tailieunhanh - Lecture Investments (8th edition): Chapter 17 - Zvi Bodie, Alex Kane, Alan J. Marcus

Chapter 17 - Macroeconomic and industry analysis. This chapter treats the broad-based aspects of fundamental analysis - macroeconomic and industry analysis. The two chapters following cover firm-specific analysis. We begin with a discussion of international factors relevant to firm performance, and move on to an overview of the significance of the key variables usually used to summarize the state of the macroeconomy. We then discuss government macroeconomic policy. | CHAPTER 17 Macroeconomic and Industry Analysis Market efficiency Efficient market: the market price provides the unbiased estimate of the true value. Efficient market doesn’t mean price be equal to true value every point in time. However, the deviations must be random. If the market is efficient: Process of valuation justifying the market price If not efficient valuation process spot under/over valued firms. The strategies are profitable if market s correct the mistakes over times. Is the market efficient? All Markets are not efficient to all investors, but a market can be efficient to certain investors What information is reflected in price? Source of efficiency: competition Fundamental Analysis Approach to Fundamental Analysis: Domestic and global economic analysis Industry analysis Company analysis Why use the top-down approach? Framework of Analysis Performance in countries and regions is highly variable Political risk Exchange rate risk Sales Profits Stock returns Global . | CHAPTER 17 Macroeconomic and Industry Analysis Market efficiency Efficient market: the market price provides the unbiased estimate of the true value. Efficient market doesn’t mean price be equal to true value every point in time. However, the deviations must be random. If the market is efficient: Process of valuation justifying the market price If not efficient valuation process spot under/over valued firms. The strategies are profitable if market s correct the mistakes over times. Is the market efficient? All Markets are not efficient to all investors, but a market can be efficient to certain investors What information is reflected in price? Source of efficiency: competition Fundamental Analysis Approach to Fundamental Analysis: Domestic and global economic analysis Industry analysis Company analysis Why use the top-down approach? Framework of Analysis Performance in countries and regions is highly variable Political risk Exchange rate risk Sales Profits Stock returns Global Economic Considerations Table Economic Performance in Selected Emerging Markets Figure Change in Real Exchange Rate: . Dollar versus Major Currencies, 1999–2006 Gross domestic product Unemployment rates Interest rates & inflation Budget deficit Consumer sentiment Key Economic Variables Figure S&P 500 Index versus Earnings Per Share Demand shock - an event that affects demand for goods and services in the economy Changes in tax, money supply, government spending, foreign export demand Demand Shocks Supply shock - an event that influences production capacity or production costs Changes in price of imported oil, freezes, flood, drought, educational level of work force, and wage rate. Supply Shocks Federal Government Policy Fiscal Policy: Demand-side management Tax rate cut Increases in government spending Federal Government Policy Continued Monetary Policy - Demand-side management Manipulation of the money supply to influence economic activity Initial & feedback effects .