Equity Investments MCQ - Equity Investments Section 2

36 Which of the following statements most accurately describes the difference among the three commercial classification systems?

A
ICB uses a three-tier structure classification system while RGS uses a fourtier structure.
B
RGS classifies based on where a company gets its revenue whereas ICB classifies based on products or services.
C
GICS and ICB use a four-tier structure while RGS uses a three-tier structure.

GICS and ICB use a four-tier structure while RGS uses a three-tier structure. B is incorrect because RGS classifies based on the products and services a company produces.

37 Which of the following is least likely a limitation of classifying companies based on statistical similarities?

This classification actually makes it relatively easy to identify securities which are correlated. Options B and C represent limitations.

38 Which of the following statements about commercial and government industry classification systems is least accurate?

Government classification system does no distinguish between large and small businesses, for-profit and non-profit, or private and public companies.

39 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?

During recession, non-cyclical companies tend to outperform cyclical companies. Consumers are more likely to defer purchases of products of cyclical companies than of defensive companies.

40 Modern classification schemes are commonly based on grouping companies by:

Modern classification schemes are commonly based on grouping companies by similar products and/or services.