Financial Market Management — CBSE Class 10 board question

Two basic investment styles in active fund management are:

1. Growth Investing Style:
A growth manager looks for companies expected to give above-average earnings growth. The manager believes that the earning prospects and therefore the stock prices in future will be even higher. Identifying such high-growth sectors is the key challenge for the growth investment manager.

2. Value Investing Style:
A value manager looks to buy companies that are currently undervalued in the market, but whose true worth they believe will eventually be recognized in market valuations. The focus is on buying stocks at a price below their estimated true value.

Source: Chapter 7, What is Active Fund Management?

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• Each style carries 2 marks — define it and explain the fund manager's approach clearly.
• Examiners expect the key distinguishing idea: Growth = future earnings potential; Value = currently underpriced stocks.
• Use the exact terms from the textbook: "above average earnings growth" and "undervalued in the market."
• Avoid mixing up these two styles — that is a common mistake.