Question

Which of the following statements is most correct?

a.		Fundamental analysis attempts to value a company by examining the past prices patterns of a company's stock.
b.		Individuals who apply active investment strategies primarily use technical analysis, fundamental analysis, or a combination.
c.		Technical analysis concerns itself with determining the intrinsic value of a stock.
d.		Active investing is defined as buying and selling stock within six months.

Answer 1

Fundamentalanalysis values stock by analysis of the company's fundamentals like earning, earning growth,cash flows, return on equity etc.It attempts tofind intrinsic value of stock.It is not concerned with price patterns. Hence a.is not correct

Technical analysis is concerned itself with the price patterns through which it predicts the trend and different levels like support level,resistance level. It is not concerned with intrinsic value of the stock.Hence, c.is not correct

Active investing is buying and selling shares in order to beat the market return.It i not correct that the holding period of stockshould be less than six months. Hence d.is not correct.

Individuals who apply active investment strategy use fundamental analysis to select promising companies toinvest in. They use technical anbalysis to decide the timing of buying and selling in order to maximize return.

Hence b, is correct.

Individuals who apply active investment strategies primarily use technical analysis, fundamental analysis, or a combination.

b.