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Stocks 204: Start Thinking Like an Analyst

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1.
Determining the goal of a business is normally easy.
Choose wisely. There is only one correct answer.
False. Sometimes it is not easy, because a business might combine different objectives.
2.
What is an economic moat?
Choose wisely. There is only one correct answer.
A long-term competitive advantage that allows a company to earn oversized profits over time. A moat protects the business and does not let other businesses in.
3.
Which of these companies best exemplifies the use of the network effect?
Choose wisely. There is only one correct answer.
EBay. eBay is the quintessential example of a company with a strong network effect.
4.
Why are economic moats advantageous?
Choose wisely. There is only one correct answer.
They allow a company to generate profits and keep competitors at bay. Companies that reward investors over the long haul are those that have a durable competitive advantage.
5.
High switching costs help companies _______.
Choose wisely. There is only one correct answer.
Raise prices without the risk of losing customers.