Choose wisely. There is only one correct answer to each question.
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1.
Value managers _______.
Buy stocks that they believe are worth significantly more than the current price. Value managers buy stocks that they believe are undervalued.
2.
Value fund managers buy stocks that they believe are undervalued, _______.
But they also define value in different ways. And partly because they define value in different ways, they tend to use differing strategies when choosing stocks.
3.
Relative-value managers measure a stock's value by comparing its price ratios with _______.
A benchmark. These managers use a benchmark of some kind for comparison purposes.
4.
A value fund manager may sell a value stock once its price reaches some benchmark.
True. To be fairly valued means to reach a benchmark of some kind.
5.
Managers practicing absolute-value strategies calculate what a company is worth in absolute terms and then _______.
Buy the stock for less than that. Value investing is all about paying less than what the stock is intrinsically worth.
