index at a strike price of $930. At expiration the index price is $920. Explain the profit and loss.

Q: The spot price of the market index is $900. A 3-month forward contract on this index is priced at $930. Draw the payoff graph for the short position in the forward contract.

Q: The premium on a call option on the market index with an exercise price of 1050 is $9.30 when originally purchased. After 2 months the position is closed, and the index spot price is 1072. If interest rates are 0.5% per month, what is the Call Profit?A) $9.30B) $9.39C) $12.61D) $22.00

Q: The premium on a long term call option on the market index with an exercise price of 950 is $12.00 when originally purchased. After 6 months the position is closed, and the index spot price is 965. If interest rates are 0.5% per month, what is the Call Payoff? A) $2.64 B) $12.00 C) $12.36 D) $15.00

Q: A put option is purchased and held for 1 year. The Exercise price on the underlying asset is $40. If the current price of the asset is $36.45 and the future value of the original option premium is (-$1.62), what is the put profit, if any, at the end of the year? A) $1.62 B) $1.93 C) $3.55 D) $5.17

Q: If your homeowner's insurance premium is $1,000 and your deductible is $2000, what could be considered the strike price of the policy if the home has a value of $120,000? A) $118,000 B) $120,000 C) $117,000 D) $122,000

Q: The spot price of the market index is $900. After 3 months the market index is priced at $915. The annual rate of interest on treasuries is 2.4% (0.2% per month). The premium on the long put, with an exercise price of $930, is $8.00. Calculate the profit or loss to the short put position if the final index price is $915. A) $15.00 gain B) $15.00 loss C) $6.95 gain D) $6.95 loss

Q: The spot price of the market index is $900. The annual rate of interest on treasuries is 2.4% (0.2% per month). After 3 months the market index is priced at $920. An investor has a long call option on the index at a strike price of $930. What profit or loss will the writer of the call option earn if the option premium is $2.00? A) $2.00 gain B) $2.00 loss C) $2.01 gain D) $2.01 loss

Q: All of the positions listed will benefit from a price decline, except: A) Short put B) Long put C) Short call D) Short stock

Q: The spot price of the market index is $900. After 3 months the market index is priced at $920. The annual rate of interest on treasuries is 2.4% (0.2% per month). The premium on the long put, with an exercise price of $930, is $8.00. At what index price does a long put investor have the same payoff as a short index investor? Assume the short position has a breakeven price of $930. A) $921.90 B) $930.00 C) $938.05 D) $940.00

Q: The spot price of the market index is $900. After 3 months the market index is priced at $920. The annual rate of interest on treasuries is 2.4% (0.2% per month). The premium on the long put, with an exercise price of $930, is $8.00. What is the profit or loss at expiration for the long put? A) $2.00 gain B) $2.00 loss C) $1.95 gain D) $1.95 loss

Q: The spot price of the market index is $900. After 3 months, the market index is priced at $920. An investor has a long call option on the index at a strike price of $930. After 3 months, what is the investor's profit or loss? A) $10 loss B) $0 C) $10 gain D) $20 gain

Q: The spot price of the market index is $900. A 3-month forward contract on this index is priced at $930. The annual rate of interest on treasuries is 2.4% (0.2% per month). What annualized rate of interest makes the net payoff zero? (Assume monthly compounding.) A) 4.8% B) 8.5% C) 11.2% D) 13.2%

Q: The spot price of the market index is $900. A 3-month forward contract on this index is priced at $930. The market index rises to $920 by the expiration date. The annual rate of interest on treasuries is 2.4% (0.2% per month). What is the difference in the payoffs between a long index investment and a long forward contract investment? (Assume monthly compounding.) A) $10.84 B) $24.59 C) $26.40 D) $43.20

Q: The spot price of the market index is $900. A 3-month forward contract on this index is priced at $930. What is the profit or loss to a short position if the spot price of the market index rises to $920 by the expiration date? A) $20 gain B) $20 loss C) $10 gain D) $10 loss

Q: Discuss the origins of derivatives in terms of risk reduction using the concept of evolution to integrate the additional uses of derivatives into the discussion. Conclude by asking students to list methods by which third parties could make fees by interjecting themselves into the process.

Q: What would cause the spread between the market rate of interest and the repo rate to be small?

