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1.
Relative-value managers _______.
Buy stocks trading below their historical price ratios, their industry peers, or the market. Relative-value managers measure a stock's value by comparing its price ratios with some benchmark.
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.
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.
4.
Value managers _______.
Buy stocks that they believe are worth significantly more than the current price. Value managers buy stocks that they believe are undervalued.
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.
