FIN630 GDB Solution Nov 2010

Mr. A is holding 1500 shares of a company and he wants to buy or sell some shares. He is taking the services of a broker for trading in stock exchange. Broker has analyzed the market trend based on mutual fund cash position analysis and Bar chart analysis. Broker has provided following information to Mr. A on different days:



A. Due to adverse political situation of country and some other economic factors, only 40% of mutual funds are invested in the stock market and rest is idle.

B. In the Bar chart a stock breaks through resistance level.

Required:

Based upon the above information provided by broker:

1. What is feasible for Mr. A (buying or selling) in situation A and in situation B?

2. What will be the market trend (bearish or bullish) in situation A and in situation B?

Solution:-

1. What is feasible for Mr. A (buying or selling) in situation A and in situation B?
Ans:
Situation A:
Mr. A will buy the shares.
Situation B:
Mr. A will sell the shares.

2. What will be the market trend (bearish or bullish) in situation A and in situation B?
Ans:
Situation A:
Bearish
Situation B:
Bullish

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