Intro to Finance Test #6

What is overvaluation?

• the reason why people buy stocks

• when people believe that something costs less than it actually does

• a bar that is set too high where people cannot reach it

• when something costs more than it actually should

What allows peoples to calculate the value ratios for the entire index and compare them over time?

• index value ratio

• P/E ratio

• P/BV ratio

• NAV

What is the easiest and most common way to outsource your investment decision?

• The Economist

• Mutual Funds

• REITs

• NYSE

Name one thing you need to consider before you invest:

What is discretionary income?

• income that you use for daily expenses (food, rent, transportation)

• money that you've held onto since you were a baby

• money that you've been collecting in secret

• income that you are spending outside of necessary, living expenses

What are the two most common techniques for researching stocks?

• financial analysis

• technical analysis

• historical analysis

• profit analysis

• fundamental analysis

What is another name for technical analysis?

• stock volume

• fundamental analysis

• empirical analysis

• valuation ratio

Which option is a weakness of technical analysis?

• stock price and trading volume

• the future

• profitability

• debt levels and growth rates

True or False: Fundamental analysis is the foundation to any sort of quality research and analysis of stocks.

What are value ratios?

• how much each bond costs

• dividend/yield

• what you have to pay for the stock divided by what you're going to get in return

• cash flow, profitability, valuation ratios, debt levels, and growth rates