单选题 Laura James is the head portfolio manager for National Fund, a U.S. based mutual fund with a well-respected track record. National’s primary focus is on large-cap domestic equities, and the fund has consistently posted high returns relative to its peer group over the past seven years. Much of National’s recent success is from its investments in the U.S. automobile industry, which have posted extraordinary returns due to a favorable economic scenario. Over the past seven years, the U.S. economy has been expanding, foreign competition has not met consumer expectations, and oil prices have remained low. These factors have contributed to an increase in market share for the domestic producers (at the expense of foreign competitors), and the result has been strong earnings for the top U.S. automakers. 　　Ford Motor Company, in particular, has enjoyed tremendous success in this environment. Ford has capitalized on the trend toward bigger vehicles, particularly sport utility vehicles (SUVs), and has outperformed the other domestic auto makers. Ford jumped on the SUV bandwagon early, and established its dominance. Other domestic auto makers followed, with foreign producers being the last to embrace the trend. Ford has increased its market share in an increasingly competitive industry. 　　James is constantly reviewing economic forecasts and industry data in order to assess the expected performance of the investments in National’s portfolio. Due to changes in economic policy and recent volatility in energy prices, James now believes that current market conditions exhibit signs of contraction (recession). In addition, the automobile sector may be facing additional negative factors. In particular, James has concerns regarding the SUV segment of the automobile industry. Although she believes they will remain popular, she is concerned that the market may be reaching a point of saturation. In addition, volatile energy prices may dampen consumers’ enthusiasm for large vehicles. Lastly, foreign competitors have increased efforts toward the production of SUVs, thus “crowding” the market with many new models.
单选题 Assume an industry exhibits tendencies of “regression toward the mean.” This could mean all of the following EXCEPT: （　　）
【正确答案】 B
【答案解析】Profitability in a particular industry attracts competition from other firms, which then forces prices down, eventually reducing profits back to a long-run normal level. The opposite holds true for industries experiencing losses.
单选题 In a recessionary environment, an automaker such as Ford would be expected to: （　　）
【正确答案】 D
【答案解析】During economic downturns, producers of low-cost products increase their market share at the expense of high-cost producers. This also is true within firms that produce various priced products.
单选题 Assume domestic automakers are growing at a rate of –2%. Ford expects to increase its market share by 0.5%. What is Ford’s growth rate? （　　）
【正确答案】 C
【答案解析】(1 + growth of firm sales) = (1 + growth of industry sales) x (1 + fractional change of market share) 　　= 0.98 x 1.005 　　= 0.9849 　　Growth of firm sales = –1.51%
单选题 Suppose instead that Ford’s growth of firm sales is expected to be –3% and the growth of industry sales is 1%. What is Ford’s expected change in market share? （　　）
【正确答案】 C
【答案解析】0.97 = 1.01 x (1 + x) 　　0.9604 = 1 + x 　　–3.96% = x
单选题 Which of the following scenarios would be most likely to have a positive impact on Ford’s market share? （　　）
【正确答案】 B
【答案解析】An increase in its marketing budget. 　　The percentage change in a firm’s market share is directly proportional to the percentage change in its marketing expenditures. An increase in the overall number of cars sold would not necessarily change Ford’s market share. New competition would be negative, as would war, as Ford’s share of the SUV market (gas guzzlers) is large.