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Funds 401: Shades of Value

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1.
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.
2.
Relative-value managers _______.
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Buy stocks trading below their historical price ratios, their industry peers, or the market. Relative-value managers measure a stock's value by comparing its price ratios with some benchmark.
3.
Value fund managers buy stocks that they believe are undervalued, _______.
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But they also define value in different ways. And partly because they define value in different ways, they tend to use differing strategies when choosing stocks.
4.
Which statement is true?
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Absolute value funds require patience because management's concentrated style can lead to ups and downs in the short term. Absolute-value managers can calculate a company's worth in a variety of ways. They also tend to have lumpy performance due to their style, and require patience of fund investors.
5.
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.