Security Analysis & Portfolio Management ( MCQ,s & Short Answers )

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LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Multiple Choice Multiple Answer Question Active investment managers :-

Correct Answer Do not believe that markets are efficient , Puts efforts to search mispriced securities in the market , Are relatively active traders in securities to acquire abnormal returns

Multiple Choice Multiple Answer Question Equity analysts provides estimates of earnings and earnings

growth for future, using historical data and :- Correct Answer Macro economic information that may impact future growth ,

Private information about the firm , Firm's specific information and public information

Multiple Choice Multiple Answer Question What are the features of short-term trends?

Correct Answer They last from 1 to 3 or 4 weeks , They interrupt the course of the intermediate cycle , They are usually influenced by random news events

Multiple Choice Multiple Answer Question What are the features of trend lines

Correct Answer A simple and useful tool in technical analysis , Prices move in trends , The trend lines represent points of support and resistance

Multiple Choice Multiple Answer Question What are the features of candle stick charts?

Correct Answer Indicates in black if the closing price is lower than the opening price , Indicates in white if the closing price is higher than the opening price

Your Answer , Displays the correlation between the high and low prices

Multiple Choice Multiple Answer Question The growth rate in the initial phase is not constant but declines

linearly over time to reach the stable growth rate in steady state is a phenomena of :-

Correct Answer H- Model for valuing growth , H-Two stage model for growth , H-Model unlike the classic two stage model

Multiple Choice Multiple Answer Question What are the features of line charts?


Correct Answer It connects closing prices from one period to the next , It is ideal for securities with no high or low price data

Multiple Choice Multiple Answer Question What are the ways of measuring relative strength?

Correct Answer Calculate the rates of return and classify securities that have earned superior historical returns , Calculating certain ratios will help in analyzing whether a security has relative strength

Your Answer Calculating the Return on investment

Multiple Choice Multiple Answer Question The Peer group of Bharat Forge consists of which all

companies? Correct Answer Am forge industries , Kalyani Forge , EL Forge

Multiple Choice Multiple Answer Question Which were the initiatives which the chairman said would

focus on in 2003-04 in the speech in annual report for the year 2003-03?

Correct Answer Research and development , Capital investment and focus on balance sheet , Overseas acquisitions

Multiple Choice Multiple Answer Question The Two-Stage dividend discount model is best suited for the

firms that are :- Correct Answer In high growth rate phase , Expecting to maintain the growth

rate phase steadily for a specific time period , Sources of high growth are expected to disappear after specific period of time

Multiple Choice Multiple Answer Question The features of bond are :-

Correct Answer Collateral , Call provision , Sinking fund and protective covenants

Multiple Choice Multiple Answer Question What are the features of

company fixed deposits? Correct Answer Interest rate offered is

higher than banks , No benefits under 80 L , No TDS for interest income upto Rs. 5000

Your Answer Interest rate offered is higher than banks , No


benefits under 80 L , No TDS for interest income upto Rs. 5000

Multiple Choice Multiple Answer Question What are the features of point

and figure charts? Correct Answer Charts are constructed using a

combination of X's and O's known as boxes. , X's show that the prices are moving up , O's show that the prices are moving down

Your Answer Charts are constructed using a combination of X's and O's known as boxes. , X's show that the prices are moving up , O's show that the prices are moving down

Multiple Choice Multiple Answer Question What are the features of post

office monthly income scheme? Correct Answer Investor earns bonus of 10% on

completion of term , Rate of return is 8 % , Interest payable monthly

Your Answer Rate of return is 8 % , Interest payable monthly , Investor earns bonus of 10% on completion of term

Multiple Choice Multiple Answer Question The firm issuing bonds

operating sinking fund and repurchases bonds either :-

Correct Answer Calling in a certain number of bonds by lot , Buying bonds in the open market , Buying bonds issued to banks and financial institutions

Your Answer Calling in a certain number of bonds by lot , Buying bonds in the open market , Buying bonds issued to banks and financial institutions

Multiple Choice Multiple Answer Question If option is given to you to

receive Rs.1,000/- today or after


one year, you will choose to receive it today because :-

Correct Answer You can use the amount to generate returns over the next one year , The purchasing power of Rs.1,000/- today is more than what it will be one year from now , There is an element of uncertainty associated with the future receipt

Your Answer You can use the amount to generate returns over the next one year , The purchasing power of Rs.1,000/- today is more than what it will be one year from now , There is an element of uncertainty associated with the future receipt

Multiple Choice Multiple Answer Question The computation of return on a

bond involves considering :- Correct Answer The entire sequence of cash flows

, The timing of cash flows , Calculating the internal rate of return

Your Answer The entire sequence of cash flows , The timing of cash flows , Calculating the internal rate of return

Multiple Choice Multiple Answer Question What are the features of line

charts? Correct Answer It connects closing prices from one

period to the next , It is ideal for securities with no high or low price data

Your Answer It connects closing prices from one period to the next , It is ideal for securities with no high or low price data

Multiple Choice Multiple Answer Question Explain what are leverage ratios ?

Correct Answer Debt equity ratio and interest coverage ratio and DSCR are important leverage ratios , Debt is riskier source of finance as it entails fixed outgo of periodic


payments , Help in assessing the risk arising using the debt capital

Your Answer Help in assessing the risk arising using the debt capital , Debt equity ratio and interest coverage ratio and DSCR are important leverage ratios , Debt is riskier source of finance as it entails fixed outgo of periodic payments

Multiple Choice Multiple Answer Question What developments had taken

place during the year 2000 in case of Bharat Forge Ltd.?

Correct Answer Demerger of investment division and windmills , Nominee director of UTI resigned and ceased to be the director - nomination withdrawn by UTI

Your Answer Demerger of investment division and windmills , Nominee director of UTI resigned and ceased to be the director - nomination withdrawn by UTI

Multiple Choice Multiple Answer Question The investor in bonds receives income

from :- Correct Answer Interest payments at coupon rates ,

Capital gain/loss arising out of the sale of the bond , Redemption of the bond of the issuer at a contracted value

Your Answer Interest payments at coupon rates , Capital gain/loss arising out of the sale of the bond , Redemption of the bond of the issuer at a contracted value

Multiple Choice Multiple Answer Question 1 Return can be in the form of :-

Correct Answer Dividends , Interests , Capital appreciation

Your Answer Dividends , Interests , Capital appreciation

Multiple Choice Multiple Answer Question 5 What were the achievements of Bharat Forge

during the year 2003? Correct Answer Secured second largest customer in China ,

Appointed a Company Secretary to act as compliance officer , New contracts won in passenger car components


Your Answer Secured second largest customer in China , Appointed a Company Secretary to act as compliance officer , New contracts won in passenger car components

Multiple Choice Multiple Answer Question 35 An option is :-

Correct Answer A contract between two parties , Where buyer receives a privilege for which he pays a premium , Where the seller accepts an obligation for which he receives a fee

Your Answer A contract between two parties , Where buyer receives a privilege for which he pays a premium , Where the seller accepts an obligation for which he receives a fee

Multiple Choice Multiple Answer Question 41 Formula for calculation of portfolio variance

requires :- Correct Answer Expected return on portfolio , Expected return on

assets , Weight of asset in the portfolio Your Answer Expected return on portfolio , Expected return on

assets , Weight of asset in the portfolio

Multiple Choice Multiple Answer Question 46 What were the objectives for 2002-03 the

chairman of Bharat forge had emphasised on in the annual report for 2001 - 02

Correct Answer Maintain aggressive exports thrust , Increase shares of value added products , Continue reducing costs

Your Answer Maintain aggressive exports thrust , Increase shares of value added products , Continue reducing costs

Multiple Choice Multiple Answer Question 47 Which are the most popular types of orders

placed through an online trading account? Correct Answer Limit orders , Market orders

Your Answer Market orders , Hedging orders , Arbitrage orders

Multiple Choice Multiple Answer Question 4 A firm's growth is determined by how

much is re-invested into new assets and the quality of these investments, and these includes :-

Correct Answer Acquisitions , Building distribution channels , Expanding marketing capabilities and investing in new facilities


Your Answer Acquisitions , Expanding marketing capabilities and investing in new facilities , Mergers

Multiple Choice Multiple Answer Question 5 Which of the following are important

momentum indicators used widely? Correct Answer Rate of change (ROC) , Relative strength

indicator (RSI) , Moving average convergence divergence(MACD)

Your Answer Rate of change (ROC) , Relative strength indicator (RSI) , Moving average convergence divergence(MACD)

Multiple Choice Multiple Answer Question 14 Which ratios are commonly used?

