Fundamental Analysis

Question 1

What is fundamental analysis?

Answer 1

Fundamental analysis is the evaluation of a security’s intrinsic value by examining related economic and financial factors.

Question 2

True or False: Fundamental analysis focuses solely on historical price movements.

Answer 2

False

Question 3

Fill in the blank: Fundamental analysis often involves analyzing a company’s ______, including its earnings, expenses, assets, and liabilities.

Answer 3

financial statements

Question 4

What are the three main financial statements used in fundamental analysis?

Answer 4

The income statement, balance sheet, and cash flow statement.

Question 5

Multiple Choice: Which of the following is NOT a component of fundamental analysis? A) Economic indicators B) Technical charts C) Industry analysis D) Company management

Answer 5

B) Technical charts

Question 6

What is the purpose of analyzing economic indicators in fundamental analysis?

Answer 6

To understand the broader economic environment that can impact a company’s performance.

Question 7

True or False: Fundamental analysis can be used to predict short-term price movements.

Answer 7

False

Question 8

What does the P/E ratio stand for in fundamental analysis?

Answer 8

Price-to-Earnings ratio.

Question 9

Fill in the blank: The ______ ratio is used to evaluate the valuation of a company’s stock relative to its earnings.

Answer 9

P/E

Question 10

Multiple Choice: Which of the following factors is typically analyzed in fundamental analysis? A) Market sentiment B) Supply and demand C) Company earnings D) Stock price trends

Answer 10

C) Company earnings

Question 11

What is the significance of the balance sheet in fundamental analysis?

Answer 11

It provides a snapshot of a company’s financial position at a specific point in time.

Question 12

True or False: Cash flow statements are important for assessing a company’s liquidity and financial health.

Answer 12

True

Question 13

What does EBITDA stand for?

Answer 13

Earnings Before Interest, Taxes, Depreciation, and Amortization.

Question 14

Fill in the blank: The ______ approach to fundamental analysis focuses on macroeconomic factors.

Answer 14

top-down

Question 15

Multiple Choice: Which of the following is a key element of qualitative analysis? A) Revenue growth B) Management quality C) Debt levels D) Dividend yield

Answer 15

B) Management quality

Question 16

What is a dividend and why is it important in fundamental analysis?

Answer 16

A dividend is a payment made by a corporation to its shareholders, and it reflects the company’s profitability and financial health.

Question 17

True or False: Fundamental analysts only consider numbers and ignore qualitative factors.

Answer 17

False

Question 18

What does the term ‘intrinsic value’ refer to in fundamental analysis?

Answer 18

The perceived or calculated true value of a company based on its fundamentals.

Question 19

Fill in the blank: Analyzing industry trends helps fundamental analysts to understand a company’s ______ in the market.

Answer 19

position

Question 20

Multiple Choice: Which of the following is a common valuation method used in fundamental analysis? A) Moving averages B) Discounted cash flow C) Relative strength index D) Fibonacci retracement

Answer 20

B) Discounted cash flow

Question 21

What role do interest rates play in fundamental analysis?

Answer 21

Interest rates affect the cost of borrowing and the overall economic environment, influencing company performance.

Question 22

True or False: A higher P/E ratio generally indicates that investors expect higher growth in the future.

Answer 22

True

Question 23

What is the primary goal of fundamental analysis?

Answer 23

To determine the fair value of a security and identify investment opportunities.

Question 24

Fill in the blank: Fundamental analysis typically involves a thorough examination of a company’s ______ and ______.

Answer 24

financial health; market conditions