Single choice9)The margin of safety approach to investing is comparable to:Growth investingMomentum investingValue investing
Question
Single choice 9)
The margin of safety approach to investing is comparable to:
- Growth investing
- Momentum investing
- Value investing
Solution
The margin of safety approach to investing is comparable to Value investing.
Explanation:
Value investing focuses on identifying undervalued stocks that are trading for less than their intrinsic or book value. This strategy relies on the concept of a "margin of safety," which is the difference between an asset's intrinsic value and its market price. Investors using this strategy seek to minimize risks by ensuring that there is a buffer (or margin) that protects them from unexpected market fluctuations.
In contrast, growth investing emphasizes investing in companies with strong growth potential, while momentum investing focuses on stocks that are trending strongly in one direction. Therefore, the margin of safety concept is more aligned with the principles of value investing.
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