Pricing power is the impact of price changes on product demand. Factors include uniqueness, competition, quality perception, and advertising effectiveness. Price elasticity of demand is key to understanding pricing power. Value-based pricing helps companies remain competitive and profitable. Pricing power is a term often used in the business world to identify the impact that a […]
The binomial option pricing model is a method of determining the value of an option contract, useful for US options, which can be exercised any time before the expiration date. It is based on a branching structure that allows investors to make specific predictions about future prices, and can be adjusted to reflect anticipated changes […]
The Capital Asset Pricing Model (CAPM) estimates the expected rate of return for a stock based on its beta risk, with higher risks justifying higher returns. The formula starts with the risk-free rate and calculates the premium generated by investing in the stock market above a risk-free asset. The Security Market Line (SML) graph compares […]
Foreign Sales Companies (FSCs) are created to reduce income tax on export-related income. Administrative pricing rules allow for up to a 15% reduction in income tax and up to 30% reduction in corporate taxes. FSCs must meet certain requirements, including maintaining a primary bank account outside the manufacturer’s country of origin and holding meetings outside […]
The pricing mechanism is an economic concept that relies on a free market system, where the price of a product depends on supply and demand. It helps achieve balance in the economy by reflecting the action and reaction of the entire market. The mechanism acts as a rationing agent for products with inverse proportionate demand […]
- 1
- 2
