An investment advisor with Churn Brothers Brokerage states that he uses the "bottom up" approach to identify promising investment opportunities. When this investment advisor is evaluating an investment using the bottom up approach, he would begin by doing which of the following?
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A. B. C. D. E. F.A
The bottom up approach begins with an examination of individual securities and companies. Individuals who advocate the bottom up approach believe that it is possible to identify lucrative investment opportunities within various sectors despite macroeconomic and industry influences. In the field of security analysis, there is commonly a confluence of the bottom up approach with "technical analysis,"an approach that is based on the belief that it is possible to predict securities prices by using historical data.
The bottom up approach is contrasted by the top down approach, which begins with an examination of the macroeconomic environment, then progresses to an examination of alternative economies and securities markets, then moves toward industry analysis and the examination of specific securities.