Which of the following is the greatest risk for a value investor? A) EPS growth estimates fail to materialize B) Security prices could be low for legitimate economic reasons C) Liquidity
B
B Economic reason and maybe long time horizon
B
B A) EPS growth is sought by growth (momentum) investors C) Liquidity is more about trading strategies, value investors don’t care that so much about it either Value investors (Warren B., even though he says he’s mixed value/growth) look for relatively (!) "under"valued securities. If those have low P/Es because they produce photopaper then there might be an economic reason to it 
B
B
b
B Value investors buy because the price is low in the first instance relative to other metrics. The prices may remain low if for example a cell phone maker decides to stay off production of smartphones.