D describe the use of financial statement analysis in screening for potential equity investments;

Question 1

Be aware that equity screens may

Answer 1

include or exclude many or all firms in an industry!

Question 2

‘Backtesting’

Answer 2

Using a specific set of criteria to screen historical data to determine how portfolios based on those criteria would have performed.

Question 3

Pay special attention to..

Answer 3

the potential effects of survivorship bias, data mining bias, and look ahead bias when evaluating the results of backtesting