Stock Trading Stock Trading Fundamental Analysis & Valuation

Question 1

What does the Price-to-Earnings (P/E) ratio measure?

Accepted Answer

How much investors pay per dollar of earnings

Answer

A company's total debt relative to equity

Answer

The dividend yield of a stock

Answer

A company's market cap vs. book value

Question 2

Which financial statement shows a company's revenues and expenses over a period?

Accepted Answer

Income statement

Answer

Balance sheet

Answer

Cash flow statement

Answer

Statement of retained earnings

Question 3

What is EBITDA an acronym for?

Accepted Answer

Earnings Before Interest, Taxes, Depreciation, and Amortization

Answer

Estimated Base Income Tax, Dividends, and Assets

Answer

Equity Before Interest, Trading, Debt, and Assets

Answer

Earnings Before Income Tax and Dividend Adjustment

Question 4

What does a Price-to-Book (P/B) ratio below 1.0 typically indicate?

Accepted Answer

The stock may be trading below its net asset value

Answer

The company has no debt

Answer

The stock is overvalued

Answer

The company has high earnings growth

Question 5

Which metric best represents the cash a company generates after capital expenditures?

Accepted Answer

Free cash flow

Answer

Net income

Answer

Gross profit

Answer

Operating income

Question 6

In fundamental analysis, what is the 'intrinsic value' of a stock?

Accepted Answer

The estimated true value based on financial analysis

Answer

The stock's current market price

Answer

The book value of company assets

Answer

The average analyst price target