QUESTION TWO: LEARNED SECURITY ANALYSIS Before a person decides to invest in a particular security, he...

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QUESTION TWO: LEARNED SECURITY ANALYSIS Before a person decides to invest in a particular security, he needs to understand and analyse the characteristics of the investments available. This will not only increase chances of success with regards to the required returns but also with regards to general management of financial risks. Required a) Describe and in the process contrast between the two major methods of security analysis (10 marks) b) In analysing the qualitative aspects of an industry under fundamental approach, highlight four factors that will help investors analyse a particular industry for purposes of assessing its future prospects. (5 marks) c) Despite the major benefits of security analysis, empirical evidence suggests that that is no guarantee to successful entrepreneurship or guarantee of success as an investor resulting from security analysis. State some of the reasons why security analysis does not always yield the anticipated results. (5 marks) Total 20 marks QUESTION TWO: LEARNED SECURITY ANALYSIS Before a person decides to invest in a particular security, he needs to understand and analyse the characteristics of the investments available. This will not only increase chances of success with regards to the required returns but also with regards to general management of financial risks. Required a) Describe and in the process contrast between the two major methods of security analysis (10 marks) b) In analysing the qualitative aspects of an industry under fundamental approach, highlight four factors that will help investors analyse a particular industry for purposes of assessing its future prospects. (5 marks) c) Despite the major benefits of security analysis, empirical evidence suggests that that is no guarantee to successful entrepreneurship or guarantee of success as an investor resulting from security analysis. State some of the reasons why security analysis does not always yield the anticipated results. (5 marks) Total 20 marks

Answer rating: 100% (QA)

a The two major methods of security analysis are fundamental analysis and technical analysis Fundamental Analysis This method involves analyzing a securitys intrinsic value by examining various factor... View the full answer