Equity Investments Q124

124Jacob is interested in buying shares of GSK. He, therefore, does a thorough research on pharma sector and studies GSK in depth. His analysis involves the estimation of an asset’s value using earnings and sales forecasts, and risk estimates as well as economic growth, inflation and interest rates prevailing. In such a scenario, Jacob’s analysis for investment in GSK assumes markets are:

Option : C
Explanation : Jacob is acting as a fundamental analyst by using publicly available information to estimate a security‟s intrinsic value to determine if the security is mispriced, which contradicts semi-strong form of market efficiency.

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