Stocks Intermediate: Value Stocks

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1.
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.
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.
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.
4.
Of the following, the most likely external factor to trigger an expected turnaround in a value stocks performance is that _______.
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A respected economic forecaster predicts a boom in the companys industry. This would almost certainly benefit the company.
5.
Investors are less likely to find value stocks in non-cyclical industries than in cyclical ones.
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True. Investors are less likely to find value stocks in stable industries that experience fewer highs and lows.