Correct Answer Debt equity ratio , Interest coverage ratios , Debt service coverage ratios

Your Answer Debt equity ratio , Interest coverage ratios , Debt service coverage ratios

Multiple Choice Multiple Answer Question 15 What were the Chairman's comments during

the speech in the Annual report of the FY 2002-03?

Correct Answer Best year in the history of the company , 146% growth in exports , Highest pre and post tax profits

Your Answer Best year in the history of the company , 146% growth in exports , Highest pre and post tax profits

Multiple Choice Multiple Answer Question 20 Who are the constituents of a

mutual fund? Correct Answer Sponsor & trustees , Asset

management company , Custodian

Your Answer Sponsor & trustees , Asset management company , Custodian

Multiple Choice Multiple Answer Question 26 What are the features of Kisan Vikas Patra?

Correct Answer Term is for 8 years seven months , Provision of premature withdrawal , Interest rate is 8.4% compounded annually

Your Answer Term is for 8 years seven months , Provision of premature withdrawal , Interest rate is 8.4% compounded annually


Multiple Choice Multiple Answer Question 38 The security analysis process will achieve :-

Correct Answer True picture of a company , Normal earning power , Projection of future profitability

Your Answer True picture of a company , Normal earning power , Projection of future profitability

Multiple Choice Multiple Answer Question 41 The return to the bond investor can be

measured in terms of :- Correct Answer Current yield , Yield to maturity , Realised

yield Your Answer Yield to maturity , Realised yield

Multiple Choice Multiple Answer Question 5 Which are the different types of accounts offered to

investors by the stock brokers? Correct Answer Cash trading , Margin trading

Your Answer General trading , Cash trading , Margin trading

Multiple Choice Multiple Answer Question 7 What are the features of Retail government securities

(G-secs) ? Correct Answer Safest investment option available , Demat account is

required for investment , Choice of tenure varies from less than 1 year to 30 years

Your Answer Securities can be bought from the RBI , Safest investment option available , Demat account is required for investment

Multiple Choice Multiple Answer Question 10 To measure the movement of stocks in the market

which indices were constructed by Dow? Correct Answer Dow Jones industrial Average , Dow Jones

Transportation Average Your Answer Dow Jones Transportation Average

Multiple Choice Multiple Answer Question 16 The security market is the market for :-

Correct Answer Equity , Debt , Derivatives

Your Answer Equity , Debt , Bank deposits

Multiple Choice Multiple Answer


Question 18 In a typical stock market cycle which are the types of trends?

Correct Answer Trends upward , Trend downward , Sideway trend

Your Answer Trends upward , Trend downward , Flat trend

Multiple Choice Multiple Answer Question 22 Mutual fund schemes could be broadly classified as :-

Correct Answer Open ended scheme , Close ended scheme

Your Answer Open ended scheme , Close ended scheme , Growth schemes

Multiple Choice Multiple Answer Question 24 What was the final analysis on the performance of

Bharat forge for the year FY 02? Correct Answer Aim to become US$1 billion Company by Fy 08 from

US$100 million , Stock currently trades at 15 times its FY 05 consensus EPS forecasts , Stock will trade at an inexpensive PEG of 0.6x.

Your Answer Aim to become US$1 billion Company by Fy 08 from US$100 million , Stock currently trades at 15 times its FY 05 consensus EPS forecasts , Stock will trade at an inexpensive PEG of 0.6x.

Multiple Choice Multiple Answer Question 26 Gilt Edged Securities are :-

Correct Answer State Govt. , Quasi-Govt , Central Govt

Your Answer Central Govt , State Govt. , Quasi-Govt

Multiple Choice Multiple Answer Question 33 What are the ways of measuring relative strength?

Correct Answer Calculate the rates of return and classify securities that have earned superior historical returns , Calculating certain ratios will help in analyzing whether a security has relative strength

Your Answer Calculate the rates of return and classify securities that have earned superior historical returns , Calculating certain ratios will help in analyzing whether a security has relative strength , Calculating the Return on investment

Multiple Choice Multiple Answer Question 44 What are the different types of profitability ratios?

Correct Answer Gross profit margin ratio , Earnings power , Return on equity

Your Answer Gross profit margin ratio , Earnings power , Return on


equity

Multiple Choice Multiple Answer Question The Gordon growth model is best suited for firms :-

Correct Answer Growing at a rate equal to or lower that the growth in the economy , Which have well established dividend payout ratio policy , Whose earnings are steady and perpetual

Your Answer Growing at a rate equal to or lower that the growth in the economy , Which have well established dividend payout ratio policy

Multiple Choice Multiple Answer Question The Two-Stage dividend discount model is based on the assumption

of :- Correct Answer An initial phase where the growth is not a stable growth rate , A

subsequent steady state of growth rate being stable and lasts n years , A stable growth phase lasts forever

Your Answer An initial phase where the growth is not a stable growth rate , A subsequent steady state of growth rate being stable and lasts n years , A stable growth phase lasts forever

Multiple Choice Multiple Answer Question Features of PSU Bonds are :-

Correct Answer No TDS , Transferable by endorsement , No stamp duty on transfer

Your Answer No TDS , Transferable by endorsement , No stamp duty on transfer

Multiple Choice Multiple Answer Question An options contract allows the investor :-

Correct Answer To earn a profit while restricting the downside risk , To use the options for speculation , Either to honour or walk away from the contract

Your Answer Either to honour or walk away from the contract , To earn a profit while restricting the downside risk , To use the options for speculation

Multiple Choice Multiple Answer Question Major steps involved in construction of a index are :-

Correct Answer Selecting a set of scrips to be used , Fixing starting date , Calculating market capitalisation

Your Answer Selecting a set of scrips to be used , Fixing starting date , Fixing ending date

Multiple Choice Multiple Answer Question How can the financial statements can be manipulated while

giving the estimates for growth? Correct Answer Change method of rate of depreciation , Change method of stock

valuation , Inflating sales for current year by advancing sales for


the following year

Your Answer Change method of rate of depreciation , Change method of stock valuation , Inflating sales for current year by advancing sales for the following year

Multiple Choice Multiple Answer Question The underlying assumptions of Technical analysis are that :-

Correct Answer Prices move in predictable patterns , Market value is determined by supply & demand , Investors are emotional than being rational

Your Answer Prices move in predictable patterns , Investors are emotional than being rational

Multiple Choice Multiple Answer Question Which are the different styles of displaying charts?

