To follow a top down approach to creating an emerging market investment portfolio, you:
a. |
first select the countries that you wish to include based on macroeconomic factors. |
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b. |
none of the other choices are true |
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c. |
first select the sectors that you wish to include based on their merits to outperform. |
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d. |
include only the liquid, investable securities. |
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e. |
first select the stocks that you wish to include based on their merits to outperform. |
Answer:- Option A:- first select the countries that you wish to include based on macroeconomic factors.
(Explanation:- The top-down approach to investing focuses on the big picture that is how the overall economy and macroeconomic factors drive the markets and then coming down to sectors and then finally to stock prices. Firstly, different economies are looked into and then sectors are looked into and if the sector is doing well chances are the stocks in those industries will also do well.)
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