Final answer:
The correct answer is 1. The investment approach involving intensive research to find discrepancies between a company's market price and true worth is fundamental analysis. It differs from other methods like technical or quantitative analysis by focusing on economic factors and future earnings potential. Understanding these methods and diversification helps in making informed investment choices.
Step-by-step explanation:
The approach for investing in securities that requires intensive research to identify discrepancies between a company's true worth and its current market price is called fundamental analysis. This method involves a deep dive into financial statements, management capabilities, competitors, and market conditions to accurately determine the intrinsic value of a stock. Unlike technical analysis, which focuses on charts and past price movements, or quantitative analysis, which uses mathematical models, fundamental analysis looks at the economic factors that can affect a company's actual performance in the market. Investors who utilize this method consider it crucial to not only look at present conditions but also at potential future earnings and growth prospects.
When it comes to choosing financial assets, investors must analyze the risk and potential return. It's essential to identify investment goals and understand various market aspects like equities, bonds, and securities exchanges. Stocks are often purchased through a stockbroker or securities exchange. In addition, portfolio diversification is a vital strategy to spread risk across different asset classes and sectors, potentially reducing volatility and the impact of a poor performance in a single investment.
Companies typically have several ways to raise capital, which include attracting early-stage investors, reinvesting profits, borrowing through banks or bonds, and selling stock. Knowing the nuances of each method is critical for a company's finance strategy. For individual investors, understanding these concepts can also inform their investment strategies and expectations regarding future stock price movements based on shifting market expectations.