Which of the following is true about market maturity?
A) Without substantial year-on-year growth, stock prices of firms do not move.
B) Small fluctuations in annual revenues create huge movements in the stock prices of firms.
C) Finding new growth markets that are as lucrative as matured markets becomes easier for leaders.
D) Mature markets are gradually discarded by all firms in the industry.
E) Prices tend to increase due to the mass exit of competing firms from the market.

Question

Quizplus · Accepted Answer

Market maturity refers to a stage in the life cycle of a market where growth slows down, and the market reaches a saturation point. In mature markets, firms cannot rely on substantial year-on-year growth to maintain the stock prices. Without any substantial growth, the stock prices of firms often stagnate or decline. Hence, option A) is the correct answer. Option B) is incorrect because small fluctuations in revenues in mature markets may not create a significant impact on stock prices due to the saturation point already reached. Option C) is also incorrect as finding new growth markets is never an easy task, no matter whether the firm is a leader or not. Option D) is incorrect as most firms continue to operate in mature markets to consolidate their position and grow their market share further. Option E) is also incorrect because mass exit of competing firms from the market generally leads to a reduction in prices, caused by a glut of products in the market.

Which of the Following Is True About Market Maturity