Suppose that fundamental analysis shows a stock is overvalued
A)This means its present value is less than its price.You should consider adding the stock to your portfolio.
B)This means its present value is less than its price.You shouldn't consider adding the stock to your portfolio.
C)This means its present value is more than its price.You should consider adding the stock to your portfolio.
D)This means its present value is more than its price.You shouldn't consider adding the stock to your portfolio.

Question

Quizplus · Accepted Answer

If fundamental analysis shows that a stock is overvalued, it means that the market price is higher than the fair value of the stock. This suggests that the stock is not a good value and is likely to decline in price. Therefore, it would be prudent not to add the stock to your portfolio.

Suppose That Fundamental Analysis Shows a Stock Is Overvalued