A new survey by American Century Investments shows that most American investors know it's important to have both growth and value investments, but few can get a passing grade on a test of their knowledge of the differences between the two.
Take the Growth & Value IQ quiz to see what you know:
- A growth stock is most like .
a) Stock with a growth rate that is guaranteed and tied to the consumer price index.
b) Stock in a company that focuses on farming, lumber, landscaping, and other natural products.
c) A share of a company that is making more money and making more money faster than average.
d) Everything above.
- A value stock is most like a .
a) Stock in a fast-growing company that sells high-quality items at low prices, like a discount store.
b) Stock in a company that sells valuable things like jewellery and precious metals.
c) A stock with a low ratio of price to book value.
d) Everything above.
Which of the following is true?
From 1927 to 2001, value stocks did better than growth stocks.
b) Between 1927 and 2001, small company value stocks did better than large company value stocks.
c) Keeping a portfolio with a mix of growth and value stocks is usually thought to be a smart way to invest.
d) Everything above.
- Which fund usually does better during times of strong economic growth?
a) Change.
b) Value.
c) Both.
d) Both.
- Value funds did better than growth funds overall in 2000 and 2001.
a) True.
b) False.
In general, growth funds did better than value funds in the 1990s.
a) True.
b) False.
- Stocks that pay a big dividend are more likely to be invested in which type of fund?
a) Change.
b) Value.
c) Both.
d) Both.
- Stocks in which type of mutual fund would usually have a higher price-to-earnings ratio?
a) Change.
b) Value.
c) Both.
d) Both.
- This sentence describes what kind of stock? "Established baked-goods company with strong balance sheet and good cash flow experiencing temporary drop due to changes in senior management."
a) Change.
b) Value.
c) Both.
a) Change.
b) Value.
c) Both.
Key: 1(c); 2(c); 3(d); 4(a); 5(a); 6(a); 7(b); 8(a); 9(b); 10 (a). - NU
