Based on Past Evidence, If an Industry Has the Number

question 3

Multiple Choice

Based on past evidence, if an industry has the number one ranking on price performance, which of the following statements is most accurate? The investor should:

• A) not expect that same industry to be ranked number one again next year.
• B) expect that industry to maintain its top ranking for five years or more.
• C) expect that industry to do well over the next 10 to 20 years.
• D) expect that industry to drop out of the top ten rankings within five years.

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Definitions:

Absorption Costing

This method includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Markup

The amount added to the cost price of goods to cover overhead and profit, expressed as a percentage of the cost price.

Selling Price

The amount for which a product or service is sold to customers.

Organic Nutrients

Essential minerals and compounds derived from living organisms used to promote plant or soil health.