2025 CFA Level I Exam: CFA Study Preparation

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Basic Question 5 of 6

Which factor is important in analyzing the industry concentration issue?

A. The relative market shares of all competitors
B. The absolute market shares of all competitors
C. Both the relative and absolute market shares of all competitors

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User Contributed Comments 2

User	Comment
cpurcell	isn't market share= firm sales over sales by all competitors, and therefore already 'relative'?
ascruggs92	No, a market share of 10% means you generate 10% of the industries sales. Relative means compare you share to their share. examples: - I have 20% market share, but the other 80% is controlled equally by 2 companies. Therefore I am a relatively small player in this industry. - I have 20% market share, and the next largest competitor has 5%. Therefore I am a relatively big player in the industry. Both have 20% market share, but have different relative sizes

User

Comment

cpurcell

isn't market share= firm sales over sales by all competitors, and therefore already 'relative'?

ascruggs92

No, a market share of 10% means you generate 10% of the industries sales. Relative means compare you share to their share. examples:

- I have 20% market share, but the other 80% is controlled equally by 2 companies. Therefore I am a relatively small player in this industry.

- I have 20% market share, and the next largest competitor has 5%. Therefore I am a relatively big player in the industry.

Both have 20% market share, but have different relative sizes

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Learning Outcome Statements

determine an industry's size, growth characteristics, profitability, and market share trends

CFA® 2025 Level I Curriculum, Volume 3, Module 6.