Question

If an analyst is performing a bottom-up analysis of a particular industry, which of the following can be expected?

I. The analyst will be looking at individual firms, then building information in an attempt to analyze the industry as a whole.
II. The analyst will be looking at the industry as a whole, then deducing information down to the firm level.
III. The goal of the analyst is to get a picture of how an industry is going to perform.
IV. The goal of the analyst is to get a picture of how an individual stock is going to perform.

[A] I and III
[B] I and IV
[C] II and III
[D] II and IV

Answer 1

A) I and III

I. The analyst will be looking at individual firms, then building information in an attempt to analyze the industry as a whole. And

III. The goal of the analyst is to get a picture of how an industry is going to perform.

Step-by-step explanation:

In a bottom-up approach to analysis, an analyst will look at the performance of firms within a particular industry in order to formulate a picture of how that particular industry will perform. The goal is not necessarily to pick individual stocks, but more to get a picture of how a particular industry will perform based on the projections of firms within that industry