Fundamental and Technical Analysis

Fundamental analysis is the study of basic, underlying factors that will affect the supply and demand of the commodity being traded in futures contracts.

• True

• False

The market is strong when prices are rising even though volume is decreasing.

• True

• False

• Explanation

  
  

  When prices rise and volume rises, there are more buyers and thus there is strength in the market. Volume is a measure of the amount of "intensity" behind a price trend.

Fundamental analysis is less useful when comparing stocks in the same sector and industry.

• True
• False

A value investor would be less concerned about receiving dividends than a growth investor.

• True
• False

Which of the following best describes fundamental analysis?

• Analysis of past price action to determine future price movements

• Analysis based on fixed convictions

• Analysis of investor risk appetite

• Analysis of the forces that influence the economy

Which of the following assumption does the constant growth dividend discount model require?

A. Dividend grow at a constant rate

B. Dividend growth rate continues indefinitely

C.The required rate of return is less than dividend growth rate

• A

• B

• C

• A and B

inflation risk arises due to:

• bank deposit

• share trading

• inflation due to supply and demand

• stock exchange

What is the main purpose of the stock market?

• It brings together those wanting to raise capital with those who wish to invest

• It is the marketplace where goods are bought and sold according to grades or standards and on the basis of standard contract terms

• It issues currency

• It is the place to find the perfect partner

People who buy shares in expectation of a price rise on the stock market are called

• bulls

• bears

• optimists

• storks

People who sell shares in expectation of a drop in price on the stock market are called...

• bears

• bulls

• hedgehogs

• pessimists