CFA Practice Question

There are 57 practice questions for this study session.

CFA Practice Question

Stock valuation would be useful if an analyst wants to

I. predict how soon the price of an undervalued stock will go up by 10%.
II. select stocks with high liquidity.
III. minimize her overall execution costs.
IV. evaluate the impact of a new business model implemented by the company's marketing department.
Correct Answer: IV only

Valuation helps to identify underpriced or overpriced stocks. However, it cannot indicate when and by how much the mispricing will be corrected. It does not tell us about liquidity and transaction costs either.

User Contributed Comments 1

User Comment
vi2009 valuation is not about prediction.
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