Q. Which of the following is not a limitation of the cyclical/non-cyclical descriptive approach to classifying companies?
- A cyclical company may have a growth component in it.
- Business-cycle sensitivity is a discrete phenomenon rather than a continuous spectrum.
- A global company can experience economic expansion in one part of the world while experiencing recession in another part.
Solution
B is correct. Business-cycle sensitivity falls on a continuum and is not a discrete “either/or” phenomenon.
