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When owning a stock, you should evaluate its price relative to the price you paid for it.

True

False

False. The price you paid for it isnt very relevant. What is relevant for evaluating a stocks price is the estimated value of future cash flows.

If a company you are investing in reports a nice big surprise, what can you expect?

There will be more surprises.

There will be no more surprises.

The surprise was a false alarm.

There will be more surprises. Its not a sure thing, but you can expect more surprises, as there is likely to be a trend going on.

Past performance is sometimes a good _______ of future results.

Guarantee

Indicator

Promise

Indicator. Though past performance is not a guarantee of future results, it can still be a good indicator of good results. Still, do your homework.

A good investor ______.

Goes along with the crowd

Is willing to go against the crowd

Never goes along with the crowd

Is willing to go against the crowd. The crowd is often -- but not always -- wrong.

What sort of expectation should a stock investor have regarding success?

Since stocks are the highest-return asset class, success should come quickly.

Success should be something you are willing to wait for.

You should expect to get rich fairly quickly.

You should not expect any success when investing in stocks.

Success should be something you are willing to wait for. Even though stocks have historically returned in the 10% range, you must still have patience when investing in them. If you expect to get rich quickly, you will most likely be disappointed, and you may find yourself drawn to speculating, which is very volatile.