Security Analysis And Portfolio Management - 15

Security Analysis And Portfolio Management - 15

Select The Blank
Question ________is a hybrid form of security which has characteristics of
both equity and debentures
Correct Answer Preference shares

Multiple Choice Single Answer
Question When was the Dow theory first published?
Correct Answer Between 1900 and 1902

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

True/False
Question There may be convertible clause which gives the debenture holder
the option to convert the debentures into equity shares.
Correct Answer True

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 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

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

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 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

Select The Blank
Question S&P NSE 50 index is known as ________.
Correct Answer NIFTY

Select The Blank
Question The margining system is future contract is based on ________
recommendations.
Correct Answer J R verma committee

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


Multiple Choice Multiple Answer
Question Mutual fund schemes could be broadly classified as :-
Correct Answer Open ended scheme , Close ended scheme

Multiple Choice Single Answer
Question How can transition phases be projected?
Correct Answer Transition phases are signalled by clearly definable price patterns

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 When a debenture is sold to the general public a ________ is
appointed.
Correct Answer Trustee

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 reinvestments
is :-
Correct Answer Estimating growth from a firm's fundamentals

True/False
Question Certificate of Deposits offers high rate of interest than Treasury Bills.
Correct Answer True

Select The Blank
Question Under ________ EMH investors cannot earn abnormal/superior
profits on securities on a consistent basis.
Correct Answer Semi-strong form

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

Multiple Choice Multiple Answer
Question 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)

Match The Following
Question- Correct Answer

Price pattern- Resistance level
Primary trend- Last between 1-2 years


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

Short term trend- Last 1 to 3-4 weeks
Multiple Choice Single Answer
Question As per the framework presented by Fama, EMH can be divided as :-
Correct Answer The weak form, semi-strong form & strong form

Select The Blank
Question ________ measures the profitability of operations without considering
the influence of financial structure and tax rate.
Correct Answer Earnings power

Multiple Choice Single Answer
Question The Top-down approach is also known as :-
Correct Answer Economy-industry-company approach

True/False
Question The Asset management company of the mutual fund must have 50%
independent directors.
Correct Answer True

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

Multiple Choice Single Answer
Question A derivative is a product whose value is derived from :-
Correct Answer Value of an underlying asset

Match The Following
Question- Correct Answer
H-Model For Valuing
Growth
Initial growth rate is not
constant but linearly falls
over time to reach the
stable growth rate
Expected dividends and
required rate of returns as
per the market price per
share to the earningsper
share
The general model Expected dividends and
required rate of return
Initial growth rate is not
constant but linearly falls
over time to reach the stable
growth rate
The Gordons Growth model Expected dividends in the
next period, cost of equity
and expected growth rate in
dividends
Based on two extraordinary
growth phase lasting n years
and stable growth phase that
lasts forever
The Two-Stage Dividend
Discount Model
Based on two extraordinary
growth phase lasting n
years and stable growth
phase that lasts forever
Expected dividends in the
next period, cost of equity
and expected growth rate in
dividends

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

Select The Blank
Question ________ 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

True/False
Question If rupee weakens against the dollar, it has favourable impact for the
importers.
Correct Answer False

Select The Blank
Question The Dow theory was published in a series of editorials in the
________.
Correct Answer Wall street journal

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

True/False
Question 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

Multiple Choice Single Answer
Question Debt instruments that have a maturity period of one year or less are
called as:-
Correct Answer Money market instruments

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

Select The Blank
Question The 6.________% tax saving bonds of government of India have a
tenure of 5 years.
Correct Answer 5

Multiple Choice Single Answer
Question What do you understand by money supply?
Correct Answer Total money in existence at any given time

Multiple Choice Multiple Answer
Question Explain what are leverage ratios ?
Correct 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

Select The Blank
Question UTI was set up in the year ________.
Correct Answer 1963

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

Multiple Choice Single Answer
Question The bond issuing firm enjoys the flexibility of being able to call the
bonds if :-
Correct Answer Interest rates are falling

Multiple Choice Single Answer
Question What are short term trends?
Correct Answer Trends which interrupt the course of the intermediate cycle

Multiple Choice Multiple Answer
Question 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

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

True/False
Question A segment is more attractive when there are actual or potential
substitutes for the product.
Correct Answer True



Security Analysis And Portfolio Management - 14
Multiple Choice Single Answer
Question What are primary trends?
Correct Answer Reflection of investor's attitudes towards unfolding fundamentals in
the business cycle

