When One Begins to Compare Companies from Different Industries Without

question 39

True/False

When one begins to compare companies from different industries without considering the norms of the different industries,the evaluation may lead to a poor buy or sell decision.

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Definitions:

Unrealized Increase/Decrease

Refers to the change in value of an investment that has not been sold, affecting the company’s balance sheet but not its income statement.

Trading Securities

Financial instruments that are purchased by a company not for long-term investment but rather with the intention to trade in the short term for profit.

Unrealized Holding

Gains or losses on investments that a company has not sold yet and hence are not recorded in the financial statements.

Fair Value

The price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.