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Strategy Intermediate: Value Investing

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1.
Value investors aim to assess a stock based on its historical performance in the market.
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False. Value investors aim to assess a stock based on the companys strengths and prospects, independent of the stocks performance.
2.
A company's book value is _______.
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The value of its assets minus liabilites. Book value is the value of a company's assets.
3.
A low price-to-book (P/B) ratio means _______.
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Less than 1. Mathematically, it means less than 1.
4.
To evaluate a company, a value investor might look at _______.
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Its book value. A value investor would focus on factors intrinsic to the company to determine its likely future performance.
5.
Which of the following is the least likely reason that a stock may be undervalued?
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Interest rates have fallen in the past year. Falling interest rates would make it easier for the company to borrow funds, grow, and increase earnings, which would likely result in an increase in the price of its stock.