Question: RESEARCH INFORMATION AVAILABLE FROM VALUE LINE

This chapter stressed the importance of evaluating potential investments. Now it's your turn to try your skill at evaluating a potential investment in the Walt Disney Company. Assume you could invest $10,000 in the common stock of this company. To help you evaluate this potential investment, carefully examine Exhibit 12-5 , which reproduces the research report about Disney from Value Line. The report was published in February 2014.

1. Based on the research provided by Value Line, would you buy Disney stock? Justify your answer.

2. What other investment information would you need to evaluate Disney common stock? Where would you obtain this information?

3. On February 7, 2014, Disney stock was selling for $75 a share. Using the Internet or a newspaper, determine the current price for a share of Disney. Based on this information, would your Disney investment have been profitable?

4. Assuming you purchased Disney stock on February 7, 2014, and based on your answer to question 3, how would you decide if you want to hold or sell your Disney stock? Explain your answer.