Market Analysis and Valuation Flashcards
6 cards from real Investment practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Market Analysis and Valuation flashcards as text
What does the Price-to-Earnings (P/E) ratio measure?
Answer: The market price of a stock relative to its earnings per share, indicating how much investors pay for each dollar of earnings
The P/E ratio divides a company's stock price by its earnings per share, showing how much investors are willing to pay for each dollar of earnings — a higher P/E may indicate growth expectations or overvaluation.
What is fundamental analysis?
Answer: Evaluating a company's intrinsic value by analyzing financial statements, management, competitive position, and economic factors
Fundamental analysis involves studying a company's financial health, earnings, revenue, assets, liabilities, management quality, and industry conditions to determine its true intrinsic value.
What is technical analysis?
Answer: Using historical price movements, charts, and trading volume to forecast future stock price direction
Technical analysis uses price charts, trading volume, and statistical indicators to identify patterns and trends that may predict future stock price movements.
What is the Price-to-Book (P/B) ratio?
Answer: A stock's market price compared to the company's book value per share (assets minus liabilities)
The P/B ratio compares a company's market value to its book value, helping investors identify whether a stock may be undervalued (below 1) or overvalued relative to its net assets.
What is earnings per share (EPS)?
Answer: A company's net profit divided by the number of outstanding shares, showing profit attributed to each share
EPS is calculated by dividing a company's net income by its total outstanding shares, providing a per-share measure of profitability used widely in stock valuation.
What is a bull market?
Answer: A market characterized by rising stock prices, strong investor confidence, and economic growth expectations
A bull market is a sustained period of rising asset prices — commonly defined as a 20% or more rise from recent lows — driven by investor optimism and positive economic outlook.