Growth and Value What s the Difference
Below is a MRR and PLR article in category Finance -> subcategory Stock Market.
Growth and Value: Understanding the Differences
Many American investors recognize the importance of diversifying between growth and value investments. However, a recent survey by American Century Investments reveals that few can clearly distinguish between the two.
Growth vs. Value: Test Your Knowledge
1. What defines a growth stock?
a) Stock with a guaranteed growth rate linked to the consumer price index.b) Stock in a company that specializes in agriculture, lumber, landscaping, and organic products.
c) Stock in a company showing above-average profit and earnings growth.
d) All of the above.
2. What defines a value stock?
a) Stock in a fast-growing company focusing on high-value, low-cost products, like a discount retailer.b) Stock in a company focused on valuable goods, such as precious metals and jewelry.
c) Stock with a low price-to-book ratio.
d) All of the above.
3. Which statement is accurate?
a) Value stocks outperformed growth stocks from 1927 to 2001.b) Smaller company value stocks outperformed larger company value stocks between 1927 and 2001.
c) A balanced portfolio of growth and value stocks is generally a wise investment approach.
d) All of the above.
4. During strong economic growth, which type of fund typically performs better?
a) Growth.b) Value.
c) Neither.
d) Both.
5. Did value funds generally outperform growth funds in 2000 and 2001?
a) True.b) False.
6. Did growth funds generally outperform value funds during the 1990s?
a) True.b) False.
7. Which fund type is more likely to invest in stocks paying significant dividends?
a) Growth.b) Value.
c) Neither.
d) Both.
8. Which fund type is associated with higher price-to-earnings ratios?
a) Growth.b) Value.
c) Neither.
d) Both.
9. What type of stock is this? "Established baked-goods company with strong balance sheet and good cash flow experiencing a temporary drop due to changes in senior management."
a) Growth.b) Value.
c) Neither.
10. What type of stock is this? "Software company with steady sales increases is about to release a highly anticipated update to a popular application."
a) Growth.b) Value.
c) Neither.
Key: 1(c); 2(c); 3(c); 4(a); 5(a); 6(a); 7(b); 8(a); 9(b); 10(a).
By understanding these differences, investors can make more informed decisions about their portfolios.
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