Stocks Intermediate:
Value Stocks
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1.
Stock from which of the following companies is most likely to be undervalued and might warrant additional research?
Choose wisely. There is only one correct answer.
A company that has undergone a prolonged decline
A company that has performed below average in its industry for several years
A company that has just reported its first drop in annual earnings in a decade
A company that is a strong performer in a prevailing bear market
A company that has just reported its first drop in annual earnings in a decade. The decline may be temporary.
2.
Which of the following factors is least likely to indicate a value stock?
Choose wisely. There is only one correct answer.
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.
3.
Which of the following is the least likely internal factor to trigger a rise in the price of a value stock?
Choose wisely. There is only one correct answer.
A new president restructures the executive management team.
Production employees strike for higher wages.
The board of directors announces the sale of an unprofitable subsidiary.
The company announces a new plant opening.
Production employees strike for higher wages. Unless this problem can be solved quickly, it may threaten the companys prospects for growth.
4.
Value investors aim to buy several months after a turnaround in a stocks performance.
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True
False
False. Value investors aim to buy right before an expected turnaround in a value stocks performance.
5.
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.
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