FUNDAMENTAL ANALYSIS

The price-earnings ratio (P/E ratio) is a measure of a company’s stock price relative to its earnings per share (EPS). It is calculated by dividing the company’s price per share by its EPS. Formula: P/E Ratio = Price per Share / Earnings per Share (EPS) Interpretation: Factors Affecting P/E Ratio: Uses: Limitations: FAQs

Hypothesis testing is a statistical process that involves making a tentative statement, called a hypothesis, about a population and then testing whether the available evidence supports or refutes that hypothesis. Key Concepts: Steps: Example: To test the hypothesis that the average height of women is 160 cm, you collect data from a sample of women […]

Stepwise Regression Stepwise regression is a sequential model building technique used to build a linear regression model. It involves a series of steps to identify and select the most relevant independent variables for predicting the dependent variable. Steps: 1. Identify potential independent variables:– Examine the data and identify variables that are potentially related to the […]

Interpolation is a mathematical technique that estimates missing data points in a function or set of discrete data points. It involves finding a smooth curve or line that best fits the existing data points and then using that curve or line to estimate the missing points. Types of Interpolation: 1. Linear Interpolation:– Estimates missing points […]

Market Risk Premium (MRP) The market risk premium (MRP) is a statistical measure that quantifies the extra return that investors require for holding investments in a particular market compared to a risk-free asset. It is the difference between the expected return on an investment and the risk-free return. Formula: MRP = E(r) – Rf where: […]

Fundamental Analysis Fundamental analysis is a type of investment analysis that focuses on analyzing the intrinsic value of companies, industries, and the overall market. Investors who use fundamental analysis believe that the stock market is efficient and that prices reflect all available information. Key Principles of Fundamental Analysis: 1. Intrinsic Value:– Assessing a company’s true […]

Macro Environment The macro environment refers to the overall economic and societal conditions that influence the behavior of individuals and businesses. It includes factors such as: Economic Factors: Gross domestic product (GDP): The total value of all goods and services produced within a country in a particular period. Inflation: The rate of increase in consumer […]

A cash cow is a term used in business to describe an asset that generates a significant amount of cash flow, typically through repeated sales or investments. Characteristics of a Cash Cow: High revenue: Generates a substantial amount of revenue. Low cost of operations: Has low expenses or costs associated with its operation. Repeatability: Can […]

A hiccup is an involuntary muscular contraction that temporarily increases the volume of the chest. It is often caused by gas trapped in the stomach or intestines. Causes: Swallowing air (aerophagia) Eating certain foods or drinks (e.g., carbonated beverages, spicy foods) Certain medical conditions (e.g., indigestion, gastroesophageal reflux disease, certain medications) Emotional stress Smoking Alcohol […]

Definition: Fundamentals are the basic principles and concepts that underlie a particular subject or field of study. They provide a foundation for further learning and understanding. In accounting, for example, fundamentals include accounting principles, financial statements, and accounting equations. Key Fundamentals: 1. Accounting Principles:– Generally Accepted Accounting Principles (GAAP)- International Financial Reporting Standards (IFRS)- Auditing […]