Question 91
Which of the following statements regarding company and stock analysis is least accurate?
A) A defensive company has earnings that are relatively insensitive to downturns in the economy.
B) Cyclical stocks have betas greater than one.
C) A growth stock is the stock of a firm with rapidly increasing earnings.
D) Speculative companies have highly risky assets but have the potential to produce very high earnings.
The correct answer was C) A growth stock is the stock of a firm with rapidly increasing earnings.
Regardless of whether the firm has rapid earnings growth, if the firm’s stock price is too high it will not produce high risk-adjusted returns, and therefore it is not a growth stock. The other statements are accurate.
This question tested from Session 14, Reading 59, LOS a
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发表于 2009-3-29 14:17
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