1. Which of the following is least likely a limitation of classifying companies based on statistical similarities?
A. Difficulty in identifying securities with returns that are correlated.
B. Falsely excluding a significant relationship.
C. Falsely indicating a relationship where none exists.
2. Analyst 1: During recessions, consumers are more likely to defer purchases of products of defensive companies than of cyclical companies. Analyst 2: During recessions, non-cyclical companies tend to outperform cyclical companies. Which analyst’s statement is most likely correct?
A. Analyst 1.
B. Analyst 2.
3. According to the industry life-cycle model, the growth phase is most likely characterized by:
A. industry consolidation.
B. falling prices.
C. intense competition.