Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
What response should a stock investor have regarding changes in regulation on a company?
An investor should pay attention to such changes. Sometimes, regulations greatly increase the costs of doing business or diminish a company's prospects.
3.
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.
4.
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.
5.
What is an "earnings surprise"?
When a company's actual earnings results differ from what Wall Street's analysts expect. The actual earnings may be higher or lower. As a result, the company's stock price may rise or fall.
