Suppose Fundamental Analysis Indicates That XYZ Corporation's Stock Is Undervalued

question 68

Multiple Choice

Suppose fundamental analysis indicates that XYZ Corporation's stock is undervalued.

• A)This means its present value is less than its price.You should consider adding the stock to your portfolio.
• B)This means its present value is less than its price.You shouldn't consider adding the stock to your portfolio.
• C)This means its present value is more than its price.You should consider adding the stock to your portfolio.
• D)This means its present value is more than its price.You shouldn't consider adding the stock to your portfolio.

---

Definitions:

Physical Capital

Tangible assets that are used in the production process, such as machinery, buildings, and equipment.

Short Run

The short run is a period in economics during which at least one input, such as plant size or capital, is fixed, limiting the business's ability to adjust production levels fully.

Physical Capital

Physical capital encompasses the machinery, equipment, and infrastructure a business uses to produce goods or services, distinct from financial capital or human skills.

Average Total Cost

The total cost of production divided by the number of goods produced, accounting for both fixed and variable costs.