• You will hear an interview with Mr Lyon, a fund manager, by a reporter from Business Week. • For each question 23-30, mark one

Robert Lyon, who is the fund manager, is a strict value investor. He made several successful investments in the past few years. Recently, Business Week’s report got a chance to talk with him on investing in Europe.
   Now, Mr Lyon, can you tell us the advantages of buying stocks in Europe vs. in U.S.?
      First, the price-earning ratio on European stocks is at about 30% to 40% discount to U.S. stocks -- as big as it has been in the last 30 years. Second, the euro at 87 cents to the dollar is a competitive plus. Investors will earn more money in Europe in the next 12 months than they will in the Standard &Poor’s 500-stock index.
     Do you target specific countries when you compile your European portfolio?
     Traditionally, people would try to pick the best currency block or the best country. But we are the opposite of the traditional global investor. What we are looking for is a great global competitor. Nestle is considered as the best food company in the world and Disgeo as the best drink company. We would like m own their stock.
     What’s the fund’s biggest holding?
     A company from Belgium called Group Bruxelles Lambert(GBL). It is really a holding company and has big investments in two French companies. In addition, it also holds a 25% interest in Bertelsmann, the private German media group. Along with the 25% interest, it got the right to force Bertelsmann to have a public offering no later than 2005. We believe that Bertelsmann is worth between $25 billion and $35 billion. When Bertelsmann does go public in the next few years, we would expect GBL to increase by at least 50%.
     Do you think that Europe’s economy will have a pickup?
     Not really.  Most strategists favor more cyclically sensitive companies, anticipating that economic improvement in the U.S. will filter through Europe and lead to a rebound. Our view is that the recovery in Europe will not be that strong and a lot of those stocks have already moved up.
     How do you break down Europe on a country-by-country basis?
     Germany and France are really falling short. There has been a lot of backtracking in terms of willingness to lower taxes, enhance transparency, and encourage shareholders democracy. Britain and Scandinavia are well ahead of France and Germany. The Italians are making some more capitalist-type noise, which is also creating a lot of labor unrest. Spain has been growing steadily. Britain is expected to slow down but isn’t really slowing that much.
     Can you say something about the euro, Mr Lyon?
     Well, the euro is probably a cheap currency. Academic models put its value at from 95 cents to $1.10. On the other hand, the euro is still a synthetic currency. Hopefully, the euro won’t go any lower. It doesn’t seem to have benefited European countries’ trade situation. They have a current-account surplus with the U.S. but the euro doesn’t seem to be a huge competitive weapon for them.