Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
Peter Lynch's investment style is best described as what?
Opportunistic. Lynch took ideas from many different investment philosophies. He went wherever he thought the best opportunities were.
3.
What was Peter Lynch's favorite investment metric?
P/E ratio. Although he valued several, P/E ratio was his favorite.
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.
Which of the following was not a part of Peter Lynch's stock-picking approach?
Focus on the market and the short term. Lynch argues that the stock market is completely irrelevant. Moreover, he thinks that it is impossible to predict what stocks will do in the short term and recommends investing only for the long run.
