Choose wisely. There is only one correct answer to each question.
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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.
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.
3.
A blended fund, as shown by the Morningstar style box, will include elements of both growth and value orientations.
True. A blended fund uses both.
4.
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.
5.
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.
