Q3.
"Technical Analysis is based on the hypothesis that the future behavior of the system is
determined by its past behavior." Comment on this statement.
Ms. K wants to invest in a company that has just given a current dividend of 10 per share.
The face value of the share is 2100. Dividends are expected to grow at 7% for 5 years, at
5% for the next 3 years and at 3% thereafter perpetually. Find out the intrinsic value of the
share at the end of 4 year if the required rate of return of Ms. K is 10%.
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Explanation:
Answer to first part is;
The hypothesis that technical behavior is based on historical events is true because of that fact that technical analysis always employs some algorithm which makes decisions based on past data fed to algorithm. Although such analysis are impacted by artificial intelligence but historical data is necessary or the basis for any technical analysis. It is also belived that this data should be real and accurate for correct analysis
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