Reading 56: An Introduction to Security Valuation: Part I

答案和详解如下：

11.Deciding how to allocate investment funds, first among countries, and then within countries to various asset classes, is the objective of which step of the top-down valuation approach?

A)   Analysis of industry influences.

B)   Company analysis.

C)   Sector analysis.

D)   Analysis of general economic influences.

The correct answer was D)

The objective of step one, economic analysis, is to allocate your portfolio among countries and asset classes based on your analysis of future economic conditions.

12.In the top-down approach to valuation, industry analysis should be conducted before company analysis because:

A)   most valuation models recommend the use of industry-wide average required returns, rather than individual returns.

B)   the goal of the top-down approach is to identify those companies in non-cyclical industries with the lowest P/E ratios.

C)   an industry's prospects within the global business environment are a major determinant of how well individual firms in the industry perform.

D)   the goal of the top-down approach is to identify those companies in cyclical industries with the highest P/E ratios.

The correct answer was C)

In general, an industry’s prospects within the global business environment determine how well or poorly individual firms in the industry do. Thus, industry analysis should precede company analysis. The goal is to find the best companies in the most promising industries; even the best company in a weak industry is not likely to perform well.