Over the Long Run Value Stocks Have

question 33

Multiple Choice

Over the long run value stocks have:

• A) had low ratios of book value to market value.
• B) performed exactly as predicted by CAPM.
• C) provided a higher return than growth stocks.
• D) consistently underperformed.

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Definitions:

Ratio Analysis

An examination of the relationship between two numbers or sets of numbers on financial reports. Analyses of ratios, especially over time, can give a fairly clear picture of how well a company conducts its business.

Statement Analysis

The process of examining financial statements to make business decisions, which often involves assessing profit, liquidity, and solvency among other aspects.

Common Stockholders' Equity

The portion of a company's equity that belongs to holders of its common stock, including retained earnings and contributed capital.

Net Income Before Taxes

The total revenue minus the total expenses, excluding tax expenses.