If Securities Are Fairly Priced,then the Portfolio Manager Is Unlikely

question 16

Essay

If securities are fairly priced,then the portfolio manager is unlikely to be able to identify undervalued stocks.What other activities could portfolio managers perform?

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Definitions:

Revaluation Decrement

The process of decreasing the recorded value of an asset to reflect its current market value, often recognized in financial reporting.

Cash-Generating Unit

The smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

Impairment Loss

The amount by which the carrying amount of an asset exceeds its recoverable amount.

Net Carrying Amount

The value at which an asset is recognized on the balance sheet after deducting accumulated depreciation and impairment losses.