Stocks Intermediate: Value Stocks

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1.
While all stocks might be undervalued at some time, investors watch for certain conditions that can help them find value stocks.
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True. There are certain conditions under which stocks may be undervalued.
2.
A value stock is one that is overpriced, given the companys earnings, debt load, price-to-book-value ratio, and future growth prospects.
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False. A value stock is underpriced, given the companys earnings, debt load, price-to-book-value ratio, and future growth prospects.
3.
Which of the following is the least likely internal factor to trigger a rise in the price of a value stock?
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Production employees strike for higher wages. Unless this problem can be solved quickly, it may threaten the companys prospects for growth.
4.
A stock issued by a company with a large debt load is likely to be a value stock.
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False. A stock issued by a company with a large debt load may lack the resources to increase future earnings.
5.
Which of the following is an example of a non-cyclical industry?
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Health care. This industry tends to react less to economic changes than many cyclical industries do.