Q: Describe the concept of a bid-ask spread and how that impacts the cash flows of an investor.

Q: For families employed and living in "company towns" (i.e., where the major employer owns all homes, retail stores, etc.), explain the lack of diversification.

Q: Why would a corn farmer, who maintains a short futures contract after harvesting and selling her crop, be considered a speculator?

Q: Why might a variable rate mortgage be considered a "derivative" and a fixed rate mortgage not?

Q: A firm provides a service that benefits from decreasing employment. This firm has a risk exposure to macro event. All other variables being equal, which of the following derivative securities is the firm most likely use to hedge its exposure?A) Short position in an economic futuresB) Long position in an economic futuresC) Short position in an interest rate futuresD) Long position in an interest rate futures

Q: According to trading volume data tabulated by the Wall Street Journal for April 15, 2010, which index futures contact experienced the highest total open interest? A) DJ Industrial Average B) S&P 500 Index C) Mini S&P 500 D) Mini Nasdaq 100

Q: Assume that an investor lends 100 shares of Jiffy, Inc. common stock to a short seller. The bid-ask prices are $32.00 - $32.50. When the position is closed, the bid-ask prices are $32.50 - $33.00. The commission rate is 0.5%. The market interest rate is 5.0% and the short rebate rate is 3.0%. Calculate the gain or loss to the lender. Assume the lender is not subject to a bid-ask loss or commissions. A) $164.00 gain B) $164.00 loss C) $100.00 gain D) $100.00 loss

Q: Assume that you open a 100-share short position in Jiffy, Inc. common stock at the bid-ask prices of $32.00 - $32.50. When you close your position, the bid-ask prices are $32.50 - $33.00. You pay a commission rate of 0.5%. The market interest rate is 5.0% and the short rebate rate is 3.0%. What is your additional gain or loss due to leasing the asset? A) $64.00 loss B) $160.00 loss C) $96.00 gain D) $0

Q: Assume that you open a 100-share short position in Jiffy, Inc. common stock at the bid-ask price of $32.00 - $32.50. When you close your position, the bid-ask prices are $32.50 - $33.00. If you pay a commission rate of 0.5%, what is your profit or loss on the short investment? A) $32.50 gain B) $16.25 loss C) $132.50 loss D) $100.00 gain

Q: Assume that you purchase 100 shares of Jiffy, Inc. common stock at the bid-ask prices of $32.00 - $32.50. When you sell, the bid-ask prices are $32.50 - $33.00. If you pay a commission rate of 0.5%, what is your profit or loss? A) $0 B) $16.25 loss C) $32.50 gain D) $32.50 loss

Q: What is the cost of 100 shares of Jiffy, Inc. stock given that the bid-ask prices are $31.25 - $32.00 and a $15.00 commission per transaction exists? A) $3215 B) $3140 C) $3125 D) $3200

Q: Select the family member who is offering the most diversification to the rest of the family. A) Dad works for General Motors B) Mom works for Goodyear C) Daughter works for Jiffy Lube D) Son works for Eli Lilly & Company

Q: All of the following are financially engineered products, except: A) Mortgage B) Mortgage backed security C) Interest only D) Principal only

Q: During the growing season, a corn farmer sells short corn futures contracts in an amount equal to her crop. If upon harvesting and selling her crop she maintains the contracts, she is then considered a(n): A) Hedger B) Speculator C) Arbitrager D) None of the above

Q: A mutual fund is engaged in the short term and temporary purchase of index futures, for purposes of minimizing its cash exposures. Which "use" most closely explains their actions? A) Risk management B) Speculation C) Reduced transaction costs D) Regulatory arbitrage

Q: Who from the following list would be considered a speculator by entering into a futures or options contract on commodities? A) Farmer B) Corn delivery truck driver C) Food manufacturer D) None of the above

Q: Which of the following is not a derivative instrument? A) Contract to sell corn B) Option agreement to buy land C) Installment sales agreement D) Mortgage backed security

Q: Qualitative research studies are conducted by highly trained interviewers who analyze the findings; thus, the findings tend to be somewhat objective.

Q: Quantitative research is descriptive in nature and is used to understand the effects of various promotional inputs on the consumer, making it easier to predict consumer behavior.

