THEME 4: FUNDAMENTAL AND TECHNICAL ANALYSIS OF THE

INVESTMENT MARKET

PLAN.

1.1. General characteristics of fundamental analysis.

1.2. Rating of companies. Rating assessments of stocks and bonds.
1.3. Contents of the technical analysis.
1.4. Stock chart line. Price closing schedule. Point diagram "Japanese candlestick".
1.5. Measuring trends.
1.6. Dow Jones Index. S & P Index. PFTS-index.

1.1.A general characteristic of fundamental analysis.

Fundamental analysis involves careful study of the financial and economic

situation of the issuer, forecasting its future in the context of likely changes in the
external environment of management.

The main purpose of fundamental analysis is to forecast the future earnings of the
issuer, the associated dividends and the value of the stock. Determining their size
in the future, translate the resulting values at the current time. The resulting
discounted value is "real".

If it is higher than the market price, then the stock is considered undervalued and
should be bought because later on the market price for it will increase. If the
market price is higher than the "true", the share is overvalued and it is risky to buy
it. If an investor has such stocks in his portfolio - they are desirable to sell.

1.2. Rating of companies. Rating assessments of stocks and bonds.

Stock market analysts constantly monitor their financial position and try to predict
prospects for the development of issuers. The result of their work are integral
indicators - ratings, that is, grades by class or category of firms and securities
issued by it.

Foreign experience distinguishes two approaches to rating based on quantitative or

qualitative indicators.

1. Approach - Evaluated by thousands of the largest companies in the world

(published by the magazine "Business ages") and five hundred companies in
Europe (published in the newspaper "Financial Times") according to the criterion
of capitalization of companies (total market value of issued shares), and also take
into account: the size of turnover and value of assets, profit and equity, return on
assets and efficiency of investments, book value of shares;

2. Approach - the Forchun and Economist magazines are used for rating
assessments by leading experts in the field of economics, finance and management
according to the criteria: quality of management, product quality, financial status,
resource utilization, availability of investments, ability to innovate , soc.
responsibility.

Ratings of stocks and bonds are used in countries with a developed stock market.
The trust in rating of consulting firms is high and the attribution of securities to a
certain class can affect its market value.

1.3. Contents of the technical analysis.

The technical analysis does not foresee the study of the economic status and
prospects of the issuers, since it believes that they are taken into account in the
market when assessing the current price of assets. The technical analysis is based
on stock quotes stock quotes.

The purpose of technical analysis is to search for duplicate price configurations.

The analysis is carried out using graphs, and the resulting configurations reflect the
market behavior of assets classified.

1.4. Stock chart Line price closing schedule. Point diagram "Japanese
candlestick".

The types of graphs include: stock chart, line chart closing price, point diagram,
"Japanese candlestick". Common for the graphs is that the price changes are
displayed vertically, and the time horizontally. The volumes of trades are indicated
at the bottom of the graph by vertical risks under the appropriate price indexes.

The stock exchange chart has a vertical risk that combines the maximum and
minimum price, while the horizontal risk is the closing price of the trades.

The closing price line graphic operates with two types of information - the price of
the last transaction and the volume of bidding.

The point diagram is constructed on the basis of a matrix in which the sign "X"
shows positive changes in the price, and the "O" sign is negative. Point charts can
be built on the basis of maximum and minimum prices, closing prices and
discovery.

"Japanese candlestick" consists of four indicators. However, subtle vertical risks

show the maximum and minimum values of prices. The main part of a candlestick
is the difference between the price of opening and closing. If the closing price is
higher than the opening price - the candlestick is white, if the lower one is dark.
1.5. Measuring trends.

Trends - graphically depicted trends that characterize the prevailing direction of

market prices. According to possible "routes" trends may be increasing
(characterizes the gradual increase in prices), declining (price decline is
characterized), lateral trends describe the horizontal movement of prices.

1.6. Dow Jones Index. S&P Index. PFTS-index.

Stock indices - characterize the stock market situation on the basis of stock prices
and indicate the trend of securities rates.

The most famous stock market indices are Dow Jones, the Tokyo Stock
Exchange's Nikkei Index, the Frankfurt Stock Exchange, the London Stock
Exchange Reuters Index.

The Dow Jones Index for industrial shares is determined on the basis of 30 shares
of the largest industrial enterprises and is calculated:

n  =  30  

∑  Ai  
i  =1  

k  

k is the correction factor that changes with the change of corporation list or in case
of split of shares.
The industrial index S & P includes share prices of 400 industrial firms and is
calculated by the formula:
n  

∑    Pi  ×  Qi  
 i  =  1  
n  

∑  Qi  
i  =  1  

Pi - stock price of the i-th corporation;

Qi - the number of shares of the corporation; n - the number of corporations.

The PFTS index is the average for most liquid Ukrainian shares with the largest
market capitalization. It is calculated weekly on the basis of real deals and hard
quotes.
∑  MC1  
∑ MC     b

МС1    і    МСb  - market value of companies capitalization included in the index base
in the current and the base period.