Multiple Choice Multiple Answer
Question Which ratios are commonly used?
Correct Answer Debt equity ratio , Interest coverage ratios , Debt service coverage
ratios

True/False
Question The returns of sector specific funds are solely dependant on the
performance of the respective sectors / industries.
Correct Answer True

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

Multiple Choice Multiple Answer
Question 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

Select The Blank
Question Under futures market ________ process provides for collection of
losses that have already occurred.
Correct Answer The daily settlement

Multiple Choice Single Answer
Question 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

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

Select The Blank
Question ________ identified five forces that determine the intrinsic long run
profit attractiveness of a market or market segment.
Correct Answer Michael Porter

Select The Blank
Question Debentures rated "BB" refers ________ of timely payment of interest
and principal.
Correct Answer Inadequate safety

True/False
Question In case of fixed income securities like debentures, you get the return
in the form of dividend.
Correct Answer False

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

True/False
Question If a rupee weakens against the dollars it has favourable impact for the
exporters.
Correct Answer True

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

Multiple Choice Multiple Answer
Question 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

Select The Blank
Question ________ 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
Select The Blank
Question An investor with a higher tolerance of risk should tilt his portfolio in
favour of ________.
Correct Answer Stocks

Select The Blank
Question ________ measures the profitability of equity funds invested in the
firms.
Correct Answer Return on equity

Multiple Choice Multiple Answer
Question In a typical stock market cycle which are the types of trends?
Correct Answer Trends upward , Trend downward , Sideway trend

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

Select The Blank
Question A ________ rally for stocks generally takes place because of an
improved outlook for business conditions over what was anticipated.
Correct Answer Bear market

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

Multiple Choice Single Answer
Question What is the limitation of Flow-of funds analysis method?
Correct Answer Cannot give indication of the inclination of market participants to
purchase stock

Multiple Choice Single Answer
Question A security represent evidence of :-
Correct Answer A property right

Multiple Choice Multiple Answer
Question Return can be in the form of :-
Correct Answer Dividends , Interests , Capital appreciation

Multiple Choice Single Answer
Question Which year marked increase in growth rate?
Correct Answer 2003 -04

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

True/False
Question Because of statutory compulsion, generally Govt. securities are held
by banks, financial institutions, insurance companies etc.
Correct Answer True

Multiple Choice Single Answer
Question The greater the deviation of the actual returns from the actual return
:-
Correct Answer Greater the variance

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

Match The Following
Question -Correct Answer

Equity shares -High risk

Government Securities- No risk
Bank Deposits- Low risk

Mutual Funds- Average risk
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

Multiple Choice Single Answer
Question In India futures on individual securities have been introduced by :-
Correct Answer BSE & NSE

Match The Following
Question -Correct Answer

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


Current income -Short term debt portfolio

Stability of principal- Fixed - income portfolio

Appreciation- 75-100 % in equities

Multiple Choice Multiple Answer
Question What are the features of post office monthly income scheme?
Correct Answer Rate of return is 8 % , Interest payable monthly , Investor earns
bonus of 10% on completion of term

Multiple Choice Single Answer
Question During the 1980's rate of savings in India has hovered around what
percentage?
Correct Answer 0.21

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

True/False
Question Passive investment managers believe that markets are inefficient and
Active managers believe that markets are efficient.
Correct Answer False

Multiple Choice Single Answer
Question 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?
Correct Answer Rs. 6083/-

Select The Blank
Question Debentures rated ________ are judged to offer sufficient safety of
timely payment of interest and repayment of principal.
Correct Answer "BBB"

Select The Blank
Question Debentures rated as "A" are judged to offer ________ of timely
payment of interest and principal.
Correct Answer Adequate safety

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 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

Multiple Choice Multiple Answer
Question Who are the constituents of a mutual fund?
Correct Answer Sponsor & trustees , Asset management company , Custodian

Multiple Choice Single Answer
Question What does lower level of unemployment indicates?
Correct Answer Positive economic conditions

Select The Blank
Question Current liabilities include all liabilities due in the next ________ and
provisions.
Correct Answer 12 months

Multiple Choice Multiple Answer
Question The security market is the market for :-
Correct Answer Equity , Debt , Derivatives

Security Analysis And Portfolio Management - 13


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

Select The Blank
Question The Derivative market is divided into Future market and ________ market.
Correct Answer Options

