Investing &
Finance
Finance
If a stock’s price falls 20% and then rises 20%, do you end up with a profit, loss, or break-even?
A loss (because 20% of a smaller number doesn’t recover the full drop)
If a brand increases its prices but sales volume remains unchanged, what does that suggest about its price elasticity?
Demand is inelastic — customers are not sensitive to price changes.
Why might an entrepreneur choose to stay small rather than scale quickly?
To maintain quality, control, or avoid taking on debt/investors.
When petrol prices rise, why might taxi fares also increase a few weeks later?
Because higher input costs (fuel) shift the supply curve left, raising equilibrium prices.
If Apple released a cheaper iPhone version, what risk would it face?
Cannibalising its premium market or diluting its luxury brand image.
Why might investors prefer companies that pay dividends even if their stock price grows slowly?
They provide consistent income and stability, not just capital gains.
Why do supermarkets place expensive items at eye level and essentials like milk at the back of the store?
To encourage impulse purchases along the way.
If a startup’s growth is strong but profit margins are shrinking, what issue could that indicate?
Unsustainable scaling — rising costs or inefficient operations.
Why might a government tax cigarettes instead of banning them outright?
To discourage use while still collecting revenue and avoiding black markets.
When McDonald’s sells the same Big Mac worldwide but adjusts sauce or size by country, what strategy is that?
Global standardisation with local adaptation (“glocalization”).
During high inflation, which asset is most likely to lose value in real terms: cash, stocks, or real estate?
Cash — its purchasing power erodes fastest.It’s likely reinvesting heavily in growth or still in an early expansion phase.
A company launches a “green” product but uses excessive packaging. What marketing risk does this create?
Greenwashing backlash — consumers perceive insincerity.
A founder says, “Our product is for everyone.” Why is that a red flag for investors?
Lack of target focus — successful startups identify a specific customer segment first.
A business lowers prices and suddenly sells much more. What kind of demand does it have?
Elastic demand — customers are sensitive to price changes.
A coffee chain starts selling bottled cold brew in supermarkets. What kind of growth strategy is that?
Product or channel diversification.
A company has high revenue growth but negative cash flow. What might that suggest about its stage or strategy?
It’s likely reinvesting heavily in growth or still in an early expansion phase.
A viral TikTok trend makes your product famous overnight. What’s a potential risk of that sudden exposure?
Short-term hype without brand loyalty or supply-chain readiness.
Why might a startup offer its product for free at first?
To build a user base, collect feedback, or create network effects before monetising.
Why do airlines often operate at low profit margins despite high ticket prices?
High fixed costs, fluctuating demand, and heavy competition keep profits thin.
Tesla opened its charging network to rival car brands. Why might it do that?
To accelerate EV adoption and potentially profit from charging fees.
Why might an investor buy a company’s shares right after bad news is announced?
They believe the market overreacted and the stock is undervalued — a value-investing move.
Your competitor launches a cheaper, similar product. You choose not to lower prices but invest in storytelling and brand community instead. What strategy are you using?
Differentiation through emotional branding rather than price competition.
You have a great product but a very small marketing budget. What’s a creative low-cost growth strategy?
Referral programs, viral social media content, collaborations with micro-influencers etc.
A company with high economies of scale enters your market. How could you still compete as a small player?
By focusing on niche markets, customization, or customer service instead of cost.
If a company like Patagonia donates a large portion of profits to the environment, how can it still benefit financially?
Brand loyalty, differentiation, and long-term goodwill drive sustainable sales.