11.7 a. The luxury restaurant will be more sensitive to the state of the economy because expense...
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11.7
a. The luxury restaurant will be more sensitive to the state of the economy because expense account meals will be curtailed in a recession. Burger Queen meals should be relatively recession-proof.
b. The paint company that sells to the auto producers will be more sensitive to the state of the economy. In a downturn, auto sales fall dramatically as consumers stretch the lives of their cars. In contrast, in a recession, more people "do it themselves," which makes paint sales through small stores more stable and less sensitive to the economy.
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Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780073382302
6th Edition
Authors: Richard A Brealey, Stewart C Myers, Alan J Marcus
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