Choose wisely. There is only one correct answer to each question.
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1.
Say you are considering two different companies to invest in. One is very risky and the other has only average risk. Which of the two would require a bigger margin of safety?
The very risky one. Given the bigger risk of loss, a bigger margin of safety will do more to protect you.
2.
Is it a detriment to fat-pitch investors to hold cash when the market is rising?
No. It may be difficult to patiently sit on cash when the stock market is rising and you feel as if you're missing out on the fun. However, holding cash is akin to holding an option for when the market provides opportunities to buy at lower prices.
3.
When following a fat-pitch strategy, why would you not want to trade very often?
The odds are that the stock's underlying value will continue increasing. Why sell a stock when it keeps rising year after year?
4.
If you want to succeed with a concentrated portfolio of stocks (say, fewer than 20), you should _______.
All of the above. A concentrated portfolio will generally only work if you do all three of these things.
5.
Companies with wide economic moats tend to have _______.
Long-term staying power. Their competitive advantages help to ensure that they will survive for a long time.
