FINANCIAL REPORTING FINANCIAL STATEMENT
ANALYSIS AND VALUATION PRACTICE TEST
2026 EXAM SCRIPT WITH VERIFIED
SOLUTIONS
◉ Economic characteristics and competitive dynamics influences.
Answer: The strategies firms will employ
◉ Analysts should consider the economic characteristics and
competitive dynamics while. Answer: analyzing and forecasting
financial statements
◉ 3 Tools for Studying Industry Economics are: Answer: 1 - Porter's
Five Forces Classification Framework
2- Value Chain Analysis
3- Economic Attributes Framework
◉ 2 Types of competition in Porter's Five Forces Classification
Framework are: Answer: 1- Horizontal Competition
,2- Vertical Competiton
◉ 3 Types of Horizontal Competition in Porter's Five Forces
Classification Framework are: Answer: 1- Rivalry among EXISTING
Firms
2- Threat of NEW Entrants
3- Threat of SUBSITUTES
◉ 2 Types of Vertical Competition in Porter's Five Forces Classification
Framework are: Answer: 1- BUYING Power
2- SUPPLING Power
◉ What is often the first order of competition? Answer: Rivalry among
EXISTING Firms
◉ Industries are characterized by what 2 types of rivalries among
EXISTING firms? Answer: 1- Concentrated Rivalry
2- Diffuse Rivalry
, ◉ The greater the industry concentration. Answer: the lower the
competition between existing rivals and thus the more profitable the
firms will be.
◉ 3 Threat of New Entrants Questions to ask are: Answer: 1- How
easily can new firms ENTER A MARKET?
2- Are there ENTRY BARRIERS?
3- Do the existing rivals have distinct COMPETITIVE ADVANTAGES
making it difficult for other firms to enter and compete?
◉ What happens if existing rivals have distinct competitive advantages
making it difficult for other firms to enter and compete? Answer: Firms
in the industry will likely generate HIGHER profits than if new entrants
can enter the market easily.
◉ 2 Threat of Substitutes Questions to ask are: Answer: 1- How easily
can customers SWITCH to substitute products or services?
2- How LIKELY are they to switch?
◉ What happens to competition and profitability with close substitutes?
Answer: competition increases and profitability decreases
ANALYSIS AND VALUATION PRACTICE TEST
2026 EXAM SCRIPT WITH VERIFIED
SOLUTIONS
◉ Economic characteristics and competitive dynamics influences.
Answer: The strategies firms will employ
◉ Analysts should consider the economic characteristics and
competitive dynamics while. Answer: analyzing and forecasting
financial statements
◉ 3 Tools for Studying Industry Economics are: Answer: 1 - Porter's
Five Forces Classification Framework
2- Value Chain Analysis
3- Economic Attributes Framework
◉ 2 Types of competition in Porter's Five Forces Classification
Framework are: Answer: 1- Horizontal Competition
,2- Vertical Competiton
◉ 3 Types of Horizontal Competition in Porter's Five Forces
Classification Framework are: Answer: 1- Rivalry among EXISTING
Firms
2- Threat of NEW Entrants
3- Threat of SUBSITUTES
◉ 2 Types of Vertical Competition in Porter's Five Forces Classification
Framework are: Answer: 1- BUYING Power
2- SUPPLING Power
◉ What is often the first order of competition? Answer: Rivalry among
EXISTING Firms
◉ Industries are characterized by what 2 types of rivalries among
EXISTING firms? Answer: 1- Concentrated Rivalry
2- Diffuse Rivalry
, ◉ The greater the industry concentration. Answer: the lower the
competition between existing rivals and thus the more profitable the
firms will be.
◉ 3 Threat of New Entrants Questions to ask are: Answer: 1- How
easily can new firms ENTER A MARKET?
2- Are there ENTRY BARRIERS?
3- Do the existing rivals have distinct COMPETITIVE ADVANTAGES
making it difficult for other firms to enter and compete?
◉ What happens if existing rivals have distinct competitive advantages
making it difficult for other firms to enter and compete? Answer: Firms
in the industry will likely generate HIGHER profits than if new entrants
can enter the market easily.
◉ 2 Threat of Substitutes Questions to ask are: Answer: 1- How easily
can customers SWITCH to substitute products or services?
2- How LIKELY are they to switch?
◉ What happens to competition and profitability with close substitutes?
Answer: competition increases and profitability decreases
