Week 11 - Fundamental Analysis

Question 1

What is fundamental analysis?

Answer 1

Like technical analysis, this is trying to predict price movements so that the analysts gain an advantage over the other market participants

Question 2

What does fundamental analysis use?

Answer 2

• use historical price data
• use financial statements (present and past)
• use announcements, news and any other relevant information
  » for insight into future performance

Question 3

Under what condition can you make abnormal return through technical or fundamental analysis?

Answer 3

Only when the stock market is inefficient
(you take advantage of the mis-pricing of the stocks in an inefficient market)