Suppose that fundamental analysis indicates a particular company's 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 indicates that a company's stock is overvalued, it means that its present value is less than its price. This implies that the stock is likely to experience a price correction in the future, which could result in losses for the investor. Therefore, it is advisable not to consider adding the stock to your portfolio.

Suppose That Fundamental Analysis Indicates a Particular Company's Stock Is