1) Your book states that good companies are not necessarily good

investments. Give three reasons that might explain why this could

be true.

a) Early stages in an industry's life cycle see changes in

technology which followers may imitate and benefit from. Give

two examples of how this helps to explain the early development

of some well known companies.

b) What is meant by the term P/E ratio? Why might some

companies with a high P/E ratio be better investments that ones

with low P/E ratios?

c) How might an analyst use an index such as the Dow Jones

Averages or the SP500 average to track the performance of a

specific portfolio of stocks of his own choosing?

d) What specifically are ETF's? What are some advantages of

trading an ETF versus portfolios selected by a particular analyst?

e) How might an investment strategy based on technical analysis

differ fundamentally from a strategy based on earnings

performance?