Csc Chapter 13

Front 1

Fundamental Analysis

Back 1

It involves studying capital market conditions and the

outlook for the national economy and for the economies of countries with which Canada trades to shed light on securities’ prices. Focuses on the firm's future earnings.

Front 2

Technical Analysis

Back 2

Technical analysis is the study of historical stock prices and stock market behaviour to identify recurring patterns in the data. Since there is a lot of data to sift though, it is not as popular with analysts as fundamental.

Front 3

Technical Analysis Pays Attention To:

Back 3

1. Trading Volume

2. Historical Prices

3. Investor Psychology

4. Stock Market Behavior

5. "Price Action" of the Market

Front 4

Fundamental Analysis Pays Attention To:

Back 4

1. Financial Ratios

2. Future Earnings Prospects

3. The Economy as a Whole

Front 5

Efficient Market Theory of Stock Markets

Back 5

Because profit-seeking investors react quickly to new information about a stock, a stock’s market price fully reflects all available information and represents the best estimate of the stock’s true value.

Front 6

Random Walk Theory of Stock Markets

Back 6

It is mathematically very unlikely that you can outperform the stock market because stock prices fluctuate randomly.

Front 7

Rational Expectations Theory of Stock Markets

Back 7

People are rational and have access to all necessary information. People will use information intelligently in their own self-interests and will make intelligent decisions after weighing all available information. As such, past mistakes can certainly be avoided by investors.

Front 8

Macroeconomic Fundamental Analysis

Back 8

Many factors affect investor expectations and therefore play a part in determining the price of securities. These factors can be grouped under the following categories: fiscal policy, monetary policy, flow of funds and inflation.

Front 9

Fiscal Policy & it's Effects

Back 9

The tax and spending policy of Governments. Taxes affect the amount consumers can spend as well as the amount of retained earnings and dividends paid by corps. Higher gov. spending increases economic activity/total spending in the short term. TFSAs and RRSPs increase the demand for investments/securities.