1. An analyst finds that all the securities analyzed have estimated values higher than their market prices. The securities all appear to be:

A. Overvalued.

B. Undervalued.

C. Fairly valued.

2. An analyst finds that nearly all companies in a market segment have common shares that are trading at market prices above the analyst’s estimate of the shares’ values. This market segment is widely followed by analysts. Which of the following statements describes the analyst’s most appropriate first action?

A. Issue a sell recommendation for each share issue.

B. Issue a buy recommendation for each share issue.

C. Reexamine the models and inputs used for the valuations.

3. An analyst, using a number of models and a range of inputs, estimates a security’s value to be between ¥250 and ¥270. The security is trading at ¥265.

The security appears to be:

A. Overvalued.

B. Undervalued.

C. Fairly valued.