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NISM Certifications · NISM-Series-XV: Research Analyst · Fundamentals of Research

In equity research, which approach to analysis begins with the overall economy, then narrows to industries, and finally selects individual companies?

The top-down approach is correct because it starts with macroeconomic conditions, then evaluates industries, and finally chooses individual companies. The bottom-up approach is the opposite, as it begins with company-specific fundamentals regardless of the broader economic or industry backdrop.

  1. ATop-down approachCorrect
  2. BBottom-up approach
  3. CTechnical charting approach
  4. DQuantitative screening approach

Explanation

The top-down approach starts with macroeconomic factors, moves to industry analysis and then picks companies. The bottom-up approach does the reverse, starting from company-specific fundamentals.

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