Stocks Intermediate: Value Stocks

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1.
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.
2.
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.
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.
Which of the following is an example of a cyclical industry?
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Chemicals. The chemical industry tends to respond quickly to changes in the economy as a whole.
5.
Stock from which of the following companies is most likely to be undervalued and might warrant additional research?
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A company that has just reported its first drop in annual earnings in a decade. The decline may be temporary.