Correct Answer Bar and line charts , Candle stick charts , Point and figure charts

Your Answer Candle stick charts , Point and figure charts , Bar and line charts

Multiple Choice Multiple Answer Question What are the features of public provident scheme?

Correct Answer 15 year instrument , Rate of interest is 8% , Partial withdrawal is available from 7th year

Your Answer 15 year instrument , Rate of interest is 8% , Partial withdrawal is available from 7th year

Multiple Choice Multiple Answer Question Growth of the firm can be estimated through :-

Correct Answer Firm's past earnings/historical growth rate , Estimates made by equity research analyst who follow the firm , Estimates from a firm's fundamentals

Your Answer Firm's past earnings/historical growth rate , Estimates made by equity research analyst who follow the firm , Estimates from a firm's fundamentals

Multiple Choice Multiple Answer Question Characteristics of Preference shares are :-

Correct Answer Carry a fixed rate of dividend , Dividend payable out of profit , Redemption in 7 to 12 years

Your Answer Carry a fixed rate of dividend , Dividend payable out of profit , Redemption in 7 to 12 years

Multiple Choice Multiple Answer Question What are the SEBI regulations with respect to mutual funds?

Correct Answer Mutual funds to be registered with SEBI before the launching any scheme , 2/3rds of the directors of the trustee company must be


independent , An AMC approved by SEBI manages the fund

Your Answer Mutual funds to be registered with SEBI before the launching any scheme , 2/3rds of the directors of the trustee company must be independent , An AMC approved by SEBI manages the fund

Multiple Choice Multiple Answer Question The security analysis process will achieve :-

Correct Answer True picture of a company , Normal earning power , Projection of future profitability

Your Answer True picture of a company , Normal earning power , Projection of future profitability

Multiple Choice Multiple Answer Question The return to the bond investor can be measured in terms of :-

Correct Answer Current yield , Yield to maturity , Realised yield

Your Answer Realised yield

Multiple Choice Multiple Answer Question What are the features of bank deposits?

Correct Answer Interest is presently around 6% , Benefits under section 80 L , Banks offer cheque facility for investors making it convenient to withdraw

Your Answer Interest is presently around 6% , Banks offer cheque facility for investors making it convenient to withdraw

Multiple Choice Multiple Answer Question What are the important macro economic indicators?

Correct Answer GNP growth rate , Price Conditions , Monsoons

Your Answer GNP growth rate , Price Conditions , Monsoons

Multiple Choice Single Answer Question When an investor invests in stock, expects to get the dividends and

an expected price for the period the stock is held is the rule of :- Correct Answer The General model

Multiple Choice Single Answer Question Stock Exchanges are the part of :-

Correct Answer Secondary market

Your Answer Money Market


Multiple Choice Single Answer Question The index futures symbols of BSE are represented as :-

Correct Answer BSX JAN 2005 (January contract)

Multiple Choice Single Answer Question More than half the variation in stock price could be attributed

to which factor? Correct Answer Market influence

Multiple Choice Single Answer Question In India we have index futures contracts based on :-

Correct Answer S&P CNX Nifty and the BSE sensex

Multiple Choice Single Answer Question In India, the futures on individual securities have been

introduced from :- Correct Answer 2001

Multiple Choice Single Answer Question What do you understand by the term redemption price?

Correct Answer Price or NAV at which a scheme purchases its units

Multiple Choice Single Answer Question A security analysis is done :-

Correct Answer For decision making for investments

Multiple Choice Single Answer Question As per the exhibit 18-1 for individual stock futures on NSE,

the price steps in respect of all futures contract admitted to the dealings of the exchange shall be :-

Correct Answer 0.05

Multiple Choice Single Answer Question What is a technical approach to investment?

Correct Answer A reflection of the idea that prices move in trends which are determined by various factors


Multiple Choice Single Answer Question A pledge of real assets as insurance against the non-payment

of default by the buyer represents Correct Answer Collateral

Multiple Choice Single Answer Question Who developed Dow's Principles and organised them into a

theory as it is known today? Correct Answer William Peter Hamilton

Your Answer Charles.H.Dow

Multiple Choice Single Answer Question We can compare the price earning ratio of a market to its

historical average to make judgements about, whether market is :-

Correct Answer Under valued or over valued

Your Answer Under valued or over valued

Multiple Choice Single Answer Question When a firm can grow net profits by issuing equity, the expected

growth rate in net profits is determined by :- Correct Answer Equity reinvestment rate X return on equity

Your Answer Price earning ratio X return on equity

Multiple Choice Single Answer Question What is a load fund?

Correct Answer Fund charging a fee for entry and exit

Your Answer Fund charging a fee for entry and exit

Multiple Choice Single Answer Question Investment is a risk free investment when :-

Correct Answer Actual return is = expected return

Your Answer Actual return is = expected return

Multiple Choice Single Answer Question Debt instruments that have a maturity period of more than one

year are called as :- Correct Answer Bonds

Your Answer Bonds


Multiple Choice Single Answer Question Mr. Sharma is expecting to receive Rs. 50,000/- at the end of 5

years. He wanted to know what is the present value of this amount, if the rate of interest is 6% p.a?

Correct Answer Rs. 37363/-

Your Answer Rs. 37363/-

Multiple Choice Single Answer Question Which of these is a short-maturity debt issue?

Correct Answer Money market funds and gilts

Your Answer Money market funds and gilts

Multiple Choice Single Answer Question What is Support level?

Correct Answer A point where the prices become relatively attractive for buyers

Your Answer Market resistance to a price fall

Multiple Choice Single Answer Question During the 1980's rate of savings in India has hovered around

what percentage? Correct Answer 0.21

Your Answer 0.22

Multiple Choice Single Answer Question A market that is trading at a Price earning ratio that is much

higher than its historical norms is considered to be :- Correct Answer Over valued

Your Answer Over valued

Multiple Choice Single Answer Question The average historical growth rate can be calculated as :-

Correct Answer Arithmetic average or a geometric average

Your Answer Geometric average

Multiple Choice Single Answer Question 4 What are short term trends?

Correct Answer Trends which interrupt the course of the intermediate cycle


Your Answer They are counter-cyclical trends within the confines of a primary trend

Multiple Choice Single Answer Question 8 When the firm is not raising equity by issuing new shares, the

growth rate in net profits is given by :- Correct Answer Retention ratio X return on equity

Your Answer Price earning ratio X return on equity

Multiple Choice Single Answer Question 9 The historical growth rate and the past earnings of a firm are

used in valuing :- Correct Answer Stable firms, but not appropriate for high growth firms

Your Answer Consistent stable firms, but not appropriate for high growth firms

Multiple Choice Single Answer Question 10 Efficient market hypothesis is based on the assumption that

market comprises of :- Correct Answer Rational Investors

Your Answer Heterogeneous investors

Multiple Choice Single Answer Question 11 Co variance of asset with market portfolio 85 and variance of

market portfolio is 100 then beta is :- Correct Answer 0.0085

Your Answer 0.0085

Multiple Choice Single Answer Question 13 Mr. Tiwari is expecting to receive Rs.25,000/- at the end of 10

years. He wanted to know what is the present value of this amount, if the rate of interest is 10% p.a:-



Multiple Choice Single Answer Question 18 What does flow-of fund analysis help in understanding?

Correct Answer Availability of money for the stock market

Your Answer Financial strength of various companies

Multiple Choice Single Answer


Question 23 A security represent evidence of :-

Correct Answer A property right

Your Answer Safety

Multiple Choice Single Answer Question 24 Mr.Saurabh invests Rs. 5,000/- today. The rate of interest is 4%

compounded annually. What will be the value of his investment after 5 years?



