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1.
The stock of which type of company is likely to be the least volatile?
A large size company. Larger companies are often more established and tend to be more predictable than smaller companies; therefore, their stock prices tend to be steadier.
2.
What is a company's market capitalization?
A company's size based on the market value of its shares. A company's market capitalization is simply its size based on the market value of its shares. The market cap measure is not directly tied to a firm's earnings or sales.
3.
In gauging the value of a stock, examine its _______.
Price/book ratio. Both price/book and price/earnings ratios tell you how expensive a stock is based on some value--either the value of the company if it were sold and paid off its debts (P/B) or the value of a company based on its earnings (P/E). These factors are employed by Morningstar in measuring the "value" aspects of a stock for placement in the style box.
4.
According to the Morningstar style box, a value orientation means the manager buys stocks that are cheap.
True. Though the stocks are cheap, they could eventually see their worth recognized by the market.
5.
The Morningstar style box does not summarize which of the following?
How rapidly a fund manager buys and sells stocks. The style box provides a snapshot of the size and price of the stocks in a fund's portfolio. To get a feel for how rapidly a fund manager buys and sells stocks, check a fund's turnover rate.
