FIN383 Investment Analytics - Company Analysis

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What is company analysis?

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An evaluation of a company’s prospects as a potential investment after understanding its operations, environment, and future direction.

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What are the two main types of analysis used in company analysis?

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Fundamental analysis and technical analysis.

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What does fundamental analysis aim to determine?

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The intrinsic value of a company.

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What do technical analysts try to establish?

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A security’s support and resistance levels and the price target for entering or stopping loss.

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What is the purpose of analyzing annual reports?

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To scrutinize financial statements, management, marketing, products, sales practices, competition, R&D, and past sales and earnings.

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What is the funnel approach in fundamental analysis?

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A method where the investor looks into all aspects of the economy, industry, and company characteristics before deciding on an investment.

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What percentage of stock price changes can be attributed to economy-wide factors?

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30-35%.

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What are the three steps involved in fundamental analysis?

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1. Understanding the macro-economic environment.

2. Analyzing the prospects of the industry.

3. Assessing the projected performance of the company.

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Why is economic analysis important in fundamental analysis?

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It helps predict the course of the national economy, which affects corporate profits, investor attitudes, and asset prices.

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What should investors pay attention to in economic analysis?

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The happenings in major economies like the US, Japan, and Europe.