Question: What is the advantage of using a composite of indicators
What is the advantage of using a composite of indicators (such as the 10 leading indicators) over simply using an individual indicator?
Answer to relevant QuestionsDo leading indicators tend to give longer warnings before peaks or before troughs? What is the implication for the investor? Distinguish between a “top-down approach” and a “bottom-up approach” to selecting stocks. How would you describe the nature of competition in oligopolies, and what is the potential effect on profitability? How has international competition affected oligopolies? Do you think the sustainable growth model would be appropriate for a highly cyclical firm? J. Jones investment bankers will use a combined earnings and dividend model to determine the value of the Allen Corporation. The approach they take is basically the same as that in Table 7–2 on page 172 in the chapter. ...
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