Multiple Choice Single Answer Question 27 In India futures on individual securities have been introduced by

:- Correct Answer BSE & NSE

Your Answer BSE & NSE

Multiple Choice Single Answer Question 43 The issuing firm enjoys the flexibility to call the bonds if the

interest rates fall significantly and it can issue :- Correct Answer New bonds at a lower rates

Your Answer New bonds at a lower rates

Multiple Choice Single Answer Question 2 When was the first mutual fund set up?

Correct Answer 1963

Your Answer 1963

Multiple Choice Single Answer Question 7 How can transition phases be projected?

Correct Answer Transition phases are signalled by clearly definable price patterns

Your Answer By working out the resistance and support levels

Multiple Choice Single Answer Question 8 If the price of a share at the beginning of the year was Rs.50/-,

dividend received during the year was Rs.10/-per share and the price at the end is Rs.60/-. What is the rate of return?

Correct Answer 0.4


Your Answer 0.2

Multiple Choice Single Answer Question 27 Investing in this avenue enable you participate in the equity

market indirectly :- Correct Answer Mutual Funds

Your Answer Mutual Funds

Multiple Choice Single Answer Question 29 In any Economy, bridge is created between savers and who

need the funds by this system :- Correct Answer Financial

Your Answer Economic

Multiple Choice Single Answer Question 30 Agriculture account for how much portion of the economy?

Correct Answer Quarter

Your Answer Three fourths

Multiple Choice Single Answer Question 37 Who operates the sinking fund under the sinking fund provision

of a firm? Correct Answer The bond trustee or the issuer

Your Answer The bond trustee or the issuer

Multiple Choice Single Answer Question 40 How did Dow use the behaviour of stock markets?

Correct Answer As a barometer of business conditions rather than a basis for forecasting stock prices

Your Answer As a barometer of business conditions rather than a basis for forecasting stock prices

Multiple Choice Single Answer Question 42 The growth period in the industry life cycle is defined as :-

Correct Answer Period of rapid market acceptance and substantial profit improvement

Your Answer Period of rapid market acceptance and substantial profit improvement

Multiple Choice Single Answer Question 3 What is the limitation of Flow-of funds analysis method?

Correct Answer Cannot give indication of the inclination of market participants to purchase stock


Your Answer Cannot give indication of the inclination of market participants to purchase stock

Multiple Choice Single Answer Question 6 Sentiment indicators are based on what assumption

Correct Answer Different groups of investors are consistent in their actions at major market turning points

Your Answer Different groups of investors are consistent in their actions at major market turning points

Multiple Choice Single Answer Question 12 An agreement to buy or sell a specified quantity of an asset at a

certain future date or a certain price is know as :- Correct Answer Forward contract

Your Answer Futures contract

Multiple Choice Single Answer Question 25 What are intermediate trends?

Correct Answer They are counter-cyclical trends within the confines of a primary trend

Your Answer They are counter-cyclical trends within the confines of a primary trend

Multiple Choice Single Answer Question 29 What are index funds?

Correct Answer Investment in securities in the same weightage which replicates a particular index

Your Answer Investment in securities in the same weightage which replicates a particular index

Multiple Choice Single Answer Question 38 What are the assumptions of the Dow theory?

Correct Answer Majority of stocks follow the underlying trend of the market most of the time

Your Answer Majority of stocks follow the underlying trend of the market most of the time

Multiple Choice Single Answer Question 39 Mr.Rohan invests Rs.25,000/- today. The rate of interest is 6%






Question 41 How many measures of money supply are used commonly?

Correct Answer 2

Your Answer 2

Multiple Choice Single Answer Question 43 Under which simple model the value of the stock is the present

value of expected dividends on it :- Correct Answer The Dividend discount model

Your Answer The Dividend growth model

Multiple Choice Single Answer Question 46 Avenues can be broadly classified into the which type of assets?

Correct Answer Financial and Real

Your Answer Tangible and Intangible

Multiple Choice Single Answer Question The average investor in the market is driven more by emotions

than by rational analysis is a rule of :- Correct Answer Technical analysis

Your Answer Fundamental Analysis

Multiple Choice Single Answer Question What is the objective of an income fund?

Correct Answer To provide regular and steady income

Your Answer To provide guaranteed returns to investors

Multiple Choice Single Answer Question What does lower level of unemployment indicates?

Correct Answer Positive economic conditions

Your Answer Economic slowdown

Multiple Choice Single Answer Question The GDP growth rate in the economy in real terms has

fluctuated between :- Correct Answer 4% and 5%

Your Answer 4% and 5%


Multiple Choice Single Answer Question Mr.Satish invests Rs.10,000/- today. The rate of interest is 8%


Correct Answer Rs.14.693/-

Your Answer Rs.14.693/-

Multiple Choice Single Answer Question Which market is affected with the improving and higher growth

rate in economy? Correct Answer Stock market

Your Answer Stock market

Multiple Choice Single Answer Question What do you understand by money supply?

Correct Answer Total money in existence at any given time

Your Answer Total money in existence at any given time

Multiple Choice Single Answer Question What is Gross National Product ?

Correct Answer Gross income generated from within the country

Your Answer Gross income generated from within the country

Multiple Choice Single Answer Question The greater the deviation of the actual returns from the actual

return :- Correct Answer Greater the variance

Your Answer Greater the variance

Multiple Choice Single Answer Question What is GDP at factor cost ?

Correct Answer Excludes net income received from abroad

Your Answer Includes indirect taxes

Multiple Choice Single Answer Question More than half the variation in stock price could be attributed to

which factor?


Correct Answer Market influence

Your Answer Market influence

Multiple Choice Single Answer Question Free Float index considers this to calculate market capitalisation

:- Correct Answer Actual no. of shares available

Your Answer Actual no. of shares available

Multiple Choice Single Answer Question The Top-down approach is also known as :-

Correct Answer Economy-industry-company approach

Your Answer Economy-industry-company approach

Multiple Choice Single Answer Question What is a technical approach to investment?

Correct Answer A reflection of the idea that prices move in trends which are determined by various factors

Your Answer A reflection of the idea that prices move in trends which are determined by various factors

Multiple Choice Single Answer Question What are index funds?

Correct Answer Investment in securities in the same weightage which replicates a particular index

Your Answer Investment in securities in the same weightage which replicates a particular index

Multiple Choice Single Answer Question What could be a better approach to flow-of -funds analysis?

Correct Answer An examination of liquidity trends in the banking system

Your Answer A study of macro economical changes

Multiple Choice Single Answer Question The general dividend model is based on the principle of :-

Correct Answer Present value of the expected future cash flow

Your Answer Present value of the expected future cash flow



Question What are short term trends?

Correct Answer Trends which interrupt the course of the intermediate cycle

Your Answer Trends which interrupt the course of the intermediate cycle

Multiple Choice Single Answer Question What is the aim of growth funds?

Correct Answer To provide capital appreciation over medium to long term

Your Answer To provide capital appreciation over medium to long term

Multiple Choice Single Answer Question This is not a stock exchange :-

Correct Answer MCX

Your Answer MCX

Multiple Choice Single Answer Question Under EMH it is assumed that if markets are efficient, securities are

priced to provide a :- Correct Answer Normal returns for their given level of risk

Your Answer Normal returns for their given level of risk

Multiple Choice Single Answer Question Mr. Shekhar invests Rs.50,000/- in a scheme of LIC, the rate of interest

is 8% compounded annually. What will be the value of his investment after 5 years?



