Choose wisely. There is only one correct answer to each question.
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1.
What is one reason to be wary of a lawsuit against a company whose stock you are considering buying?
Lawsuits tend to attract other lawsuits. This ultimately suggests not only monetary losses but perhaps also a waning interest in the product.
2.
The divisor used to calculate the Dow Jones Industrial Average _______.
Has been shrinking steadily in recent years. The divisor used to calculate the Dow has been shrinking steadily in recent years to account for arbitrary events such as stock splits and changes in the composition of the roster.
3.
When astute investors see a particular news event influencing a stock's price to drop even though the company's fundamentals are still sound, what are they likely to consider doing?
Buying the stock. In this case, if the fundamentals are strong, this is a classic buying opportunity.
4.
Why should you keep negative earnings surprises in context?
All of the above. Estimates are just estimates, and they may not say much that is substantial about a company's underlying operations.
5.
Hearing a negative event about a company that drives its stock price down but does not affect its fundamentals can be a welcome thing to many investors.
True. If the fundamentals are strong, then this could be a buying opportunity.
