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Basic Question 1 of 1
Sales of differentiated products at premium prices would generally be reflected most directly in ______, if all other factors remain equal.
II. higher ROA
III. more expenses
IV. higher ROE
I. higher gross profit margin
II. higher ROA
III. more expenses
IV. higher ROE
User Contributed Comments 8
| User | Comment |
|---|---|
| muneeb70 | I understand choice I but not III |
| johnowens | Premium Price = I Differentiated Products = III |
| viannie | premium products command better margin but also require more cost in advertising (expense). Also, differentiated products, need to expense more resources in differentiating your products -> in R&D, niche raw materials that's more expensive etc ... |
| johntan1979 | Agree with viannie. Think of Apple vs Wal-Mart |
| davcer | think about perfect competition and monopolistic competition, in perfect competition there is a perfectly elastic mkt demand so you sell at the mkt price, but in monopolistic competition you can charge higher prices but need to differentiate your products with advertising, marketing, etc etc, thus incurring in more expenses |
| ashish100 | i love you guys. You're my brother (t.thunder) |
| kingirm | Why not iv ? |
| 10425406 | great |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
evaluate a company's past financial performance and explain how a company's strategy is reflected in past financial performance;
CFA® 2024 Level I Curriculum, Volume 3, Module 27.