- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 12. Introduction to Financial Statement Modeling
- Subject 3. The Impact of Competitive Factors in Prices and Costs
CFA Practice Question
Which factor is least likely to impact the pricing power of a company?
B. Intensity of rivalry among incumbent companies.
C. Bargaining power of suppliers.
D. Bargaining power of customers.
E. Threat of new entrants.
A. Threat of substitute products.
B. Intensity of rivalry among incumbent companies.
C. Bargaining power of suppliers.
D. Bargaining power of customers.
E. Threat of new entrants.
Correct Answer: C
User Contributed Comments 8
| User | Comment |
|---|---|
| DariSH | why so? |
| Living123 | does not make sense |
| thebkr777 | Confused |
| sargis | I guess in case of C, it can still impose higher prices to compensate higher input prices. So, prices are higher but there is no impact on its pricing power. The other 4 are outside forces that limit its pricing power. |
| sahilb7 | I don't agree with this one... C influences the costs of the firm. This can have an indirect impact on the prices as well. |
| yalhussein | All are likely, but the question states which is "Least likely". |
| akirchner1 | I look at it this way. A, B, D, and E will most likely push prices downward giving sort of a cap on what the company can charge. C is sort of the opposite in that the higher costs imposed by the supplier onto the company will force the company to charge higher prices. But there isn't an upper limit on prices like you would see in the cases of A, B, D, and E. |
| davidt876 | sargis has it |