Q: If samples are collected randomly from a population of interest, the results of quantitative research can be generalized to larger populations.

Q: Consumers are always aware of their decisions and can rationalize their consumption behaviors.

Q: PRICE SURVEY MINI CASE: Capital Clothing wants to get a better understanding of consumers' perceptions of the price and quality of its sweaters. After reviewing data from Yankelovich on consumer lifestyles and consumption patterns, Capital Clothing identified specific consumer characteristics of its target market, which helped it develop a screening questionnaire. The screening questionnaire was used to select participants for its price/quality survey. The following is the survey administered by Capital Clothing to evaluate customer perceptions of the price and quality of its sweaters. 1. Rank to following clothing companies in terms of the quality of their sweaters. Capital Clothing Executive Suit Sweater Hut A-List 2. Do you agree or disagree with the following statement? (Check one) Sweaters from Capital Style provide good value for price. Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree 3. Please check the point on the following continuum that best expresses your impression of the price of Capital Style Sweaters. Expensive Inexpensive 4. How likely are you to purchase a Capital Style sweater in the next six months? Definitely will purchase Probably will purchase Might or might not purchase Probably will not purchase Definitely will not purchase In the PRICE SURVEY MINI CASE, question #4 measures response on a ________. A) Likert scale B) bipolar preference scale C) semantic differential scale D) behavior intention scale E) rank-order scale

Q: PRICE SURVEY MINI CASE: Capital Clothing wants to get a better understanding of consumers' perceptions of the price and quality of its sweaters. After reviewing data from Yankelovich on consumer lifestyles and consumption patterns, Capital Clothing identified specific consumer characteristics of its target market, which helped it develop a screening questionnaire. The screening questionnaire was used to select participants for its price/quality survey. The following is the survey administered by Capital Clothing to evaluate customer perceptions of the price and quality of its sweaters. 1. Rank to following clothing companies in terms of the quality of their sweaters. Capital Clothing Executive Suit Sweater Hut A-List 2. Do you agree or disagree with the following statement? (Check one) Sweaters from Capital Style provide good value for price. Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree 3. Please check the point on the following continuum that best expresses your impression of the price of Capital Style Sweaters. Expensive Inexpensive 4. How likely are you to purchase a Capital Style sweater in the next six months? Definitely will purchase Probably will purchase Might or might not purchase Probably will not purchase Definitely will not purchase In the PRICE SURVEY MINI CASE, question #3 measures response on a ________. A) Likert scale B) bipolar preference scale C) semantic differential scale D) behavior intention scale E) rank-order scale

Q: PRICE SURVEY MINI CASE: Capital Clothing wants to get a better understanding of consumers' perceptions of the price and quality of its sweaters. After reviewing data from Yankelovich on consumer lifestyles and consumption patterns, Capital Clothing identified specific consumer characteristics of its target market, which helped it develop a screening questionnaire. The screening questionnaire was used to select participants for its price/quality survey. The following is the survey administered by Capital Clothing to evaluate customer perceptions of the price and quality of its sweaters. 1. Rank to following clothing companies in terms of the quality of their sweaters. Capital Clothing Executive Suit Sweater Hut A-List 2. Do you agree or disagree with the following statement? (Check one) Sweaters from Capital Style provide good value for price. Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree 3. Please check the point on the following continuum that best expresses your impression of the price of Capital Style Sweaters. Expensive Inexpensive 4. How likely are you to purchase a Capital Style sweater in the next six months? Definitely will purchase Probably will purchase Might or might not purchase Probably will not purchase Definitely will not purchase In the PRICE SURVEY MINI CASE, question #2 measures response on a ________. A) Likert scale B) semantic differential scale C) behavior intention scale D) bipolar scale E) rank-order scale

