Methods of assets valuation
1.Cost method
2.Market value method
3.Base stock method
4. Standard cost method
5.Average cost method
Question:
Bill and Jim are building their portfolios. Bill purchases shares in a mutual fund and pays fees to a manager who actively manages the mutual fund's portfolio. He does so because he believes that the manager can identify inexpensive stocks that will rise in value. Jim is not convinces. He buys shares in an index fund- a type of mutual fund that simply buys all of the stocks in a given stock index rather than actively managing a portfolio. Bill builds his portfolio on the supposition that:
ANSWER CHOICES:
a. The stock market exhibits informational efficiency.
b. Stock prices follow a random walk
C. Stock analysts can use fundamental analysis to identify undervalued stocks.
