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Strategy Intermediate: Value Investing

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1.
A low price-to-book (P/B) ratio means _______.
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Less than 1. Mathematically, it means less than 1.
2.
Value investing is about measuring a companys past performance, not forecasting its future profits.
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False. Value investing is about measuring a companys capacity and potential for growth.
3.
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.
4.
A value stock is issued by a company that _______.
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Has the resources to grow. A careful review reveals that it will likely grow in the future, even during economic downturns.
5.
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.