Investment analysts use a number of approaches in the analysis of fundamentals that may affect share prices.Which of the following statements in relation to the bottom-up approach to share price analysis is MOST correct? The bottom-up approach:
A) identifies the level of systematic risk within industry sectors.
B) is applied to select specific firms from within desired industry sectors.
C) indicates a well-diversified portfolio that eliminates unsystematic risk.
D) provides investment indicators based on forecast financial ratios.

Question

Quizplus · Accepted Answer

The bottom-up approach is applied to select specific firms from within desired industry sectors, focusing on their individual fundamentals rather than the overall market or sector. The other options are not accurate descriptions of the bottom-up approach.

Investment Analysts Use a Number of Approaches in the Analysis