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.
Which of the following factors is least likely to indicate a value stock?
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A low book value. A low book value indicates low net assets, which could have a negative impact on future earnings growth.
3.
Value investors aim to buy several months after a turnaround in a stocks performance.
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False. Value investors aim to buy right before an expected turnaround in a value stocks performance.
4.
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.
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.