Answer to Question #68155 in Economics for Radha

Question

1. What is the current price of ordinary common shares in Commonwealth Bank of Australia (ticker: CBA)? Using an appropriate chart, describe how has this price evolved over the past 5-years, and compare to an appropriate index. What, in your opinion, has been the main driver for this share price movement? Using an appropriate ratio, evaluate whether CBA is currently over/under-valued.
2.Use the chart created in question 2, and the technical analysis tools introduced in lecture 4, to predict where the share price of Commonwealth Bank will be at the 30th June 2017. What would your recommendation be with regards to buying or selling these shares right now? What does your recommendation mean for the concept of market efficiency?

Answer 1

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