Multiple Choice Single Answer Question The price of the index futures contract is defined as :-

Correct Answer Future price = Spot price + Carry cost

Your Answer Future price = Spot price + Carry cost

Multiple Choice Single Answer Question Financial assets can be classified as :-

Correct Answer Marketable and non-marketable

Your Answer Marketable and non-marketable


Multiple Choice Single Answer Question Mr. Suresh is expecting to receive Rs.1,50,000/- at the end of 3

years. He wanted to know what is the present value of this amount, if the rate of interest is 9% p.a ?

Correct Answer Rs.1,15,827/-

Your Answer Rs.1,15,827/-

Multiple Choice Single Answer Question What is Flow-of-funds analysis?

Correct Answer Consists of an analysis of the financial positions of various investor groups

Your Answer Consists of an analysis of the financial positions of various investor groups

Multiple Choice Single Answer Question Mr. Suhas is expecting to receive Rs.1,00,000/- at the end of 7

years. He wanted to know what is the present value of this amount, if the rate of interest is 7% p.a ?

Correct Answer Rs. 62,275/-

Your Answer Rs. 62,275/-

Multiple Choice Single Answer Question What do you understand by term pioneering stage in the industry

life cycle analysis? Correct Answer Slow sales growth product recently introduced

Your Answer Slow sales growth product recently introduced

Multiple Choice Single Answer Question Till 1990's secular Indian economy's inflation rate has been of

what percentage? Correct Answer 0.07

Your Answer 0.07

Multiple Choice Single Answer Question Credit rating companies assign ratings for which of these

investments? Correct Answer Company deposits

Your Answer Company deposits



Question If index future is taken under futures contract, the underlying asset would be :-

Correct Answer Stock index

Your Answer Stock index

Multiple Choice Single Answer Question What is balance of payments?

Correct Answer Credit and debit transactions of a country

Your Answer Credit and debit transactions of a company

Multiple Choice Single Answer Question Profits are non existent in pioneering stage because of :-

Correct Answer Heavy expenses on product introduction

Your Answer Heavy expenses on product introduction

Multiple Choice Single Answer Question What is the indicator of buoyant economy?

Correct Answer Increased level of housing construction activity

Your Answer Increased level of housing construction activity

Multiple Choice Single Answer Question What does a transitional phase indicate?

Correct Answer It marks the turning point between a rising and falling market

Your Answer It marks the turning point between a rising and falling market

Multiple Choice Single Answer Question Dividend discount model is considered as the simplest model for

:- Correct Answer Valuing Equity

Your Answer Valuing Equity

Multiple Choice Single Answer Question The present value of all the future cash payments to be paid on the security to the investor is termed as :- Correct Answer Intrinsic value of a security Your Answer Intrinsic value of a security Multiple Choice Single Answer


Question If the price of a share at the beginning of the year was Rs.100/-, no dividend received during the year and the price at the end is Rs.115/-. What is the rate of return? Correct Answer 0.15 Your Answer 0.15 Multiple Choice Single Answer Question What is the objective of Portfolio management? Correct Answer To Minimize risk and maximize return Your Answer To Minimize risk and maximize return Multiple Choice Single Answer Question Capital expenditure -depreciation +change in working capital -(new debt issued - debt repaid) = Correct Answer Equity reinvested in business Your Answer Equity reinvested in business Multiple Choice Single Answer Question What is the percentage of variation the market and industry influence account for? Correct Answer 2/3rd Your Answer 75% Multiple Choice Single Answer Question What is the rate of interest on the tax free bonds issue by the government? Correct Answer 6.5% Your Answer 6.5% Multiple Choice Single Answer Question Investments could be made in retail government securities through :- Correct Answer Primary dealers Your Answer Primary dealers Question The growth rate is used to forecast future revenues and earnings and

are inputs in valuing :- Correct Answer Stable firms

Your Answer High growth firms

Multiple Choice Single Answer Question The objective of fundamental analysis for a security in a market is to

identify either it is :- Correct Answer Under priced and over priced


Your Answer Under priced and over priced

Multiple Choice Single Answer Question We can compare the price earning ratio of a market to its historical

average to make judgements about, whether market is :- Correct Answer Under valued or over valued

Your Answer Under valued or over valued

Multiple Choice Single Answer Question The growth rate is used to forecast future revenues and earnings and

are inputs in valuing :- Correct Answer Stable firms

Your Answer High growth firms

Multiple Choice Single Answer Question How can transition phases be projected?

Correct Answer Transition phases are signalled by clearly definable price patterns

Your Answer Transition phases are signalled by clearly definable price patterns

Multiple Choice Single Answer Question When was the Dow theory first published?

Correct Answer Between 1900 and 1902

Your Answer Between 1900 and 1902

Multiple Choice Single Answer Question When was the first mutual fund set up?

Correct Answer 1963

Your Answer 1963

Multiple Choice Single Answer Question What is the art of technical analysis?

Correct Answer To identify trend changes at an early stage and maintain investment posture till the trend has reversed

Your Answer To identify trend changes at an early stage and maintain investment posture till the trend has reversed

Multiple Choice Single Answer Question The expected price of the stock at the end of the holding period is

determined by future dividends and the value of the stock is the


present value of dividends through infinity are the underlying assumptions of :-

Correct Answer The General model

Your Answer The Dividend discount model

Multiple Choice Single Answer Question How would you rate a portfolio with 90% investment in stocks?

Correct Answer Highly aggressive

Your Answer Highly aggressive

Multiple Choice Single Answer Question What are primary trends?

Correct Answer Reflection of investor's attitudes towards unfolding fundamentals in the business cycle

Your Answer Long term trends

Multiple Choice Single Answer Question In a forward contract there is :-

Correct Answer No Exchange of cash

Your Answer No Exchange of cash

Multiple Choice Single Answer Question Under EMH it is assumed that if markets are efficient, securities are

priced to provide a :- Correct Answer Normal returns for their given level of risk

Your Answer Equal returns for their given level of risk

Multiple Choice Single Answer Question The approach followed to assess the growth rate by looking at how

much a firm reinvests for future growth and the quality of its re-investments is :-

Correct Answer Estimating growth from a firm's fundamentals

Your Answer Earnings multiplier approach

Select The Blank Question The possibility of reduction of risk through the construction of a portfolio

depends on the value of ________ between the two assets. Correct Answer Correlation coefficient

Your Answer Time


Select The Blank Question Dow Jones transportation average was previously known as ________.

Correct Answer Rail average

Your Answer Rail average

Select The Blank Question The compounded annual return of Kisan Vikas patra is ________.

