Security Analysis and Portfolio Management - 24
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 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
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
Select The Blank
Question Debentures rated ________ are judged to offer sufficient safety of timely
payment of interest and repayment of principal.
Correct Answer "BBB"
Multiple Choice Single Answer
Question Stock Exchanges are the part of :-
Correct Answer Secondary market
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
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
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
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
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 A firm uses a combination of equity and debt for financing its assets.
Correct Answer True
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
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
Multiple Choice Single Answer
Question The index futures symbols of BSE are represented as :-
Correct Answer BSX JAN 2005 (January contract)
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 , HModel
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
True/False
Question Investors in high tax bracket would benefit by investing in equity schemes.
Correct Answer False
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
Multiple Choice Single Answer
Question More than half the variation in stock price could be attributed to which
factor?
Correct Answer Market influence
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
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
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
Multiple Choice Single Answer
Question In India we have index futures contracts based on :-
Correct Answer S&P CNX Nifty and the BSE sensex
True/False
Question When we invest in only one asset we are not exposed to any specific or
market risk.
Correct Answer False
Multiple Choice Single Answer
Question In India, the futures on individual securities have been introduced from :-
Correct Answer 2001
Select The Blank
Question ________ measures the efficiency of credit management.
Correct Answer Average collection period
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 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 Multiple Answer
Question The Peer group of Bharat Forge consists of which all companies?
Correct Answer Am forge industries , Kalyani Forge , EL Forge
True/False
Question Five paisa.com is an example of on line trading portal.
Correct Answer True
Multiple Choice Single Answer
Question A security analysis is done :-
Correct Answer For decision making for investments
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
Select The Blank
Question Dow Jones transportation average was previously known as ________.
Correct Answer Rail average
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 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
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 Multiple Answer
Question The features of bond are :-
Correct Answer Collateral , Call provision , Sinking fund and protective covenants
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
Match The Following
Question- Correct Answer
MCX -Commodity Exchange
Sensex -BSE Index
Nifty- NSE Index
Lifex- ET Index
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
True/False
Question Bearish actions come from a series of declining peaks and troughs.
Correct Answer True
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
Security Analysis and Portfolio Management - 23
Select The Blank
Question ________ is affected by the leverage decisions of the firm.
Correct Answer Return on equity
Select The Blank
Question Debentures rated "BB" refers ________ of timely payment of interest and
principal.
Correct Answer Inadequate safety
Select The Blank
Question S&P NSE 50 index is known as ________.
Correct Answer NIFTY
True/False
Question The risk associated to get the required rate of return on the stock is measure
by market beta.
Correct Answer True
Match The Following
Question -Correct Answer
NSE&BSE are regulated by- Securities Exchange Board of India.
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 .
A contract where both the parties are equally responsible -Futures 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
True/False
Question Asegment is unattractive if the buyers possess strong or growing bargaining
powers.
Correct Answer True
Multiple Choice Single Answer
Question Debt instruments that have a maturity period of more than one year are called
as :-
Correct Answer Bonds
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
Multiple Choice Multiple Answer
Question 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
True/False
Question A higher value of current ratio indicates a better short term solvency of the
firm.
Correct Answer True
Select The Blank
Question ________seeks to safeguard against potential losses on the outstanding
position in futures market.
Correct Answer Initial margin
Select The Blank
Question Risk can be referred as the ________ in the return with respect to the
expected return.
Correct Answer Volatility
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
True/False
Question Certificate of Deposits offers high rate of interest than Treasury Bills.
Correct Answer True
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
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)
Multiple Choice Single Answer
Question What is Gross National Product ?
Correct Answer Gross income generated from within the country
Select The Blank
Question An ________ is a series of equal payments or receipts occurring at regular
intervals of time.
Correct Answer Annuity
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
Multiple Choice Single Answer
Question Which market is affected with the improving and higher growth rate in
economy?
Correct Answer Stock market
Match The Following
Question -Correct Answer
Ratio used as a measure of relative value -PEG ratio.
The market value of the firms assets divided by the replacement cost of these assets-
-Market value to replacement cost ratio
Key determiner of revenue multiples- 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
Multiple Choice Multiple Answer
Question Features of PSU Bonds are :-
Correct Answer No TDS , Transferable by endorsement , No stamp duty on transfer
True/False
Question If a rupee weakens against the dollars it has favourable impact for the
exporters.
Correct Answer True
Multiple Choice Single Answer
Question Credit rating companies assign ratings for which of these investments?
Correct Answer Company deposits
True/False
Question If rupee weakens against the dollar, it has favourable impact for the
importers.
Correct Answer False
Multiple Choice Single Answer
Question What is the objective of Portfolio management?
Correct Answer To Minimize risk and maximize return
Select The Blank
Question Acid test ratio is more stringent measure of liquidity compared to the
________.
Correct Answer Current ratio
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
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
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
Security Analysis and Portfolio Management - 22
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 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
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
Select The Blank
Question Debentures rated ________ are judged to offer sufficient safety of
timely
payment of interest and repayment of principal.
Correct Answer "BBB"
Multiple Choice Single Answer
Question Stock Exchanges are the part of :-
Correct Answer Secondary market
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
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
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
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
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 A firm uses a combination of equity and debt for financing its
assets.
Correct Answer True
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
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
Multiple Choice Single Answer
Question The index futures symbols of BSE are represented as :-
Correct Answer BSX JAN 2005 (January contract)
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 ,
HModel 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
True/False
Question Investors in high tax bracket would benefit by investing in equity
schemes.
Correct Answer False
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
Multiple Choice Single Answer
Question More than half the variation in stock price could be attributed to
which factor?
Correct Answer Market influence
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
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
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
Multiple Choice Single Answer
Question In India we have index futures contracts based on :-
Correct Answer S&P CNX Nifty and the BSE sensex
True/False
Question When we invest in only one asset we are not exposed to any specific
or market risk.
Correct Answer False
Multiple Choice Single Answer
Question In India, the futures on individual securities have been introduced
from :-
Correct Answer 2001
Select The Blank
Question ________ measures the efficiency of credit management.
Correct Answer Average collection period
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 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 Multiple Answer
Question The Peer group of Bharat Forge consists of which all companies?
Correct Answer Am forge industries , Kalyani Forge , EL Forge
True/False
Question Five paisa.com is an example of on line trading portal.
Correct Answer True
Multiple Choice Single Answer
Question A security analysis is done :-
Correct Answer For decision making for investments
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
Select The Blank
Question Dow Jones transportation average was previously known as ________.
Correct Answer Rail average
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 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
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 Multiple Answer
Question The features of bond are :-
Correct Answer Collateral , Call provision , Sinking fund and protective
covenants
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
Match The Following
Question -Correct Answer
MCX -Commodity Exchange
Sensex- BSE Index
Nifty- NSE Index
Lifex -ET Index
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
True/False
Question Bearish actions come from a series of declining peaks and troughs.
Correct Answer True
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
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