When performing fundamental security analysis using EPS, the investor needs all of the following except:
A) the know how to obtain an earnings estimate
B) the consideration of the accuracy of the earnings estimate obtained
C) the risk premium for the stock being examined
D) an understanding of the role of earnings surprises in impacting stock prices

Question

Quizplus · Accepted Answer

The risk premium for the stock being examined is not directly related to performing fundamental security analysis using Earnings Per Share (EPS). Fundamental analysis using EPS typically involves analyzing the company's earnings, growth potential, and earnings estimates to assess its financial health and potential for future growth, rather than assessing the risk premium, which is more related to the stock's expected return in excess of a risk-free rate of return.

When Performing Fundamental Security Analysis Using EPS, the Investor Needs