Correct Answer 0.084

Your Answer 0.084

Select The Blank Question Under futures market ________ process provides for collection of losses

that have already occurred. Correct Answer The daily settlement

Your Answer The daily settlement

Select The Blank Question The regulations of SEBI with respect to mutual funds were fully revised in

the year ________. Correct Answer 1996

Your Answer 1996

Select The Blank Question The Dow theory states that there are simultaneously ________

movements in the stock market. Correct Answer 3

Your Answer 3

Select The Blank Question Under the options contract ________ gives the holder the right, but not the

obligation to buy or sell the underlying instrument only on the expiry date. Correct Answer European option

Your Answer European option

Select The Blank Question ________ ratio indicates the margin available after meeting the

manufacturing expenses. Correct Answer Gross Profit margin


Your Answer Gross Profit margin

Select The Blank Question Secondary reactions occurs because of ________ which arise in the

market as a result of over optimism and over pessimism. Correct Answer Technical distortions

Your Answer Bearish trends

Select The Blank Question Debentures rated as "A" are judged to offer ________ of timely payment of

interest and principal. Correct Answer Adequate safety

Your Answer Adequate safety

Select The Blank Question Debentures rated ________ are judged to offer sufficient safety of timely

payment of interest and repayment of principal. Correct Answer "BBB"

Your Answer "BBB"

Select The Blank Question The value of the stock in the ________ model is sensitive to the

estimates of the growth rate. Correct Answer

The Gordons dividend growth

Select The Blank Question ________ is due to the fact that a borrower may not pay

interest and/or principal on time. Correct Answer

Default risk

Select The Blank Question A pattern which does not result in reversal of a trend but

reaffirmation of the underlying trend is called ________. Correct Answer

Consolidation pattern

Select The Blank Question ________ bonds are generally called for prepayment after

interest rates have fallen, investors will not be able to find


comparable investment avenues.

Correct Answer

Call risk

Select The Blank Question ________ deal in futures to offset a pre-existing risk.

Correct Answer

Hedger

Select The Blank Question ________are good benchmark to compare the ratios for a firm.

Correct Answer

Industry averages

Select The Blank Question The ________ phase is characterized by resistance area and

support level. Correct Answer

Transition

Select The Blank Question ________ measures the efficiency of credit management.

Correct Answer

Average collection period

Select The Blank Question 16 ________ is affected by the leverage decisions of the firm.

Correct Answer Return on equity

Your Answer Return on equity

Select The Blank Question 20 ________ refers to the possibility that there may not be a readily available

market for the particular bond. Correct Answer Liquidity risk

Your Answer Interest rate risk

Select The Blank


Question 21 The govt allowed public sector banks and institutions in mutual funds in ________.

Correct Answer Early 90's

Your Answer Early 90's

Select The Blank Question 36 The 8% taxable savings bonds are repayable after ________ years.

Correct Answer 6

Your Answer 5

Select The Blank Question 39 Security analysis serves the investment decision maker by identifying

________securities. Correct Answer Under priced

Your Answer Blue chip

Select The Blank Question 42 ________ absorbs the excess demand or supply generated by hedgers

and assume the risk of price fluctuations. Correct Answer Speculators

Your Answer Brokers

Select The Blank Question 44 A ________ rally for stocks generally takes place because of an improved

outlook for business conditions over what was anticipated. Correct Answer Bear market

Your Answer Bullish market

Select The Blank Question 1 UTI was set up in the year ________.

Correct Answer 1963

Your Answer 1963

Select The Blank Question 6 An ________ is a series of equal payments or receipts occurring at regular

intervals of time. Correct Answer Annuity

Your Answer Annuity


Select The Blank Question 12 An option is a contract which gives the buyer ________ to buy or sell

shares of the underlying security at a specific price on or before a specific date.

Correct Answer Right but not obligation

Your Answer Right but not obligation

Select The Blank Question 13 Measures of ________ tells us what we can expect a typical or middle

data point of a distribution to be. Correct Answer Central tendency

Your Answer Central tendency

Select The Blank Question 28 ________ identified five forces that determine the intrinsic long run profit

attractiveness of a market or market segment. Correct Answer Michael Porter

Your Answer Michael Porter

Select The Blank Question 36 ________is a hybrid form of security which has characteristics of both

equity and debentures Correct Answer Preference shares

Your Answer Preference shares

Select The Blank Question 39 Debentures rated "BB" refers ________ of timely payment of interest and

principal. Correct Answer Inadequate safety

Your Answer Inadequate safety

Select The Blank Question 43 The Derivative market is divided into Future market and ________ market.

Correct Answer Options

Your Answer Options

Select The Blank Question 46 The Dow theory was published in a series of editorials in the ________.


Correct Answer Wall street journal

Your Answer Wall street journal

Select The Blank Question 1 ________ deal in futures to offset a pre-existing risk.

Correct Answer Hedger

Your Answer Speculator

Select The Blank Question 8 Under ________ EMH investors cannot earn abnormal/superior profits on

securities on a consistent basis. Correct Answer Semi-strong form

Your Answer Semi-strong form

Select The Blank Question 11 ________ take long or short positions only with the intention of making

profits by getting out of the market when conditions favor them. Correct Answer Speculators

Your Answer Hedgers

Select The Blank Question 14 ________ model is based on the principle that an initial phase where the

growth rate is not stable and subsequent steady growth rate and remains for the long-term.

Correct Answer The Two-Stage dividend discount

Your Answer The Gordons dividend growth

Select The Blank Question 17 ________ ratio is estimated by dividing the market value of a firm's assets

by the replacement cost of these assets. Correct Answer Market value to replacement cost ratio

Your Answer PEG ratio

Select The Blank Question 19 ________involves a simultaneous sale and repurchase agreement.

Correct Answer Repos

Your Answer Repos


Select The Blank Question 28 Current liabilities include all liabilities due in the next ________ and

provisions. Correct Answer 12 months

Your Answer 12 months

Select The Blank Question 30 S&P NSE 50 index is known as ________.

Correct Answer NIFTY

Your Answer NIFTY

Select The Blank Question 31 ________seeks to safeguard against potential losses on the outstanding

position in futures market. Correct Answer Initial margin

Your Answer Daily settlement

Select The Blank Question 35 ________ ratio is the ratio of net profit to the sales.

Correct Answer Net Profit Margin

Your Answer Net Profit Margin

Select The Blank Question Mutual fund is to be registered with ________ before raising funds from

public. Correct Answer SEBI

Your Answer SEBI

Select The Blank Question An investor with a higher tolerance of risk should tilt his portfolio in favour

of ________. Correct Answer Stocks

Your Answer Bank deposits

Select The Blank Question The ________ phase carries a lot of significance because it marks the

turning point between a rising and a falling market. Correct Answer Transitional


Your Answer Sideways

Select The Blank Question Acid test ratio is more stringent measure of liquidity compared to the

________. Correct Answer Current ratio

Your Answer Current ratio

Select The Blank Question ________ measures the efficiency of credit management.

Correct Answer Average collection period

Your Answer Average collection period

Select The Blank Question ________ measures the profitability of operations without considering the

influence of financial structure and tax rate. Correct Answer Earnings power

Your Answer Earnings power

Select The Blank Question A line is defined as a price movement two or three weeks or longer, during

which period the price variation of both averages moves within a price range of approximately________%.

Correct Answer 5

Your Answer 5

Select The Blank Question ________ measures the profitability of equity funds invested in the firms.

Correct Answer Return on equity

Your Answer Return on equity

Select The Blank Question Risk can be referred as the ________ in the return with respect to the

expected return. Correct Answer Volatility

Your Answer Difference

Select The Blank


Question All trades in the futures market are cash settled on a ________ basis.

Correct Answer T+1

Your Answer T+1

Select The Blank Question ________ ratio is the ratio of net profit to the sales.

Correct Answer Net Profit Margin

Your Answer Net Profit Margin

Select The Blank Question When a debenture is sold to the general public a ________ is appointed.

