Which of the following statements about asset valuation is TRUE?
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A. B. C. D.B
Management's performance over time is most important.
The other statements are false. The bottom-up stock picking approach consists of one step "" pick the stocks you believe are underpriced, regardless of the state of the economy or the industry. The choices given here for picking stocks are the steps of the top-down approach in reverse order. Sales are considered the variable least likely to be manipulated. Although the basic methodologies for international stock valuation and domestic stock valuation (dividend discount model
[DDM], EPS, P/E) are the same, the analyst must be aware of and consider differences in accounting practices and factor in the impact of exchange rate movements. It is also important to consider the absolute performance of foreign firms and their relative performance against local firms.