Page 154 - DCOM507_STOCK_MARKET_OPERATIONS

Unit 7: Fundamental Analysis 1: Economic Analysis

7.4 Keywords Notes

Component Evaluation Index: This is a narrow type of index, one that examines a particular
series taking into consideration its components. It measures the breadth of the movement
within a particular series.
Diffusion Index: It is an indicator of the extensiveness or spread of an expansion or contraction.
Fiscal Policy: It is concerned with the spending and tax initiatives of the government. It is the
most direct tool to stimulate or dampen the economy.
GNP: GNP is a measure to quantify national income and is the total value of the final output of
goods and produced in the economy.
Lagging Indicators: These are time series data of variables that lag behind in their consequences
vis-à-vis the economy. That is, these reach their turning points after economy has already
reached its own.
Leading Indicators: As the name suggests, these are indicators that lead the economic activity in
their outcome. That is, these are those time series data of the variables that reach their high
points as well low points in advance of the economic activity.
Market Price: Price prevailing in market.

Monetary Policy: It is concerned with the manipulation of money supply in the economy.

7.5 Review Questions

1. Define fundamental analysis.
2. What is economic forecasting?

3. Define EIC Analysis.
4. Define Diffusion Index.
5. What are the factors influencing economic analysis?
6. What are the opportunities and threats in the macro-economic environment? Explain in
detail.
7. What are the techniques used in economic analysis?
8. Explain the barometric Indian approach.
9. Explain the geometric module building approach.

10. Distinguish among the leading, lagging and coincidental indicators.

Answers: Self Assessment

1. Efficiency 2. Market
3. Fundamental 4. Technical
5. Macro 6. Fiscal

7. Increase 8. Monetary
9. Interest 10. Anticipatory Surveys
11. Barometric or Indian Approach 12. Leading

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