Question #21
Reading: Reading 19 Equity Valuation - Applications and Processes
PDF File: Reading 19 Equity Valuation - Applications and Processes.pdf
Page: 8
Status: Correct
Correct Answer: A
Question
Financial Analyst Davey Jarvis, CFA, is evaluating Laura's Chocolates, Inc., which processes nut-based toffee for world-wide distribution. Which of the following steps is Jarvis most likely to take as part of the top-down valuation process?
Answer Choices:
A. Learn / understand the business
B. Perform momentum-based technical analysis
C. Evaluate price performance on an ongoing basis
Explanation
The valuation process consists of 5 steps:
1. Understanding the business.
2. Forecasting company performance.
3. Selecting a valuation model.
4. Complete the valuation.
5. Decision making.