What does fundamental analysis aim to measure?

Fundamental analysis aims to measure the intrinsic value of a security by evaluating its financial health, performance metrics, and overall economic conditions. This type of analysis involves examining various factors such as a company's earnings, revenue, dividends, and the economic environment to determine a stock's true worth. Analysts use this information to compare the intrinsic value with the current market price, helping investors identify whether a security is undervalued or overvalued.

By focusing on intrinsic value, fundamental analysis provides insights into a company's potential for future growth and profitability, which can inform investment decisions. This approach contrasts with technical analysis, which focuses on price trends and patterns rather than underlying business fundamentals. The other options—such as market trends, stock price volatility, and asset liquidity—are components of market analysis but do not directly relate to the core objective of fundamental analysis, which is assessing the inherent worth of a security.