Professional Documents
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Types of Analysis
1. Fundamental Analysis(FA)
2. Technical Analysis(TA)
Fundamental Analysis
This approach stresses on the economic conditions, such as the level of employment , economic growth , direction of the changes in the interest rates to determine the value of the securities in the market. This approach also examines a firms earnings capacity, its growth potential, and its sources of finance and the risk factor associated with it.
Technical Analysis
It
is based on the past market performance of a firms securities. It attempts to identify superior investments by analyzing the price performance and volume of transactions of the a firms securities.
It emphasizes on the price trend in the securities and deviations from the trend.
Fundamental Analysis
Approaches of FA
Economic Analysis
It involves assessing the general economic
condition of the country in which the investor is going to invest, and; Overall economic condition of the world economy that may affect the economic condition of the country of investment.
Economic Analysis
Assessment of economic condition is necessary as studies shows very strong relationship between the economic condition and the stock market performance
Forex Reserve
Domestic Legislation
Business Cycles
Unemployment Rate
Industry Analysis
What is an Industry?
An industry is a group of companies which produce similar goods and/or services. Example-Pharmaceuticals, Banking, Insurance, NBFI, Textile
Industry Analysis
Industry Analysis is done to select the right industry for investment. Basically an investor wants to get answers of a few questions through the industry analysis.
2. Is the earnings of the alternative industries consistent over time? 3. Is the performance of firms within an industry consistent ?
3. Industry Demand-Supply
4. Industry Product Quality 5. Cost Elements
Nature of Competition
a