Correct Answer Trustee

Your Answer Brokers

Select The Blank Question A security is said to be ________ if its current market price is over its

intrinsic value. Correct Answer Over priced

Your Answer Over priced

Select The Blank Question ________ is the value at a certain future date today of a stream of cash

flows that occurs over a period of time. Correct Answer Future value

Your Answer Future value

Select The Blank Question Mutual fund is to be registered with ________ before raising funds from

public. Correct Answer SEBI

Your Answer SEBI

Select The Blank Question In a heads and shoulders formation the deeper the pattern, the greater is

the ________ significance once it is completed Correct Answer Bearish

Your Answer Bearish


Select The Blank Question The govt allowed public sector banks and institutions in mutual funds in

________. Correct Answer Early 90's

Your Answer Early 90's

Select The Blank Question Under ________ EMH investors cannot earn abnormal/superior profits on

securities on a consistent basis. Correct Answer Semi-strong form

Your Answer Semi-strong form

Select The Blank Question The 6.________% tax saving bonds of government of India have a tenure

of 5 years. Correct Answer 5

Your Answer 5

Select The Blank Question ________ is the ratio of the market price per share to the earnings per

share. Correct Answer Price earning ratio

Your Answer Price earning ratio

Select The Blank Question ________ absorbs the excess demand or supply generated by hedgers

and assume the risk of price fluctuations. Correct Answer Speculators

Your Answer Speculators

Select The Blank Question UTI was set up in the year ________.

Correct Answer 1963

Your Answer 1963

True/False Question The normal relationship is for the volume to expand on rallies and

contract on declines.


Correct Answer True

True/False Question In case of assured returns, A scheme cannot promise returns unless

such returns are fully guaranteed by sponsor or AMC. Correct Answer True

True/False Question A firm uses a combination of equity and debt for financing its

assets. Correct Answer True

True/False Question Policies of the government and the attitude of the government

towards the industry have a considerable influence on the industry.

Correct Answer True

True/False Question Investors in high tax bracket would benefit by investing in

equity schemes. Correct Answer False

True/False Question The price earning ratio is an increasing function of the payout

ratio and the growth rate and a decreasing function of the riskiness of the firm.

Correct Answer True

True/False Question When we invest in only one asset we are not exposed to any

specific or market risk. Correct Answer False

True/False Question Five paisa.com is an example of on line trading portal.

Correct Answer True

True/False Question A mutual fund is required to dispatch the dividend warrants

to the unit holders within thirty days of the declaration of dividend.

Correct Answer True

True/False


Question Bearish actions come from a series of declining peaks and troughs.

Correct Answer True

True/False Question Default is normally evaluated and indicated by the rating

assigned to the debt instruments by independent credit ratings agencies.

Correct Answer True

Your Answer True

True/False Question With the use of diversification you can reduce the risk.

Correct Answer True

Your Answer True

True/False Question A segment is unattractive if the buyers possess strong or

growing bargaining powers. Correct Answer True

Your Answer True

True/False Question Risk on a portfolio of assets is always same as the risk on

individual asset. Correct Answer False

Your Answer False

True/False Question Debt is less riskier source of finance than equity.

Correct Answer False

Your Answer True

True/False Question Post office monthly schemes have a 10 year tenor.


Your Answer False

True/False


Question With the introduction of on-line trading by NSE and BSE, the role of regional stock exchanges have diminished.

Correct Answer True

Your Answer True

True/False Question Penetration of a trend line denotes a bearish phase.


Your Answer True

True/False Question Passive investment managers believe that markets are

inefficient and Active managers believe that markets are efficient.


Your Answer False

True/False Question 2 Currently in India index options are both European and American

in nature. Correct Answer False

Your Answer False

True/False Question 3 The cost structure remaining the same, better price realisation

results in lower gross profit ratio. Correct Answer False

Your Answer True

True/False Question 6 A segment is more attractive when there are actual or potential

substitutes for the product. Correct Answer False

Your Answer True

True/False Question 15 Bond ratings by credit rating agencies provide superior and low

cost information to the investor serving as a basis for a proper risk-return trade off by investors.

Correct Answer True

Your Answer True


True/False Question 29 The arithmetic mean is a set of observations is calculated by

finding the sum values and dividing by the number of observations.

Correct Answer True

Your Answer True

True/False Question 30 Investment in gilt edged securities carry a higher element of risk.


Your Answer True

True/False Question 37 Following a decline, heavy volume with little price change is

indicative of accumulation and is normally a bearish factor. Correct Answer False

Your Answer True

True/False Question 45 Speculators buy or sell futures contract in an attempt to earn a

profit. Correct Answer True

Your Answer True

True/False Question 11 Investment decisions can be viewed as an integrated process to

which security analysis makes its unique contribution. Correct Answer True

Your Answer True

True/False Question 17 Given the accounting standards across firm, price to book value

ratios can be compared across similar firms for signs of under valuation.

Correct Answer True

Your Answer True

True/False Question 18 Quick assets consist of current assets less inventories.

Correct Answer True


Your Answer True

True/False Question 22 If a rupee weakens against the dollars it has favourable impact

for the exporters. Correct Answer True

Your Answer True

True/False Question 23 A price rise accompanied by expanding volume denotes a

potential trend reversal. Correct Answer False

Your Answer True

True/False Question 35 There may be convertible clause which gives the debenture

holder the option to convert the debentures into equity shares. Correct Answer True

Your Answer True

True/False Question 47 PPF is a good retirement planning and tax saving vehicle.

Correct Answer True

Your Answer True

True/False Question 2 Bonds and Debentures represent long term debt instruments.


Your Answer True

True/False Question 9 While calculating geometric mean calculation of root is not

important. Correct Answer False

Your Answer False

True/False Question 13 Certificate of Deposits offers high rate of interest than Treasury

Bills. Correct Answer True


Your Answer True

True/False Question 21 Sensex is the index of Calcutta Stock Exchange.


Your Answer False

True/False Question 27 Fundamental analysis focuses on predicting the future price of a

security and Technical analysis on estimating the intrinsic value of a security.


Your Answer True

True/False Question 32 If rupee weakens against the dollar, it has favourable impact for

the importers. Correct Answer False

Your Answer False

True/False Question 36 The risk associated to get the required rate of return on the stock

is measure by market beta. Correct Answer True

Your Answer True

True/False Question 40 The basic inputs of the general model are expected dividends

and required rate of return on stock. Correct Answer True

Your Answer True

True/False Question 42 European style options are more expensive than American style

because they offer greater flexibility to the buyer. Correct Answer False

Your Answer True


True/False Question When you are making an investment you are expecting certain

future benefits from your investment. Correct Answer True

Your Answer True

True/False Question The returns of sector specific funds are solely dependant on the

performance of the respective sectors / industries. Correct Answer True

Your Answer True

True/False Question The labour conditions do not play an important role in the

industry analysis. Correct Answer False

Your Answer False

True/False Question A rise in interest rates will push the market prises of outstanding bonds

where as a fall in interest rates will depress the market prices down. Correct Answer False

Your Answer True

True/False Question Because of statutory compulsion, generally Govt. securities are

held by banks, financial institutions, insurance companies etc. Correct Answer True

Your Answer True

True/False Question The Asset management company of the mutual fund must have 50%

independent directors. Correct Answer True

Your Answer True

True/False Question In case of fixed income securities like debentures, you get the return in the

form of dividend. Correct Answer False


Your Answer False

True/False Question Investment in gilt edged securities carry a higher element of risk.


Your Answer False

True/False Question American option gives the holder the right, but not the obligation to buy or

sell the underlying instrument on or before the expiry date and the option can be exercised early.

Correct Answer True

Your Answer True

True/False Question Prices of stocks usually move in trends.

Correct Answer True

Your Answer True

True/False Question The sideways trend is essentially a transitional one which separates the

two major market movements. Correct Answer True

Your Answer False

True/False Question With the use of diversification you can reduce the risk.

