Growth And Value What S The Difference

1. Growth And Value What S The Difference
While the majorityof Americaninvestorsunderstandthe importanceof diversifyingacrossgrowthand
value investments,feware able toachieve apassinggrade ona testof theirknowledge of the
differencesbetweenthe two,accordingtoa new AmericanCenturyInvestmentssurvey.
Testyour knowledgewiththe Growth&Value IQquizbelow:
1. Which bestdescribesagrowthstock?
a) Stockthat offersguaranteedrate of growthtiedtoconsumerprice index.
b) Stock ina companyspecializinginagriculture, lumber,landscaping,andotherorganicproducts.
c) A stockin a companydemonstratingbetterthanaverage profitandearningsgains.
d) All of the above.
2. Which bestdescribesavalue stock?
a) Stockin fast-growingcompanyspecializinginhigh-value,low-costproducts,like adiscountretailer.
b) Stock ina companyspecializinginvaluable goods,like preciousmetalsandjewelry.
c) Stock thathas a lowprice-to-bookratio.

2. d) All of the above.
3. Which statementistrue?
a) Value stocksoutperformedgrowthstocksbetween1927 and2001.
b) Smallercompanyvalue stocksoutperformedlargercompanyvalue stocksbetween1927 and 2001.
c) Maintainingaportfoliowithacombinationof growthandvalue stocksgenerallyisconsidereda
prudentinvestmentapproach.
d) All of the above.
4. During periodsof strongeconomicexpansion,whichfundgenerallyperformsbetter?
a) Growth.
b) Value.
c) Neither.
d) Both.
5. Generallyspeaking,value fundsoutpacedgrowthfundsin2000 and 2001.
a) True.

3. b) False.
6. Generallyspeaking,growthfundsoutpacedvaluefundsduringthe 1990s.
a) True.
b) False.
7. Which type of fundis more likelytoinvestinstockspayingasignificantdividend?
a) Growth.
b) Value.
c) Neither.
d) Both.
8. Higherprice-to-earningsratiosnormallywouldbe associatedwithstocksinwhichtype of mutual
fund?
a) Growth.
b) Value.

4. c) Neither.
d) Both.
9. What kindof stockis describedinthisexample:“Establishedbaked-goodscompanywithstrong
balance sheetandgoodcash flowexperiencingtemporarydropinreactiontochangesinsenior
management.”
a) Growth.
b) Value.
c) Neither.
10. What kindof stock isdescribedinthisexample:“Softwarecompany,enjoyingsteadysalesincreases,
isin the processof rollingoutan eagerlyanticipatedupdatetoa popularsoftware application.”
a) Growth.
b) Value.
Key:1(c); 2(c);3(d); 4(a);5(a); 6(a);7(b); 8(a);9(b); 10(a). – NU