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What is one primary difference between crowdfunding and traditional venture capital fundraising?
What is one primary difference between crowdfunding and traditional venture capital fundraising?
Business incubators provide resources and space to help new businesses develop their products.
Business incubators provide resources and space to help new businesses develop their products.
True
What do grants and subsidies have in common?
What do grants and subsidies have in common?
Both provide financial assistance to businesses, but grants do not typically need to be repaid.
Loans are typically advanced to the borrower by a __________.
Loans are typically advanced to the borrower by a __________.
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Match the following funding sources with their descriptions:
Match the following funding sources with their descriptions:
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What is the most common form of funding for small and medium-sized businesses?
What is the most common form of funding for small and medium-sized businesses?
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Subsidies are always in the form of cash payments.
Subsidies are always in the form of cash payments.
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The first step in setting a pricing policy is to select the __________ objective.
The first step in setting a pricing policy is to select the __________ objective.
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What does a high price generally convey about a product?
What does a high price generally convey about a product?
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Setting prices too low will make a product appear high-quality.
Setting prices too low will make a product appear high-quality.
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What relationship exists between price and demand according to the content?
What relationship exists between price and demand according to the content?
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Which of the following is NOT a source of startup financing?
Which of the following is NOT a source of startup financing?
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__________ costs do not vary with the level of production or sales revenue.
__________ costs do not vary with the level of production or sales revenue.
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The Time Value of Money (TVM) concept states that a dollar received today is worth more than a dollar received in the future.
The Time Value of Money (TVM) concept states that a dollar received today is worth more than a dollar received in the future.
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What is indicated by consumers when they see a higher price on a product?
What is indicated by consumers when they see a higher price on a product?
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What must businesses consider when setting prices for their products?
What must businesses consider when setting prices for their products?
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What are the 8 Ps of Marketing?
What are the 8 Ps of Marketing?
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Variable costs are fixed and do not depend on production levels.
Variable costs are fixed and do not depend on production levels.
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The marketing __________ involves planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services.
The marketing __________ involves planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services.
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Match the pricing strategies to their effects.
Match the pricing strategies to their effects.
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Match the following marketing terms with their definitions:
Match the following marketing terms with their definitions:
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Which of the following best describes the main purpose of advertising?
Which of the following best describes the main purpose of advertising?
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The promotional mix includes advertising, sales promotion, public relations, and personal selling.
The promotional mix includes advertising, sales promotion, public relations, and personal selling.
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In a business context, __________ refers to the strategies used for engaging with stakeholders and the public.
In a business context, __________ refers to the strategies used for engaging with stakeholders and the public.
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What is the time value of money (TVM) principle?
What is the time value of money (TVM) principle?
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According to the TVM principle, receiving P100,000 today is worth less than receiving P50,000 for two years.
According to the TVM principle, receiving P100,000 today is worth less than receiving P50,000 for two years.
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Which pricing strategy involves setting a low initial price to quickly attract many buyers?
Which pricing strategy involves setting a low initial price to quickly attract many buyers?
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What is the formula to calculate future value (FV) using the present value (PV), interest rate (i), and time (t)?
What is the formula to calculate future value (FV) using the present value (PV), interest rate (i), and time (t)?
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Value pricing is solely about reducing prices to attract customers.
Value pricing is solely about reducing prices to attract customers.
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What is the main characteristic of Everyday Low Pricing (EDLP)?
What is the main characteristic of Everyday Low Pricing (EDLP)?
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The value of money can increase over time through __________.
The value of money can increase over time through __________.
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In going-rate pricing, businesses mainly base their prices on competitors' prices rather than their own __________ or __________.
In going-rate pricing, businesses mainly base their prices on competitors' prices rather than their own __________ or __________.
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Match the variables in the time value of money to their meanings:
Match the variables in the time value of money to their meanings:
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Which pricing strategy is used when distinguishing between products in a product line?
Which pricing strategy is used when distinguishing between products in a product line?