Correct Answer True

Your Answer True

True/False Question A higher value of current ratio indicates a better short term solvency of the firm. Correct Answer True Your Answer True True/False


Question The basic assumption of Technical analysis is that, price discounts everything and it is the outcome of all forces affecting a stock. Correct Answer True Your Answer True True/False Question Fixed assets turnover ratio measures the efficiency of utilisation of total assets, fixed as well as current. Correct Answer True Your Answer True True/False Question The price earning ratio can be estimated for the firms with negative

earnings per share. Correct Answer False

Your Answer True

True/False Question A share certificate indicates that the investor owns a certain number of

shares. Correct Answer True

Your Answer True

True/False Question Balance of payments surplus augments foreign reserves of the

country and have a favourable impact on he exchange rate. Correct Answer True

Your Answer True

Select The Blank Question The ________ phase carries a lot of significance because it marks the

turning point between a rising and a falling market. Correct Answer Transitional

Your Answer Transitional

True/False Question Bonds and Debentures represent long term debt instruments.


Your Answer True


True/False Question A price rise accompanied by expanding volume denotes a potential

trend reversal. Correct Answer False

Your Answer False

Select The Blank Question The ________ phase is characterized by resistance area and support

level. Correct Answer Transition

Your Answer Transition

True/False Question Currently in India index options are both European and American in

nature. Correct Answer False

Your Answer False

Select The Blank Question Debentures rated as "A" are judged to offer ________ of timely

payment of interest and principal. Correct Answer Adequate safety

Your Answer High safety

True/False Question A rally that develops on contracting volumes is suspect and warns of a

potential trend reversal in price Correct Answer True

Your Answer True

Match The Following Question Correct Answer Your Answer

Price pattern Resistance level Head and shoulders formation

Primary trend Last between 1-2 years Last between 1-2 years

Intermediate trend Last between 3 weeks to as long as 6 months

Last between 3 weeks to as long as 6 months

Short term trend Last 1 to 3-4 weeks Last 1 to 3-4 weeks



MCX Commodity Exchange Commodity Exchange

Sensex BSE Index BSE Index

Nifty NSE Index NSE Index

Lifex ET Index Gold Index


Turnover ratios Help measure the efficiency of utilisation of assets

Help measure the efficiency of utilisation of assets

Debt Equity ratio Debt / Equity Debt / Equity

Quick assets Highly liquid assets Highly liquid assets

Average collection period Similar to debtors turnover Similar to debtors turnover


Development of Dow's principles

William Peter Hamilton Charles H.dow

Breadth Indicator Advance/decline line Moving average

Momentum indicator MACD MACD

Trend lines Useful tool in technical analysis

Useful tool in technical analysis

Match The Following Question 26 Correct Answer Your Answer

Under options contract When you expect prices to fall, then, you take a long position by buying puts. When you expect prises to rise, then you take a short position by selling puts.

Cost of Carry model Futures contract


A contract where both the parties are equally responsible

Futures contract Options contract

The amount which the buyer of the option has to pay to the option writer to induce him to accept the risk associated with the contract.

Option price Transaction cost model

NSE&BSE are regulated by

Securities Exchange Board of India

Securities Exchange Board of India


Equity shares High risk High risk

Government Securities No risk Low risk

Bank Deposits Low risk No risk

Mutual Funds Average risk Average risk


Risk free investment Actual returns = expected returns

Actual returns = expected returns

Risk Volatility in the return Volatility in the return

Variance Measure of dispersion Measure of dispersion

Returns Future benefits from investments

Future benefits from investments


H-Model For Valuing Growth

Initial growth rate is not constant but linearly falls over time to reach the stable growth rate

Initial growth rate is not constant but linearly falls over time to reach the stable growth rate

The general model Expected dividends and required rate of return

Expected dividends in the next period, cost of equity and expected growth rate in dividends


The Gordons Growth model

Expected dividends in the next period, cost of equity and expected growth rate in dividends

Assessment of the growth rate by looking at how much a firm reinvests for future growth and the quality of its reinvestment

The Two-Stage Dividend Discount Model

Based on two extraordinary growth phase lasting n years and stable growth phase that lasts forever

Based on two extraordinary growth phase lasting n years and stable growth phase that lasts forever


Future value of a series of cash flows occurring at the end of each period.

Future value of annuity Future value of annuity

Value today of a stream of cash flows that occurs in future.

Present Value Future Value

Value at a certain future date today of a stream of cash flows that occurs over a period of time.

Future Value Present Value

Series of equal payments or receipts occurring at regular intervals of time.

Present value of annuity Present value of annuity


Weak form model is also termed as

Random walk model Random walk model

Investors are rational Efficient market hypothesis

Efficient market hypothesis

Securities current prices fully reflect all historical information

Weak form EMH Fama

Framework on efficient capital markets, a review of theory and empirical work

Fama Strong form


Technical collaboration of Bharat Forge with SIFCO

1981 1981


industries USA

Bharat Forge was incorporated at Mumbai

1961 1961

Shares of 100 each subdivided of Bharat forge

1971 1971

930000 bonus shares issued by Bharat Forge

1976 1976


The yield to maturity is same as the

Geometric mean return or the internal rate of return

Geometric mean return or the internal rate of return

Periodic interest payments and principal repayment at the time of maturity

Debt instrument/Bonds Debt instrument/Bonds

The actual yield earned by an investor on a bond

Realised yield Realised yield

Present value interest factor of annuities and present value interest factor

Yield to maturity Yield to maturity

1. Treasury Bills

2

1. Foreign Institutional Investors

2. Commercial Papers 3

2. Government of India

3. Certificate of Deposits

4

3. Corporates

4. Bonds 5 4. Banks and Financial Institutions 5. Central/State Govts/PSU's 6. Post Office 1. ROE 3 1. Measure the profitability of operations without considering

the influence of financial structure and tax rate 2. Earnings power

1 2. Ratio if net profit to sales

3. Net profit margin

2 3. Measure the profitability of equity funds

4. Gross profit margin

6 4. Valuation ratio


5. Measures the profitability of debt funds 6. Indicates the margin available after meeting the

manufacturing expenses 1. SEBI 5 1. Nifty

2. NAV 2 2. Net asset value 3. AMFI 6 3. Net average value 4. NSE

1

4. Association of merchant financers of India

5. Redressal of investor complaints 6. Association of mutual funds of India Match The Following Question Correct Answer Your Answer

Growth of income 40-60 % debt, 40-60 % equities

40-60 % debt, 40-60 % equities

Current income Short term debt portfolio Fixed - income portfolio

Stability of principal Fixed - income portfolio Short term debt portfolio

Appreciation 75-100 % in equities 75-100 % in equities


Ratio used as a measure of relative value

PEG ratio Price to book value ratio

The market value of the firms assets divided by the replacement cost of these assets

Market value to replacement cost ratio

Market value to replacement cost ratio

Key determiner of revenue multiples

Profit margin Profit margin

The market value of the equity in a firm reflects the markets expectations of the firms earnings power and cash flows.

Price to book value ratio Price earning ratio



Expiration period for options Nine months Nine months

The world's first largest options exchange

Chicago Board of options exchange

New York board of Options exchange

The most popular pricing options model published in the year 1973

Black Scholes Black Scholes

When the writer gives the buyer of the option the right to sell the underlying asset on or before the expiry date

Put option Put option

Documents

Security Analysis & Portfolio Management ( MCQ,s & Short Answers )