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1.
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.
2.
Value managers _______.
Buy stocks that they believe are worth significantly more than the current price. Value managers buy stocks that they believe are undervalued.
3.
Absolute-value managers _______.
Buy stocks that are cheaper than what they deem to be the company's entire worth. Managers practicing absolute-value strategies calculate what a company is worth in absolute terms and will only buy the company's stock for less than that figure.
4.
A stock becomes 'fairly valued' in the eyes of value fund managers when it _______.
Either of the above. Either of these could be true, depending on the approach for valuation that the manager uses.
5.
Benchmarks used by relative-value managers include all but which of the following?
Measures of absolute worth. Such measures are used by absolute-value managers, not relative-value managers.
