CSC Exam 2 Fundamental and Technical Analysis Guide

This CSC Exam 2 lesson covers fundamental and technical analysis within Investment Analysis. Read it as part of the analysis-and-portfolio half of the Canadian Securities Course: the exam usually wants you to connect analysis, product structure, tax, account type, and client constraints before choosing an answer.

Learning Objectives

• Differentiate fundamental analysis from technical analysis and describe the type of questions each method is designed to answer.
• Identify major categories of information used in equity analysis (macroeconomic, industry, company-specific, and market data) and the purpose of each.
• Explain how changes in GDP growth expectations can affect corporate earnings and equity valuations at a high level.
• Explain how inflation expectations can affect interest rates, purchasing power, and equity sector performance at a high level.
• Describe how interest rate changes can influence equity valuations through discount rates and financing costs (high level).
• Describe how the shape of the yield curve can be interpreted as an economic signal and why it matters for equity analysis (high level).
• Explain how exchange rate movements can affect exporters, importers, and sector competitiveness (high level).
• Explain how commodity price changes can affect commodity-linked companies and related industries (high level).
• Describe business cycle phases and identify how sector leadership can vary across the cycle (high level).
• Differentiate leading, coincident, and lagging indicators and identify typical examples used by analysts (high level).
• Explain how fiscal policy changes (taxation/spending) can affect corporate profitability and markets (high level).
• Explain the purpose of industry analysis and the types of factors assessed (competition, regulation, cyclicality, and pricing power).
• Differentiate cyclical industries from defensive industries and describe the implications for earnings stability.
• Describe industry life-cycle stages (emerging, growth, maturity, decline) and how they influence expected growth and margins (high level).
• Define technical analysis and explain its core premise about price, volume, and market psychology (high level).
• Identify basic trend concepts (uptrend/downtrend, support/resistance) and how they are used in technical analysis (high level).
• Explain what a moving average is and what analysts typically infer from price crossing a moving average (high level).
• Explain the role of volume in confirming price trends and pattern breakouts (high level).
• Recognize limitations and common pitfalls of relying solely on fundamental or technical analysis (high level).
• Given a scenario, select the most appropriate analysis lens (macro, industry, company, or technical) to answer a specific investment question.

Key Concepts

• Fundamental analysis studies economic, industry, and company evidence; technical analysis studies price, volume, and market behaviour.
• The exam often asks which analysis lens answers the stated investment question.
• Macro, industry, company, and technical evidence should not be treated as interchangeable.

Exam Focus

CSC Exam 2 questions often look like product questions, but the stronger answer usually comes from the portfolio frame. Identify the objective, time horizon, liquidity need, tax sensitivity, risk capacity, risk tolerance, account type, and documentation issue before selecting the investment or workflow answer.

Main review priorities: analysis lens selection, fundamental versus technical evidence, company and market interpretation. Use those priorities to decide what the question is really testing and which distractors can be eliminated.

How to Apply This Section

Start with the client’s situation, not the product label. A mutual fund, ETF, alternative, structured product, or fee-based account can be appropriate in one fact pattern and unsuitable in another. The relevant question is whether the feature supports the client’s objective without violating the dominant constraint.

Next, connect the technical concept to a decision. For investment analysis, decide which evidence matters. For portfolio analysis, decide whether the allocation improves the risk-return trade-off. For funds, ETFs, alternatives, and structured products, decide whether the structure, cost, liquidity, and disclosure profile fit. For taxation and client workflow, decide whether the recommendation is better after tax and defensible under the client record.

Finally, test the answer against process. If the client facts are incomplete, stale, or inconsistent, clarification can be the best answer. If the product has complex risk, cost, liquidity, or payoff terms, disclosure and documentation matter. If the portfolio has drifted, the best answer may be rebalancing or review rather than a new product.

Decision Framework

Common Pitfalls

• Treating the highest-return or most sophisticated product as automatically best.
• Ignoring whether the recommendation fits the client’s risk capacity, time horizon, liquidity need, and tax situation.
• Memorizing formulas without understanding what input or interpretation the question is testing.
• Confusing product mechanics with suitability; knowing how a product works does not prove it fits.

Review Checklist

Before leaving this section, make sure you can:

• explain fundamental analysis from technical analysis and describe the type of questions each method is designed to answer.
• explain major categories of information used in equity analysis (macroeconomic, industry, company-specific, and market data) and the purpose of each.
• explain how changes in GDP growth expectations can affect corporate earnings and equity valuations at a high level.
• explain how inflation expectations can affect interest rates, purchasing power, and equity sector performance at a high level.
• explain how interest rate changes can influence equity valuations through discount rates and financing costs (high level).
• explain how the shape of the yield curve can be interpreted as an economic signal and why it matters for equity analysis (high level).
• explain how exchange rate movements can affect exporters, importers, and sector competitiveness (high level).
• connect the section to a realistic CSC Exam 2 recommendation scenario.
• state which client fact or portfolio constraint would change the answer.

Key Takeaways

• CSC Exam 2 is an analysis, portfolio, and client-fit exam, not a product-name quiz.
• The best answer usually connects the technical topic to objective, constraint, cost, tax, risk, and documentation.
• Product structure matters only after the client and portfolio role are clear.
• Misses often come from choosing a plausible product that fails the dominant constraint.