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Multiple Choice Quiz
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1.
At what stage of industry life cycle a company would face an influx of competition?
A)Start-up
B)Consolidation
C)Maturity
D)Relative decline
2.
______________ is an example of a defensive industry.
A)Food producers
B)Auto manufacturers
C)Both A and B are examples.
D)Neither A nor B is an example.
3.
Companies in the maturity state of the industry life cycle are sometimes referred to as ______________.
A)falling stars
B)bargains
C)turnarounds
D)cash cows
4.
Which of the following will affect the sensitivity of a firm's earnings to the business cycle?
A)Operating leverage.
B)Dividend policy.
C)Tax liabilities.
D)None of the above will.
5.
According to the section rotation analysis, investors should invest more heavily in ______________ when the economy enters a contraction stage.
A)cyclical industry
B)defensive industry
C)Either industry.
D)Both industries.
6.
Which of the following is a characteristic of the start-up stage of the industry life cycle?
A)New technology.
B)Many competitors.
C)Slow growth.
D)Dominant industry leader.
7.
Industry analysis is affected by ______________.
A)technology
B)interest rate
C)demographics
D)All of the above.
8.
Housing starts is ______________.
A)a leading economic indicator
B)a coincidental economic indicator
C)a lagging economic indicator
D)None of the above.
9.
Which of the following is true about industry analysis?
A)When the economy is booming, rates of return across industry do not vary greatly.
B)When the economy is weak, rates of return across industry do not vary greatly.
C)Rates of return across industry vary during a specific period of time.
D)Rates of return across industry do not vary over time.
10.
When the Federal Reserve ______________ the discount rate, the money supply of the economy will increase.
A)raises
B)lowers
C)does not change
D)None of the above.
11.
What is the first step of a proper top-down analysis of a company's prospects?
A)The analysis of the global economy.
B)The analysis of the domestic economy.
C)The analysis of the industry the company is in.
D)The analysis of the company's fundamentals.
12.
Fiscal policy refers to the government's ______________ to stabilize the economy.
A)influence of money supply and demand
B)trading policy
C)technology development
D)spending and taxing
13.
______________ are indicators whose values reach troughs and peaks before the aggregate economy does.
A)Front-running indicators
B)Lagging indicators
C)Leading indicators
D)First indicators
14.
Which of the following risks a U.S. company would specifically face in global environment?
A)Total risk.
B)Exchange rate risk.
C)Systematic risk.
D)All of the above.
15.
Monetary policy refers to the government's ______________ to change investment and consumption demand.
A)manipulation of money supply
B)taxing policy
C)exchange rate policy
D)interstate business policy





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