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.
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.
3.
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.
4.
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.
5.
Which type of fund is likely to be the most volatile?
A small-cap growth fund. Funds that own expensive (growth) small companies are bound to be more volatile than those that own large, inexpensive (value) stocks or middle-of-the-road (blend) fare are.
