Stocks Intermediate:
Value Stocks
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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1.
Value investors aim to buy several months after a turnaround in a stocks performance.
Choose wisely. There is only one correct answer.
True
False
False. Value investors aim to buy right before an expected turnaround in a value stocks performance.
2.
Stock from which of the following companies is most likely to be undervalued and might warrant additional research?
Choose wisely. There is only one correct answer.
A company that has undergone a prolonged decline
A company that has performed below average in its industry for several years
A company that has just reported its first drop in annual earnings in a decade
A company that is a strong performer in a prevailing bear market
A company that has just reported its first drop in annual earnings in a decade. The decline may be temporary.
3.
Which of the following factors is least likely to indicate a value stock?
Choose wisely. There is only one correct answer.
A new management team
A low price-to-book-value
A low book value
New product patent approvals
A low book value. A low book value indicates low net assets, which could have a negative impact on future earnings growth.
4.
Which of the following is an example of a non-cyclical industry?
Choose wisely. There is only one correct answer.
Automobiles
Paper
Health care
Machinery
Health care. This industry tends to react less to economic changes than many cyclical industries do.
5.
A stock issued by a company with a large debt load is likely to be a value stock.
Choose wisely. There is only one correct answer.
True
False
False. A stock issued by a company with a large debt load may lack the resources to increase future earnings.
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DONE