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Funds 401: Shades of Value

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1.
If a stock is 'fairly valued,' what does that mean?
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The stock is no longer cheap by whatever benchmark the manager uses. The other answers might apply to relative-value managers or absolute-value managers, who would use either relative or absolute benchmarks.
2.
Relative-value managers measure a stock's value by comparing its price ratios with _______.
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A benchmark. These managers use a benchmark of some kind for comparison purposes.
3.
A stock becomes 'fairly valued' in the eyes of value fund managers when it _______.
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Either of the above. Either of these could be true, depending on the approach for valuation that the manager uses.
4.
Value managers _______.
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Buy stocks that they believe are worth significantly more than the current price. Value managers buy stocks that they believe are undervalued.
5.
Managers practicing absolute-value strategies calculate what a company is worth in absolute terms and then _______.
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Buy the stock for less than that. Value investing is all about paying less than what the stock is intrinsically worth.