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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.
For value investors, which of the following would be the least helpful in evaluating a company?
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Quarterly sales. A value investor usually focuses on factors that reveal the fundamental capacity and potential of the company over the long term.
3.
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.
4.
Value investors identify variables that may push up the price of a value stock in the next two or three years.
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False. Value investors identify variables that may push up the price of a value stock in the near future.
5.
There are reasons why a low price-to-book ratio may not be a good thing for investors. Which of the following is not one of those reasons?
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The company is earning a high return on its assets. This is actually a good thing for investors.