Which of the following best describes the first step in the Top Down Approach to security valuation?
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A. B. C. D. E.E
The "top down" approach to investment identification begins with an analysis of the macroeconomic environment, then moving on to an analysis of specific regions and countries. The later stages of the top-down approach involve the analysis of specific industries and end with the analysis of specific companies.
While "identification of geographical growth trends" is an appealing choice, it does not represent the best possible answer. Had the question asked for the first step in the Bottom Up approach, then "analysis of specific companies" would have been the correct choice.