- This topic has 2 replies, 2 voices, and was last updated 7 years ago by
.
- Posts
Hello sir.
1) what is Fundamental analysis? It says it is “determining future share prices by future incermental cash flows discounted by Investors required rate of return which reflects perceived risk.” Is it the method that we use in Business valuation of Securites ( i mean formulas for Equity Cost and IRR for determining Cost of debt?) is it all we do in F9 about fundamental analysis 🙂 ?2)in Which markets Fundamental analysis can be used? in All (inefficient, efficient)? and what are the drawbacks compared with technical analysis.
3)If the technical analysis can only and always efficiently be used in inefficient market, will it happen in real life? i mean London Stock Exchange and New york Wall street doesnt look to be weak form, theyve all got insider dealing so they are semi-strong. RIght? so its useless to use it in there.
4)what are the circumstances when we need to use Technical analysis, not fundamental?
5)What are the examples of inefficient and weak form efficient stock exchanges?
Please help.
Sincerely
Rustam6) General question: For the investment appraisals, the higher the inflation the lower “discounting” effect the PV’s have. Am i right? so keeping interest rates low and keeping inflation is better for economies when growing. Why inflation is bad thing then?
Yes – fundamental analysis is effectively what we are doing in F9 when we assume that he market values of securities are the present values of expected future receipts discounted at the investors required rate of return.
In theory it is the ‘correct’ way. In practice of course, the problem is knowing the expectations of investors and their required returns.
There are no rules in real life and it is not really relevant for the exam.
Stock exchanges are regarded these days as being semi-strong. What is needed for the exam on this is dealt with in chapter 2 of the lecture notes.
Who says inflation is a bad thing? As long as inflation is kept under control it is generally regarded as a good thing – it is only when it gets out of control that there are problems. However this is really an economics question and not relevant for F9.
- The topic ‘Share price analysis’ is closed to new replies.