Stocks Intermediate:
Value Stocks
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1.
Of the following, the most likely external factor to trigger an expected turnaround in a value stocks performance is that _______.
Choose wisely. There is only one correct answer.
Interest rates are about to rise
A combination of economic factors forecasts a general economic downturn
New, stringent clean-air requirements that will affect the companys emissions procedures are announced
A respected economic forecaster predicts a boom in the companys industry
A respected economic forecaster predicts a boom in the companys industry. This would almost certainly benefit the company.
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
False
True. There are certain conditions under which stocks may be undervalued.
3.
Which of the following is an example of a cyclical industry?
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Chemicals
Insurance
Pharmaceuticals
Food
Chemicals. The chemical industry tends to respond quickly to changes in the economy as a whole.
4.
Which of the following factors is least likely to indicate a value stock?
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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.
5.
Which of the following is an example of a non-cyclical industry?
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Automobiles
Paper
Health care
Machinery
Health care. This industry tends to react less to economic changes than many cyclical industries do.
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