An industry currently has high sales growth that is increasing only modestly. Entry of competitors has lowered profit margins but the ROE is high. This industry is most likely to be in what stage of the industry life cycle: A. Mature Growth B. Pioneering Development C. Rapid Accelerating Growth D. Deceleration of growth and Decline I chose A, Correct answer is D, which is the 5th (last) stage in the industry life cycle. I’m still having a little trouble with it though. According to schweser: Sales growth ceases to accelerate by the 3rd stage Competitors enter the industry during 3rd stage and begin to cause a decrease in profit margins, ROE becomes normal by the 4th stage. According to the explanation, it is in the 5th stage because it could be considered a basic materials company and therefore inflation would have little influence on costs but prices will adjust. Can someone shed some light?
I had the same question and I’m pretty sure it was A that was the answer, you might want to double check on that…
I had that same question in sample exam 3 and i marked A, which the CFAI program marked as Correct… don’t know if that helps.
It seems their system sucks!!! I took exam I and found Lifo/Fifo question in Corp Finance section (which is okay) but when in the answer booklet (took print out from their website) it gives explaination of some another question which doesnt even exist in that exam. WEIRD
^ me to…
100% positive that it gave D is as the answer…whatever.
i had the exact same question in my mind when i went back to review the exam. i am pretty sure A is correct b/c i got it right during the exam but then saw D in the answer sheet the give at the end. then realized the answer sheet is competely out of order. it’s like that for the other sample exams too. maybe the system was screwy when you took it.
I think you guys are thinking of exam #2. I have not taken #3, but I do remember a question similar to this where the answer was mature growth
I just finished exam 3 about 10 minutes ago, it is A
i got that same question and put A and got it correct…just finished exam three and scored a 58% i felt pretty good going into it, but i got a bunch of easy questions wrong…i anyone else a little discouraged after taking that test??
CFA, I thought #3 was a very tough test. I got 66%. Struggled in what are my two usual best topics ethics and FSA. I don’t like the way it marks as you go. I got a few ethics wrong in a row and lost all my confidence… good luck to all. cheers
I think A because they say sales is still growing although only modestly. Answer D says deceleration of growth and decline which would contradict the information provided.