In which of the following selling disciplines would the investor sell the stock after it had reached its intrinsic value?
A) Up-from-cost. B) Valuation-level. C) Target price.
Valuation Level?
I went for Valuation level also.
Any more tries? odds have come up to 50:50 now.
At the time of purchase, the manager may specify a target price, representing an estimate of intrinsic value, and the stock reaching that price triggers a sale.
So Target Price.
Correct, but I could agrue it to be any of the 3 options.
The grey shades of Qbank
Definitional stuff …
Up From Cost: An up-from-cost may specify at purchase a percent or absolute gain that will trigger a sale.
Target Price: At the time of purchase, the manager may specify a target price, representing an estimate of intrinsic value, and the stock reaching that price triggers a sale.
Valuation Level:A value investor purchasing a stock based on its low P/E multiple may choose to sell if the multiple reaches its historical average. This approach may be called a valuation-level sell discipline
Seriously, bag the Q-Bank. It is fucking useless, and I really think Schweser should be embarassed to put out such garabage. The questions are just plain wrong on occasion, and at least 30% of the time they are very poorly worded.
I would say both B and C are totally legitimate answers - I don’t think a case for A can be made.
It’s kind of helping me to revise and rote-learn those little concepts. Though, definitely we should not look at it to provide a “exam like” simulation, it’s definitely helping in its own little way. Every mark counts and adds up. You would be shocked to see how much of theorotical questions are aksed in L3, whereas people tend to focus on those formulas and solving multi currency global attribution problems, 2 bond hedge problems, doing valuation of IRSs, CDS, cash and carry which are borderline out of “syllabus”. Concepts are important, not the numericals.
I have been reading Reading 27 for the past couple of days and was pretty sure I got the details in! On completing those 106 questions I have winded down with 67% and pretty surprised at the subtilities I missed while reading the text, which become more clear when you see the questions side-by-side juxtaposed.
Been avergaing about 75-80% in most SSs, pretty shocked to see a 67% in my strongest subject!