Which of the following is another term for target return percentage?

• A. Margin
• B. Markup
• C. Yield
• D. Commission

Answer: (B)

Understanding how target returns translate into pricing starts with recognizing that the term describing the percentage added to cost to achieve that return is markup. When you set a target return, you’re deciding how much profit to add on top of the cost, and that profit is expressed as a markup on cost. The selling price becomes cost × (1 + markup). For example, with a $100 cost and a 30% target return, the markup is 30%, so the price would be $130. Margin, yield, and commission refer to different concepts: margin is profit as a percentage of selling price, yield is a return relative to investment or cost depending on context, and commission is a salesperson’s fee.