Stocks Intermediate: Value Stocks

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1.
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.
2.
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.
3.
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.
4.
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.
5.
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.