All Courses > Stocks > 500
Stocks 506: Great Investors: Peter Lynch

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
What three fundamental criteria did Peter Lynch use to evaluate a stock?
Choose wisely. There is only one correct answer.
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.
Peter Lynch's investment style is best described as what?
Choose wisely. There is only one correct answer.
Opportunistic. Lynch took ideas from many different investment philosophies. He went wherever he thought the best opportunities were.
3.
Which of the following was not a part of Peter Lynch's stock-picking approach?
Choose wisely. There is only one correct answer.
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.
4.
Companies whose sales and profits rise and fall in a regular fashion are called _______.
Choose wisely. There is only one correct answer.
Cyclicals. The cyclicals tend to be predictable.
5.
What sorts of companies did Peter Lynch favor?
Choose wisely. There is only one correct answer.
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.