Question

Stock Price Forecast

$150 History Forecast Bubble Bubble $125 $100 $75 Bust $50 Bubble Bust S25 Bust 50 1970 1980 1990 2000 2010 2020 2030 Actual 5% growth Estimate Historical 3% growth ◇ NPV Calibration Point Bubble/Bust Calibration Point

Problem # 1: Refer to the stock price forecast table provided and any other resource material you deem necessary to address the following:

• Summarize the forecast using 6-10 brief bullet points
• In 100-200 words explain how the forecasters might have utilized the historical data for the stock price to forecast future stock prices and the methodology for forecasting that the forecaster might have used.
• What assumptions did the forecaster use? What might be some of the rational for making the assumptions? How would different assumptions affect the forecast? (100-200 words)
• If you were advising investors regarding the organization's stocks, what would you tell them? Comment on when, and how much (if any) investment should be done, the return they can expect, time frames, and possible risks. (100-200 words)

Answer 1

There are various factors which are taken into consideration before forecasting.

1. GDP growth of the country plays a major role in Index. As the GDP goes on increasing Index of the parrticular country goes on increasing.

2.Oil prices affect the entire world.

3. Is country an Agricultural, manufacturer or service dominated?

4. As you can the history of any index, it will always have a bubble and the bust as well as the index is always on the increasing side.

5. Some of these assumptions help analysts to choose the perfect scrips.

6. Financial statements of different companies are taken into account before invewsting.

7. Different financial ratios are considered.

So in all, Technical and financial indicators help analysts to make a decision of investing.