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NISM Certifications · NISM-Series-XV: Research Analyst · Introduction to Research Analyst Profession

Which of the following best describes the difference between fundamental and technical research as practised by research analysts?

Fundamental research assesses economic, industry and company factors to estimate intrinsic value, while technical research examines price and volume patterns to anticipate trends. The two approaches use different inputs, so reversing them or calling both chart-based is incorrect.

  1. AFundamental research studies economic, industry and company factors to estimate value, whereas technical research studies price and volume patternsCorrect
  2. BFundamental research studies only charts, whereas technical research studies financial statements
  3. CBoth rely exclusively on price and volume data
  4. DTechnical research estimates intrinsic value from dividends, whereas fundamental research ignores earnings

Explanation

Fundamental analysis looks at economy, industry and company information such as financials to derive intrinsic value. Technical analysis uses historical price and volume data to identify trends and patterns. The other options reverse or distort these roles.

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