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.
Which of the following is an example of a non-cyclical industry?
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Health care. This industry tends to react less to economic changes than many cyclical industries do.
4.
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.
5.
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.