CFA Practice Question

There are 191 practice questions for this study session.

CFA Practice Question

According to the industry life cycle analysis, ______

A. all companies in an industry will have similar performance.
B. mature industries tend to be more competitive than new industries.
C. very profitable companies can exist in an industry with below-average profitability.
Correct Answer: C

A: Some companies may follow a different pattern.

B: The opposite is generally true.

User Contributed Comments 8

User Comment
johntan1979 How is C possible? One or two big players, with many others with tiny market shares?
bidisha think how toyota did in the US for C.
gill15 I think B is true...New industry in the Embryonic stage has NO competition....that the mature phase must have more competition then that...
jejasin I had the same thinking as Gill...this section is tricky
Corey678 @gill15 I thought by "new" they fused Embryonic and Growth stages together. While I think Embryonic stage has little competition; in the Growth stage the level of competition ramps up more so than mature industries where barriers of entry rises.
merc5559 @Corey678 Growth stage has low competition...
renataa yeah, you are right Merc5559. But what is think is that the competition is not high for New and Mature industries, but the I guess the mature industry has lower of two because the creation of barriers.. But it is - ''I want you to fail'' question...
khalifa92 C means that very profitable companies can exist in highly competitive phase/industry.
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