CFA CFA Level 1 CFA Level 1 Question of the Week – Equity Investments

CFA Level 1 Question of the Week – Equity Investments

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    • Matt_AnalystPrep
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      Which of the following statements related to the cost leadership strategy is/are accurate?

      I. The cost leadership strategy is used to decrease production costs.
      II. The cost leadership strategy is used to increase sales.

      • A. I only
      • B. II only
      • C. Both I & II
    • Matt_AnalystPrep
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      The correct answer is C.

      Firms engaging in cost-leadership strategy seek to combine low per-unit profit with large sales to make a profit.  Typically, but not always, they tend to market to a large population base or a niche with a high demand volume. Perhaps the most famous cost leader is Wal-Mart, which has used a cost-leadership strategy to become one of the largest companies in the world.

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