Choose wisely. There is only one correct answer to each question.
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1.
What three fundamental criteria did Peter Lynch use to evaluate a stock?
Profits, business model, and current stock price. Lynch looked for profitable companies with solid business models selling at good prices. He was willing to pay more for those companies than other managers might have paid, and he tolerated debt as long as the profits were there and the business model was right.
2.
According to Peter Lynch's classification system for companies, a company that has been beaten down might soon rise again. What kind of company would this be?
Turnaround. Of course, it may not turn around at all, but if it does, its momentum will likely be tied to the overall market.
3.
According to Peter Lynch, what are the big winners in the stock market?
Fast growers. These companies have the biggest potential for growth, along with a lot of risk.
4.
What sorts of companies did Peter Lynch favor?
Those in industries he understood. Lynch invested in those in industries he understood. Lynch firmly believes that you should invest only in what you know. He shunned industries he didn't understand, even if they presented great value or great possibilities. Notice this echoes Warren Buffett's "circle of competence" idea.
5.
Peter Lynch believed investors should invest for the short term so that they do not lose money.
False. He believed in long-term investing and ignoring short-term movements in the market.
