Choose wisely. There is only one correct answer to each question.
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1.
What sort of expectation should a stock investor have regarding success?
Success should be something you are willing to wait for. Even though stocks have historically returned in the 10% range, you must still have patience when investing in them. If you expect to get rich quickly, you will most likely be disappointed, and you may find yourself drawn to speculating, which is very volatile.
2.
When owning a stock, you should evaluate its price relative to the price you paid for it.
False. The price you paid for it isnt very relevant. What is relevant for evaluating a stocks price is the estimated value of future cash flows.
3.
The stock of a company that is in great shape financially will always be priced accurately.
False. Though that is the ideal, a stocks price is sometimes higher or lower than what is accurate (that is, what its book value is).
4.
Being a stubborn investor will always pay off.
False. Often, being stubborn will lead to losses. If youre holding a stock whose company is foundering, it may not be wise to hold onto it.
5.
All else equal, you should be most interested in buying _______.
A wide-moat company with mediocre management. Remember, the economics of a business usually trumps the competence of management.