CFA Practice Question

There are 96 practice questions for this study session.

CFA Practice Question

An IT company's market share stands at 10% of a $1bn market in 2013. The overall industry is expected to grow at a rate of 1%. The company expects that its innovative products coupled with aggressive marketing will allow it to increase its market share by 5% each year. What will its revenues be for the year of 2015?

A. $106.1 million.
B. $102.0 million.
C. $112.5 million.
Correct Answer: C

A top-down approach, market growth and market share, is used in forecasting the company's revenue. The market size will be 1,000m x (1.01)2 = $1,020.1m. The company market share will be 10% x 1.052 = 11.03%. The annual revenue in 4 years will be 1,020.1 x 11.03% = $112.46m.

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