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Fundamental Analysis
Fundamental Analysis (FA) is a technique of assessing the intrinsic worth of security by
analyzing relevant economic and financial variables. Fundamental analysts research everything
that may affect the importance of stock market security. The study components range from
macroeconomic indicators such as the economic situation and the circumstances of industry,
and microeconomic variables such as the performance of the company’s management. The final
goal of FA is to get at a number which an investor can equate to the current price of the security
and determine whether the security is correctly valued, undervalued, or overvalued. All stock
analysis attempts to assess whether the security is correctly priced in the overall market. This
analysis is generally performed from a macro to a micro context to identify securities that have
not been valued correctly by the market. The analysts often research to assess the general
economic situation and the performance of the particular sector, before focusing on the output of
the specific company to obtain a reasonable market value for the portfolio. The fundamental
analysis utilizes public information to determine the worth of a stock and other forms of security.