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If P100,000 is invested at a 20% annual interest rate compounded monthly, what would its future value be after 2 years?
If P100,000 is invested at a 20% annual interest rate compounded monthly, what would its future value be after 2 years?
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Investing money typically leads to higher opportunity costs compared to holding onto the money.
Investing money typically leads to higher opportunity costs compared to holding onto the money.
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Market skimming is effective only if enough buyers are willing to pay the high initial price.
Market skimming is effective only if enough buyers are willing to pay the high initial price.
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What is one financial decision that understanding TVM can help a person make?
What is one financial decision that understanding TVM can help a person make?
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What is the goal of value pricing for businesses?
What is the goal of value pricing for businesses?
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Match the following pricing strategies with their descriptions:
Match the following pricing strategies with their descriptions:
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What is an example of Razor-and-Blade pricing?
What is an example of Razor-and-Blade pricing?
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International pricing is only determined by a country's economic conditions.
International pricing is only determined by a country's economic conditions.
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What is promotional pricing designed to create?
What is promotional pricing designed to create?
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A common example of product bundle pricing is a fast food restaurant's _____ meal combo.
A common example of product bundle pricing is a fast food restaurant's _____ meal combo.
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Which of the following is NOT a form of promotional pricing?
Which of the following is NOT a form of promotional pricing?
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Match the pricing strategy with its description:
Match the pricing strategy with its description:
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Limited-time offers are used to create a sense of urgency among buyers.
Limited-time offers are used to create a sense of urgency among buyers.
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What should businesses consider when selecting a final price for their product?
What should businesses consider when selecting a final price for their product?
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Study Notes
Time Value of Money
- Time value of money (TVM) is the concept that money available today is worth more than the identical sum in the future due to its potential earning capacity.
- P100,000 today is worth more than P100,000 received in two years.
- TVM allows you to determine which investment options provide the most optimal rate of return given the timeframe of an investment.
Future Value Formula
- Future Value = Present Value x (1 + interest rate)^ (number of years x number of compounding periods per year)
- PV: Present value of money
- i: Interest rate or return
- t: Number of years
- n: Number of compounding periods of interest per year
Example of TVM
- Investing P100,000 at a 20% annual interest rate, compounded monthly for 2 years.
- Future Value = 148,691.46
- This means P100,000 today will be worth 148,691.46 in two years. Forgoing the investment over that timeframe would mean forgoing P48,691.47 in interest.
Revenue Generation Models
- Personal Investment: Individuals invest in financial instruments like stocks, bonds, real estate, etc.
- Love Money: Money given to loved ones, repaid as business profits increase.
- Venture Capital: Wealthy investors finance startups with potential long-term growth in exchange for company shares.
- Angels: Wealthy individuals (or executives) invest directly in startups, offering expertise and managerial support.
- Crowdfunding: Businesses raise money from the general public in exchange for equity in the company.
- Business Incubators: Startups share spaces, resources, and networks with established businesses to help them grow faster.
- Grants and Subsidies: Government funds for businesses to offset operating costs.
- Loans: Funds provided by lenders to businesses, typically with terms and conditions.
Basic Pricing Strategies
- Price is a critical factor in influencing consumer choice, requiring careful consideration of the business, market competition, brand positioning and target market.
- Price selection involves a series of steps:
- Identifying the pricing objective.
- Evaluating customer perception of value.
- Ensuring customer confidence
- Establishing a demand curve (Price vs Demand).
Pricing Methods
- Markup pricing: Adding a standard markup to the cost of the product to determine the selling price.
- Target-return pricing: Determining the price at which target rate of return on investment is achieved
- Perceived-value pricing: Setting prices based on the customer’s perceived value of the product, considering quality, service and other intangible attributes
- Value pricing: Balancing quality and price to create a strong overall value proposition
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Description
This quiz covers the concept of the Time Value of Money (TVM), explaining why money today is worth more than the same amount in the future. Learn about the Future Value formula and apply it through examples to understand investment options and optimal returns.
