Which of the Following Characteristics Appeal to So-Called Value Investors

question 43

Multiple Choice

Which of the following characteristics appeal to so-called value investors?
I. high P/E ratios.
II. low debt to equity ratios
III. high cash flow relative to price
IV. high book value relative to market price

• A) I and II only
• B) I and III only
• C) I, II and IV only
• D) II, III and IV only

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Definitions:

GAAP

Widely Recognized Accounting Standards; a set of standard accounting practices and rules routinely adhered to for financial reporting purposes.

Fair Value Accounting

An accounting approach where assets and liabilities are recorded at their current market value, not just historical cost.

Valuation Allowance

An allowance against deferred tax assets indicating that it is more likely than not that some portion or all of the deferred tax asset will not be realized.

Trading Investments

Securities bought and held primarily for selling in the short term to profit from price differences.