Important Points for IC 89 - Management Accounting Exam
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Fundamental Analysis is a method of evaluating a security that entails attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors.
The Technical analysis is based on the assumption that the price of a stock depends on supply and demand in the market place. It has little correlation with its intrinsic value.
Systematic risks are common to an entire class of assets and liabilities and cannot be diversified in anyway. The systematic risk again comprises of: Market risk, Interest rate risk, Social or Regulatory risk and Purchasing power risk.
Market risk arising due to fluctions in the prices of securities and equity shares traded in the market though the earning power of the corporate sector and the interest rate structure remain more or less unchanged.
Systematic risk is the variability of return on stocks or portfolio due to change in the nations economy, tax reforms by the Government or a change in the world energy situation.
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