Question

Question 0 What is fundamental analysis about and what does it examination include?

Question 1 The stock valuation method of income capitalización considers the stock price as the discounted value of future dividends at the risk adjusted required return of equity, for dividend paying firms. True or False?

Question 2 The main advantages of bonds to the investor seen in our subject were (Just name them):

Question 3 Mortgage bonds (or mortgage-backed securities) are bonds that have as an underlying security a mortgage on all properties of the issuing corporation.

Question 4 In the bond market investment decisions are made more on the bond’s yield than its price basis. There are three widely used measures of the yield one being the Current Yield. Please explain what is Current Yield about and its formula.

Answer 1

0.  
Stock analysis is primarily done to find stocks that are either overvalued or undervalued and based on the analysis actions are taken to earn profit. Fundamental analysis is analysis of economic , industrial and company related information that could affect the price of the stock and based on the analysis the analyst estimates the intrinsic or the fair value of the stock. Now based on the intrinsic value of the stock, if the market price is greater the intrinsic value, the stock is considered to be overvalued whereas if the market price is lower than the intrinsic value, the stock is considered to be undervalued. Rather than analysis charts and figures on a frequent basis ( known as technical analysis), fundamental analysis includes analysing whether the market is bear or bull, using real data of industry and company like growth rate, earnings and many more to analyse the security.