《《Chapter 13 - Equity Investment Analysis》.pdfVIP

C H A P T E R 13 Equity Investment Analysis Objectives ■ Determine how an investment strategy and purpose are determined for an equity investment decision. ■ Explain the reasons for investment portfolio diversification, especially related to the tradeoff of return and risk. ■ Differentiate mutual fund categories and identify how they fit to specific investment objectives. ■ Apply the six-step approach to analyze companies for equity investment decisions. ■ Compare relative performance of Dow Jones Industrial Average companies. ■ Evaluate the importance of an executive summary to provide an overview to the six-step process. ■ Evaluate how a specific buy or sell investment decision is made. Introduction Perhaps the most important financial analysis decisions involve equity investments. Virtually all of the necessary raw data are publicly available and almost all of the data are available on the Internet. This chapter uses all the techniques from previous chapters in the context of investment decisions for specific equity investment portfolios. Background materials are introduced including the purpose of investments and investment portfolios and the use of mutual funds. Then the six-step process is reviewed in the context of invest- ment portfolio decisions. Dell Computer will be considered as a potential additional to a grow