Introduction to Financial Markets (405) — CBSE Class 10 board question

Value Investment Strategy:

Value investing is a strategy where an investor picks stocks that appear to be trading below their intrinsic or true value. The investor looks for shares that are undervalued by the market — i.e., the current market price is lower than what the stock is actually worth.

Key features:

• Focuses on buying undervalued stocks and holding them long-term.
• Requires analysing the company's fundamentals (earnings, assets, dividends).
• The investor waits patiently for the market to recognise the stock's true value, earning profit when the price rises.
• Aims to provide returns above the inflation rate to ensure real growth of investment.

It is a low-risk, long-term approach suited to investors who research carefully before investing.

Source: Investment Basics, Chapter 1

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The source passages do not explicitly define "Value Investment Strategy," so the examiner expects you to apply concepts from the chapter — such as real rate of return, inflation-beating returns, and careful analysis before investing (the 12 steps) — to frame your answer. Key examiner expectations: define the term, list 2–3 features, and connect it to the broader investment goal of beating inflation and preserving asset value. Keep it concise and factual.