The fundamental theory is based on the assumption that a stock's intrinsic or real value is determined by the future earnings of the company.

Question

Quizplus · Accepted Answer

The fundamental theory is based on the belief that a stock's true value is determined by the future earnings of the company. This view assumes that a company's financial health, management, industry trends, economic conditions, and other factors will influence its future earnings potential. Based on these factors, analysts evaluate a company's financial statements, industry data, market trends, and other information to estimate its intrinsic value. This information is then used to make investment decisions and determine whether a stock is overvalued or undervalued.

The Fundamental Theory Is Based on the Assumption That a Stock's