Global Industry Analysis for Security Valuation Decisions
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Questions and Answers

Why is global industry analysis important for security valuation decisions?

  • It helps in understanding local competitors
  • It is crucial for security valuation decisions (correct)
  • It is not important
  • It is irrelevant in an open economy

What is required for foreign stock investing according to the passage?

  • No specific requirements
  • Understanding trading mechanisms of foreign markets
  • Familiarity with operations of foreign markets (correct)
  • Understanding only local operations

Is global industry analysis irrelevant in an open economy?

  • Yes, it is irrelevant (correct)
  • No, it is crucial for company valuation
  • It is important only for local competitors
  • It depends on the type of companies being analyzed

What should international companies' analysis focus on, according to the passage?

<p>Expected return and risk exposure (C)</p> Signup and view all the answers

What does risk sensitivity measure?

<p>Company's response to economic activity (B)</p> Signup and view all the answers

Is it true that foreign stock investing does not require portfolio managers to understand the constraints of foreign markets?

<p>No, understanding constraints is essential (C)</p> Signup and view all the answers

What is the purpose of analysis according to the passage?

<p>To find securities with superior expected returns (C)</p> Signup and view all the answers

What are the information constraints in foreign firms according to the passage?

<p>Difficulty obtaining, interpreting, and analyzing using domestic methods (C)</p> Signup and view all the answers

What challenges do investment organizations face in structuring their international research efforts?

<p>Challenges in structuring their international research efforts (A)</p> Signup and view all the answers

How should research be structured if the value of companies worldwide is primarily affected by global industrial sectors?

<p>Based on global industrial sectors (B)</p> Signup and view all the answers

What does style investing focus on?

<p>Evaluating companies within the same industry (B)</p> Signup and view all the answers

Do national accounting standards impact financial ratios and industry comparisons?

<p>Yes, they have a significant impact (B)</p> Signup and view all the answers

What does global industry analysis involve?

<p>Contrasting financial ratios against the industry average (B)</p> Signup and view all the answers

Do companies today compete globally?

<p>Yes, they compete globally (D)</p> Signup and view all the answers

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