Select The Blank
Question All trades in the futures market are cash settled on a ________ basis.
Correct Answer T+1

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


Multiple Choice Single Answer
Question What is GDP at factor cost ?
Correct Answer Excludes net income received from abroad

Select The Blank
Question ________seeks to safeguard against potential losses on the outstanding
position in futures market.
Correct Answer Initial margin

Multiple Choice Single Answer
Question 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

Select The Blank
Question Under futures market ________ process provides for collection of losses that
have already occurred.
Correct Answer The daily settlement

Select The Blank
Question S&P NSE 50 index is known as ________.
Correct Answer NIFTY

Multiple Choice Single Answer
Question What does a Balanced fund seek to achieve?
Correct Answer Growth and regular income

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

True/False
Question Fundamental analysis focuses on predicting the future price of a security and
Technical analysis on estimating the intrinsic value of a security.
Correct Answer False

Multiple Choice Multiple Answer
Question 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

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

True/False
Question There may be convertible clause which gives the debenture holder the option
to convert the debentures into equity shares.
Correct Answer True

True/False
Question Bearish actions come from a series of declining peaks and troughs.
Correct Answer True

Multiple Choice Single Answer
Question 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

Select The Blank
Question Debentures rated "BB" refers ________ of timely payment of interest and
principal.
Correct Answer Inadequate safety

True/False
Question When we invest in only one asset we are not exposed to any specific or
market risk.
Correct Answer False

Match The Following
Question- Correct Answer

Weak form model is also
termed as
-Random walk model

Investors are rational- Efficient market hypothesis

Securities current prices fully
reflect all historical information
-Weak form EMH
Framework on efficient capital
markets, a review of theory
and empirical work
-Fama


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

Multiple Choice Multiple Answer
Question What are the warning indicators to be considered before analysing the
financial statements of a firm ?
Correct Answer Growth in profits outstripping the revenue growth by a large extent , Non
operating expenses occur frequently , Accounting rules changed frequently

Select The Blank
Question ________ identified five forces that determine the intrinsic long run profit
attractiveness of a market or market segment.
Correct Answer Michael Porter

Multiple Choice Multiple Answer
Question What were the Chairman's comments during the speech in the Annual report
of the FY 2002-03?
Correct Answer 146% growth in exports , Highest pre and post tax profits , Best year in the
history of the company

Select The Blank
Question The regulations of SEBI with respect to mutual funds were fully revised in the
year ________.
Correct Answer 1996

Multiple Choice Single Answer
Question What are short term trends?
Correct Answer Trends which interrupt the course of the intermediate cycle

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

Select The Blank
Question Measures of ________ tells us what we can expect a typical or middle data
point of a distribution to be.
Correct Answer Central tendency

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

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

Match The Following
Question- Correct Answer

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


Current income- Short term debt portfolio

Stability of principal Fixed - income portfolio 100% debt

Appreciation- 75-100 % in equities
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

Multiple Choice Multiple Answer
Question What are the different types of profitability ratios?
Correct Answer Gross profit margin ratio , Earnings power , Return on equity

True/False
Question The ratios between profits and investments are called rate of return
measures.
Correct Answer True

Multiple Choice Single Answer
Question Where are gilt funds invested?
Correct Answer Government securities

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

Multiple Choice Single Answer
Question What levels if increased will have unfavourable impact on the stock market?
Correct Answer Higher levels of taxation

Select The Blank
Question The margining system is future contract is based on ________
recommendations.
Correct Answer J R verma committee

Multiple Choice Single Answer
Question Till 1990's secular Indian economy's inflation rate has been of what
percentage?
Correct Answer 0.07

Multiple Choice Single Answer
Question Capital expenditure -depreciation +change in working capital -(new debt
issued - debt repaid) =
Correct Answer Equity reinvested in business

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

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

Multiple Choice Multiple Answer
Question 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

Multiple Choice Single Answer
Question If the price of a share at the beginning of the year was Rs.70/-, dividend
received during the year was Rs.5/-per share and the price at the end is
Rs.79/-. What is the rate of return?
Correct Answer 0.2

True/False
Question A segment is more attractive when there are actual or potential substitutes for
the product.
Correct Answer True

Multiple Choice Single Answer
Question What are index funds?
Correct Answer Investment in securities in the same weightage which replicates a particular
index

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