Canadian Securities Course Exam
Terms in this set (369)
The method of evaluating capital market conditions,
What is Fundamental
economic conditions, industry conditions, and the
Analysis?
condition of individual companies.
To compare the intrinsic value against a security's price
What is the goal of
so you can determine whether it is undervalued or
fundamental analysis
overvalued.
The method of determining the future price direction
What is technical analysis?
based on the past price movements.
1) Efficient Market Hypothesis
What are the 3 market
2) Random Walk Theory
theories?
3) Rational Expectations hypothesis
Describe the Efficient A stock's price fully reflects all available information an
market hypotheses represents the best estimate of the stock's true value.
Past prices contain no useful info because any
Describe the Random Walk
developments affecting the company have already been
Theory
reflected in the current price of the stock
Describe the Rational Past mistakes can be avoided by using available
Expectations Theory information to anticipate change.
1) Weak form: Assumes all past market information is fully
reflected in current prices
What are the 3 variations of
2) Semi-strong form: Assumes publicly available info is
of the efficient market
fully reflected in current prices
hypothesis
3) Strong form: Assumes all info is fully reflected (public
and insider) No single investor
What are the 3 fiscal policy 1) Tax changes
tools that can affect a 2) Government Spending
macroeconomic analysis? 3) Government Debt
, When economic growth They tend to rise. Longer term bond yields will rise at a
accelerates, what happens slower rate.
to bond yields?
What impact does inflation It creates uncertainty which can lead to higher interest
have rates, lower corporate profits, and lower P/E multiples.
1) Emerging growth industries
What are the life cycle 2) Growth Industries
stages of an industry? 3) Mature Industries
4) Declining Industries
What are the 5 basic 1) Threat of new entry
competitive forces that 2) Competitive rivalry
determine the 3) Threat of substitutes
attractiveness of an 4) Bargaining power of buyers
industry? 5) Bargaining power of supplier.
Refers to the industries in which the effect on earnings is
Define Cyclical Industries most pronounced. Most are large international
exporters of commodities
Have relatively stable returns and do well during
What are defensive
recessions. "Blue chip" stocks, maintain dividends
industries
through bad times.
1) All influences on market action are automatically
What are the 3 assumptions
accounted for or discounted in price.
technical analysis is based
2) Prices move in trends
on>
3) The future repeats itself.
- Support/resistance levels
- Reversal and continuation patterns
Name commonly used tools
- Head & Shoulders pattern
in technical analysis:
Moving averages
- Sentiment indicators
Helps forecast when the market will start moving in a
What is cyclical analysis:
direction and when it will reach it's peak or trough.
Terms in this set (369)
The method of evaluating capital market conditions,
What is Fundamental
economic conditions, industry conditions, and the
Analysis?
condition of individual companies.
To compare the intrinsic value against a security's price
What is the goal of
so you can determine whether it is undervalued or
fundamental analysis
overvalued.
The method of determining the future price direction
What is technical analysis?
based on the past price movements.
1) Efficient Market Hypothesis
What are the 3 market
2) Random Walk Theory
theories?
3) Rational Expectations hypothesis
Describe the Efficient A stock's price fully reflects all available information an
market hypotheses represents the best estimate of the stock's true value.
Past prices contain no useful info because any
Describe the Random Walk
developments affecting the company have already been
Theory
reflected in the current price of the stock
Describe the Rational Past mistakes can be avoided by using available
Expectations Theory information to anticipate change.
1) Weak form: Assumes all past market information is fully
reflected in current prices
What are the 3 variations of
2) Semi-strong form: Assumes publicly available info is
of the efficient market
fully reflected in current prices
hypothesis
3) Strong form: Assumes all info is fully reflected (public
and insider) No single investor
What are the 3 fiscal policy 1) Tax changes
tools that can affect a 2) Government Spending
macroeconomic analysis? 3) Government Debt
, When economic growth They tend to rise. Longer term bond yields will rise at a
accelerates, what happens slower rate.
to bond yields?
What impact does inflation It creates uncertainty which can lead to higher interest
have rates, lower corporate profits, and lower P/E multiples.
1) Emerging growth industries
What are the life cycle 2) Growth Industries
stages of an industry? 3) Mature Industries
4) Declining Industries
What are the 5 basic 1) Threat of new entry
competitive forces that 2) Competitive rivalry
determine the 3) Threat of substitutes
attractiveness of an 4) Bargaining power of buyers
industry? 5) Bargaining power of supplier.
Refers to the industries in which the effect on earnings is
Define Cyclical Industries most pronounced. Most are large international
exporters of commodities
Have relatively stable returns and do well during
What are defensive
recessions. "Blue chip" stocks, maintain dividends
industries
through bad times.
1) All influences on market action are automatically
What are the 3 assumptions
accounted for or discounted in price.
technical analysis is based
2) Prices move in trends
on>
3) The future repeats itself.
- Support/resistance levels
- Reversal and continuation patterns
Name commonly used tools
- Head & Shoulders pattern
in technical analysis:
Moving averages
- Sentiment indicators
Helps forecast when the market will start moving in a
What is cyclical analysis:
direction and when it will reach it's peak or trough.
