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1.
Which classic investment book did Benjamin Graham author?
The Intelligent Investor. Graham also wrote 'Security Analysis,' an earlier book.
2.
Which statement would Benjamin Graham most agree with?
"Investing is most intelligent when it is most businesslike." Since stocks represent partial ownership of real businesses, the same behavior that makes sense in the business world makes sense in the stock market.
3.
Which of the following best defines the term "intrinsic value"?
The true worth of a business, which is entirely separate from its stock market price. Intrinsic value is the true worth of a business, which is entirely separate from its stock market price. The intrinsic value of a business is based on its balance sheet net worth and/or future earnings power, not on what participants in the market are willing to pay.
4.
According to Benjamin Graham, an investor should ensure a margin of safety when considering buying a stock.
True. The purpose of the margin is to protect against unforeseen events that could lead to loss.
5.
According to Benjamin Graham, why should investors use a 'margin of safety' when settling on a price to pay for a company's stock?
The estimates of the stock's intrinsic value are not likely to be completely accurate. Because it involves so many assumptions, such estimates are not likely to be completely accurate. Thus the need for a margin of safety.
