Professional Documents
Culture Documents
Analysis of Investment and Portfolio Management: Group No
Analysis of Investment and Portfolio Management: Group No
Analysis of Investment and Portfolio Management: Group No
MANAGEMENT
GROUP NO(7)
MEHWISH MUNIR 14
MEHARULNISA 35
MUQADDAS ZUBAIR 32
SANA NAZIR 42
Security valuation priniciples
What are the specifics and logic of the top-down (three-step) approach?
The top-down, three
step valuation approach holds that both the economy/market and the industry effect have a significant im
pact on the total returns for individual securities
the three steps in the valuation process which involve
1. the influence of the economic environment on the firms,
2. the importance of the industry environment on the firms and
3. the fundamentals of individual firms.
A Three-Step Process approach
Industry Influences – We seek to determine which industries will likely do better than others in the exp
ected economic environment – Also, changing demographic factors have different effects across industrie
s
Company Analysis – Individual investments will either make or break portfolio performance – Once w
ell-positioned industries are determined, find well-positioned firms within those industries
What are the two primary approaches to the
valuation of common stock