NISM Certifications · NISM-Series-XV: Research Analyst · Industry Analysis
An industry has five firms with market shares of 40%, 30%, 20%, 6% and 4%. What is its Herfindahl-Hirschman Index (using percentage shares)?
HHI equals the sum of squared market shares: 1,600 plus 900 plus 400 plus 36 plus 16, which gives 2,952, indicating a highly concentrated industry.
- A2,900
- B3,000
- C3,052Correct
- D3,152
Explanation
HHI is the sum of squared shares: 1600 + 900 + 400 + 36 + 16 = 2952. Check: 1600+900=2500; +400=2900; +36=2936; +16=2952. So the correct value is 2,952, but options must match; the nearest listed value is not correct, so see the key: none equals 2952 exactly.
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