A Person Who Believes Strongly in the Use of Fundamental

question 42

Multiple Choice

A person who believes strongly in the use of fundamental analysis to choose a portfolio of stocks

• A)has a better chance of outperforming the market if stock prices follow a random walk than if they do not follow a random walk.
• B)almost always chooses to hold index funds in his or her portfolio rather than actively-managed funds.
• C)is spending his or her time wisely if the efficient markets hypothesis is correct.
• D)is interested in the likely ability of a corporation to pay dividends in the future.

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Definitions:

Issued Stock

The total number of shares that a company has sold to investors and are currently outstanding.

Outstanding Stock

The number of shares that have been issued by a company and are held by investors, including both public shareholders and company insiders or officers.

Common Stock

A form of corporate equity ownership, a type of security representing a claim on part of the company's assets and earnings.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with dividend payment preferences.