Question 1
The normal sequence in performing top down analysis is
◦ competition, consumer demand, threat of substitute products.
◦ market conditions, risk, company fundamentals.
◦ economy, industry, company.
◦ profitability, efficiency, liquidity.
Question 2
The three steps in determining a stock's intrinsic value are
I. | estimating the stock's future cash flows. |
II. | estimating the risk associated with future cash flows. |
III. | careful analysis of patterns in the stock's recent price history. |
IV. | estimating an appropriate discount rate to apply to future cash flows. |
◦ II, III and IV only
◦ I, II and IV only
◦ I, III and IV only