Stocks Intermediate: 20 Stock-Investing Tips

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
If a company you are investing in reports a nice big surprise, what can you expect?
Choose wisely. There is only one correct answer.
There will be more surprises. Its not a sure thing, but you can expect more surprises, as there is likely to be a trend going on.
2.
The future is unpredictable. But you can protect yourself against unpredictability by having a margin of safety built into a stock that you buy.
Choose wisely. There is only one correct answer.
True. A margin of safety -- for example, paying less for a stock than its book value -- can dampen the effect of the futures unpredictability.
3.
Being a stubborn investor will always pay off.
Choose wisely. There is only one correct answer.
False. Often, being stubborn will lead to losses. If youre holding a stock whose company is foundering, it may not be wise to hold onto it.
4.
When owning a stock, you should evaluate its price relative to the price you paid for it.
Choose wisely. There is only one correct answer.
False. The price you paid for it isnt very relevant. What is relevant for evaluating a stocks price is the estimated value of future cash flows.
5.
What sort of expectation should a stock investor have regarding success?
Choose wisely. There is only one correct answer.
Success should be something you are willing to wait for. Even though stocks have historically returned in the 10% range, you must still have patience when investing in them. If you expect to get rich quickly, you will most likely be disappointed, and you may find yourself drawn to speculating, which is very volatile.