What Are A Public Firm 's Fundamental Attributes?

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Section I 1. Precisely define fundamental analysis. What are a public firm’s fundamental attributes? Explain specifically and precisely why fundamental analysis might fail to work as an investment analysis technique in an efficient capital market. Fundamental Analysis identifies undervalued or overvalued stocks based on publicly available financial information. It is the examination of the underlying forces that affect the well being of the economy, industry groups, and companies. Its goal is to derive a forecast and profit from future price movements. The fundamental attributes of a public firm are • To maximize the stock price value • Monitor and discipline of board of directors • charter provisions and bylaws that affect the…show more content…
• Even if the information and value estimates are correct, the falling stock price may pose as a threat. • For the above reasons one should not take fundamental analysis for granted. . 2. Discuss the tulip bulb craze and the ZZZZ Best bubble. What does Malkiel believe they illustrate? What does Malkiel believe the best investment strategy is? Why? What does this say about the stock price performance of an individual firm? Tulip-bulb Craze In 1593, a new botany professor bought non fatal virus known as mosaic from Vienna. This caused colored stripes and flames to appear in the tulip plant. This lead to increase in the tulip bulb prices as people looked at them as smart investment. In addition price kept on increasing and most of the people decided to sell their own bulbs. Bulb deflation took place rapidly thus dealers went bankrupt and they refused to buy more bulbs. ZZZZ Best ZZZZ Best was a carpet cleaning company, owned by Barry Minkow in the 1980s. It went public in Dec 1986 and reached a market capitalization of more than US$200 million. Forgery and theft took place in the company which affected the growth of the company in the form of unknown credit card charges and bad contracts. Minkow faced fraud charges and was sentenced to 25 years in prison. Out of 25 years he served only 7 years in prison. He had unique skills as a communicator and he blurted out how he got away with fraud. This case was famous for its redemption and inspiration. He
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