Two General Approaches to the Valuation Process

Valuation Approaches

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Question

Which of the following are the two general approaches to the valuation process?

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A. B. C. D.

B

Advocates of the top-down, three-step approach believe that the economy and industry have an important effect on total returns of individual stocks. Advocates of the bottom-up stock picking approach believe that it is possible to find stocks that will have superior returns regardless of the economy and industry.