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a fundamental analyst: question 2 options: performs an unnecessary function, since markets are efficient. studies a firm's financial statements to determine pricing inefficiencies. believes that the market is strong-form efficient. relies upon the same information as the technical analyst, but believes in the random walk.

User Kaizen
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Final answer:

A fundamental analyst focuses on uncovering pricing inefficiencies by evaluating financial statements and market conditions, which differs from the approach of a technical analyst and the concept of markets following a random walk.

Step-by-step explanation:

A fundamental analyst studies a company's financial statements and other relevant information to determine potential pricing inefficiencies in the stock market. They work under the assumption that the market is not totally efficient and that stocks' actual prices may not always reflect their intrinsic value. In contrast to a technical analyst who looks at price patterns and market trends, a fundamental analyst evaluates financial metrics, management, industry conditions, and the broader economy to make investment decisions. They do not subscribe to the belief that the market follows a random walk, which is the notion that price movements are completely random and unpredictable.

The skepticism around perfectly competitive markets being both productively and allocatively efficient arises because these models do not account for the unequal income distribution in actual economies. For instance, a person's inability to afford housing or a car due to insufficient income illustrates that real-world markets fail to achieve perfect efficiency.

User Saqibahmad
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