Equity Investments - Equity Investments Section 2
- Option : B
- Explanation : Cost leadership entails minimizing costs and transferring the benefits of these reduced costs to consumers. In this manner, the company maintains slim margins, but generates its profitability through high volume. Since the company has preferred the strategy of improving productivity rather than marketability, the likelihood is that the company pursues a cost-leadership strategy.
68. Which of the following statements about company analysis is least accurate?
- A
The complexity of the spreadsheet model may make it appear that the conclusions or stock price forecasts are right, when in fact it may be not.
- B
The corporate profile would include a description of the company’s business, investment activities and governance only.
- C
Analysis of demand for products/services include sources of demand, differentiation, long term outlook.
- Option : B
- Explanation : The corporate profile would include a description of the company’s business, investment activities, governance and strengths and weaknesses.
- Option : A
- Explanation : Since the market value is less than intrinsic value the stock is undervalued.
- Option : A
- Explanation : For a security that is actively traded and followed it is unlikely that the intrinsic value differs substantially from the market value.