Q: PRICE SURVEY MINI CASE: Capital Clothing wants to get a better understanding of consumers' perceptions of the price and quality of its sweaters. After reviewing data from Yankelovich on consumer lifestyles and consumption patterns, Capital Clothing identified specific consumer characteristics of its target market, which helped it develop a screening questionnaire. The screening questionnaire was used to select participants for its price/quality survey. The following is the survey administered by Capital Clothing to evaluate customer perceptions of the price and quality of its sweaters. 1. Rank to following clothing companies in terms of the quality of their sweaters. Capital Clothing Executive Suit Sweater Hut A-List 2. Do you agree or disagree with the following statement? (Check one) Sweaters from Capital Style provide good value for price. Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree 3. Please check the point on the following continuum that best expresses your impression of the price of Capital Style Sweaters. Expensive Inexpensive 4. How likely are you to purchase a Capital Style sweater in the next six months? Definitely will purchase Probably will purchase Might or might not purchase Probably will not purchase Definitely will not purchase In the PRICE SURVEY MINI CASE, question #1 measures response on a ________. A) bipolar scale B) Likert scale C) rank order scale D) behavior intention scale E) semantic differential scale

Q: PRICE SURVEY MINI CASE: Capital Clothing wants to get a better understanding of consumers' perceptions of the price and quality of its sweaters. After reviewing data from Yankelovich on consumer lifestyles and consumption patterns, Capital Clothing identified specific consumer characteristics of its target market, which helped it develop a screening questionnaire. The screening questionnaire was used to select participants for its price/quality survey. The following is the survey administered by Capital Clothing to evaluate customer perceptions of the price and quality of its sweaters. 1. Rank to following clothing companies in terms of the quality of their sweaters. Capital Clothing Executive Suit Sweater Hut A-List 2. Do you agree or disagree with the following statement? (Check one) Sweaters from Capital Style provide good value for price. Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree 3. Please check the point on the following continuum that best expresses your impression of the price of Capital Style Sweaters. Expensive Inexpensive 4. How likely are you to purchase a Capital Style sweater in the next six months? Definitely will purchase Probably will purchase Might or might not purchase Probably will not purchase Definitely will not purchase In the PRICE SURVEY MINI CASE, the screening questionnaire is developed based on ________ from Yankelovich. A) internal secondary data B) quantitative primary data C) external secondary data D) qualitative primary data E) qualified primary data

Q: PEN MINI CASE: United Writing Utensils is preparing to launch a new high-end pen in preparation for the college graduation season. Prior to launching its new product, United carries out research on different promotional ideas in an attempt to select an advertisement design that will optimize the pen's sales. United has pre-selected four advertising themes that it will test. In these tests, individuals are shown a series of print ads with one of the four test advertisements inserted randomly in the series. Test subjects are then asked to recall certain elements of the pen advertisement. By comparing data from different sets of test subjects shown different versions of the advertisement, United will be able to determine which of the four advertising themes most effectively communicates United's intended message about the quality and prestige of the new product. In the PEN MINI CASE, the study described is best characterized as a(n) ________. A) consumer panel B) qualitative study C) secondary study D) exploratory study E) quantitative study

Q: PEN MINI CASE: United Writing Utensils is preparing to launch a new high-end pen in preparation for the college graduation season. Prior to launching its new product, United carries out research on different promotional ideas in an attempt to select an advertisement design that will optimize the pen's sales. United has pre-selected four advertising themes that it will test. In these tests, individuals are shown a series of print ads with one of the four test advertisements inserted randomly in the series. Test subjects are then asked to recall certain elements of the pen advertisement. By comparing data from different sets of test subjects shown different versions of the advertisement, United will be able to determine which of the four advertising themes most effectively communicates United's intended message about the quality and prestige of the new product. In the PEN MINI CASE, subjects are asked: "What do you remember about the pen advertisement you saw?" This is an example of a(n) ________. A) metaphor analysis B) open-ended question C) word association D) multiple choice question E) closed-ended question

Q: PEN MINI CASE: United Writing Utensils is preparing to launch a new high-end pen in preparation for the college graduation season. Prior to launching its new product, United carries out research on different promotional ideas in an attempt to select an advertisement design that will optimize the pen's sales. United has pre-selected four advertising themes that it will test. In these tests, individuals are shown a series of print ads with one of the four test advertisements inserted randomly in the series. Test subjects are then asked to recall certain elements of the pen advertisement. By comparing data from different sets of test subjects shown different versions of the advertisement, United will be able to determine which of the four advertising themes most effectively communicates United's intended message about the quality and prestige of the new product. In the PEN MINI CASE, the manipulated treatment is ________. A) the store environment B) the product features C) the product packaging D) the product price E) the advertising theme