CASE STUDY 4 Ms. Sara an Investor in stock market uses broadly two approaches namely fundamental approach and technical approach in taking investment decisions. She uses fundamental approach or analysis as it involves detailed examination of data pertaining to the company, industry and economy. It requires considerable skill of the analysts to examine such massive data to get a value for the firm and then compare with the market price to take investment decision. If the value is more than market price investors buy the stock. An alternative approach called technical approach or analysis ignores all the data other than data generated in the stock market. She also uses technical analysis as she believe that there are enough number of investors and analysts in the market who constantly examine the stocks and derive the price. There is no point in doing or repeating such exercise. It is adequate to watch them because whatever superior analytical techniques such investors have, they have to come to the market ultimately to cash analysis is thus reading the minds and activities of the major players in the market by observing their behavior in the market place through price, volume and several other market data. Technical analysis typically involves charting the market data and using a number of oscillators. The Dow Theory postulates that prices of industrial securities tend to move in tune with business cycles of the boom, depression etc. in the economy. Required: Q1. If Ms. Sara approaches you to suggest a suitable method for analyzing securities historical trading data, what method will you suggest and in what way the method you suggested is superior or efficient than the other methods? (4 Marks) 9 Page Q2. Assume yourself as Ms. Sara, collect historical stock price data of a bank of your choice from any stock market for the last three months period and explain its trend by using Dow Theory technical analysis tool. (3 Marks) Q3. What is your suggestion for the investors of above selected bank in regard to continuity of their investments in the same? Justify your suggestions