Security Analysis And Portfolio Management - 21
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 Single Answer
Question Free Float index considers this to calculate market capitalisation-
Correct Answer Actual no. of shares available
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
Multiple Choice Single Answer
Question Who operates the sinking fund under the sinking fund provision
of a firm?
Correct Answer The bond trustee or the issuer
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 profitability of equity funds invested in
the firms.
Correct Answer Return on equity
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
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
Select The Blank
Question ________ measures the efficiency of credit management.
Correct Answer Average collection period
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
Select The Blank
Question Risk can be referred as the ________ in the return with respect
to the expected return.
Correct Answer Volatility
True/False
Question Bearish actions come from a series of declining peaks and
troughs.
Correct Answer True
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 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 The Top-down approach is also known as :-
Correct 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
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 Multiple Answer
Question Formula for calculation of portfolio variance requires :-
Correct Answer Expected return on portfolio , Expected return on assets ,
Weight
of asset in the portfolio
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
Multiple Choice Single Answer
Question What are index funds?
Correct Answer Investment in securities in the same weightage which
replicates
a particular index
Select The Blank
Question All trades in the futures market are cash settled on a ________
basis.
Correct Answer T+1
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 Multiple Answer
Question Which ratios are commonly used?
Correct Answer Debt equity ratio , Interest coverage ratios , Debt service
coverage ratios
Multiple Choice Multiple Answer
Question Mutual fund schemes could be broadly classified as :-
Correct Answer Open ended scheme , Close ended scheme
True/False
Question If a rupee weakens against the dollars it has favourable impact
for the exporters.
Correct Answer True
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
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
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
The general model -Expected dividends and
required rate of return
The Gordons Growth
model- Expected dividends in the
next period, cost of equity
and expected growth rate
in dividends
The Two-Stage Dividend
Discount Model -Based on two
extraordinary growth
phase lasting n years and
stable growth phase that
lasts forever
True/False
Question Because of statutory compulsion, generally Govt. securities are
held by banks, financial institutions, insurance companies etc.
Correct Answer True
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
rat phase steadily for a specific time period , Sources of high growth
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 - Fama
Framework on efficient
capital markets, a review
of theory and empirical
work
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 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
True/False
Question Sensex is the index of Calcutta Stock Exchange.
Correct Answer
Answer False
Select The Blank
Question ________ refers to the possibility that there may not be a readily
available market for the particular bond.
Correct Answer Liquidity risk
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
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
Select The Blank
Question ________are good benchmark to compare the ratios for a firm.
Correct Answer Industry averages
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
Select The Blank
Question ________ ratio is the ratio of net profit to the sales.
Correct Answer Net Profit Margin
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 general dividend model is based on the principle of :-
Correct Answer Present value of the expected future cash flow
Multiple Choice Single Answer
Question 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
True/False
Question PPF is a good retirement planning and tax saving vehicle.
Correct Answer True
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 A security is said to be ________ if its current market price is
over its intrinsic value.
Correct Answer Over priced
Multiple Choice Single Answer
Question What is the aim of growth funds?
Correct Answer To provide capital appreciation over medium to long term
Security Analysis And Portfolio Management - 20
Multiple Choice Multiple Answer
Question What are the different types of profitability ratios?
Correct Answer Return on equity , Gross profit margin ratio , Earnings power
Select The Blank
Question Mutual fund is to be registered with ________ before raising
funds from public.
Correct Answer SEBI
Multiple Choice Multiple Answer
Question The security market is the market for :-
Correct Answer Equity , Debt , Derivatives
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 Single Answer
Question A security analysis is done :-
Correct Answer For decision making for investments
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
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/-
Multiple Choice Single Answer
Question What is the objective of an income fund?
Correct Answer To provide regular and steady income
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
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 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
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 What does lower level of unemployment indicates?
Correct Answer Positive economic conditions
Multiple Choice Single Answer
Question The GDP growth rate in the economy in real terms has
fluctuated between :-
Correct Answer 4% and 5%
Multiple Choice Single Answer
Question Mr.Rohan invests Rs.25,000/- today. The rate of interest is 6%
compounded annually. What will be the value of his investment
after 3 years?
Correct Answer Rs. 29775/-
Multiple Choice Single Answer
Question Mr.Satish invests Rs.10,000/- today. The rate of interest is 8%
compounded annually. What will be the value of his investment
after 5 years?
Correct Answer Rs.14.693/-
True/False
Question When you are making an investment you are expecting certain
future benefits from your investment.
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
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 Which are the different types of accounts offered to investors by
the stock brokers?
Correct Answer Cash trading , Margin trading
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
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 The ________ phase carries a lot of significance because it
marks the turning point between a rising and a falling market.
Correct Answer Transitional
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
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 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
True/False
Question While calculating geometric mean calculation of root is not
important.
Correct Answer False
True/False
Question The labour conditions do not play an important role in the
industry analysis.
Correct Answer False
Select The Blank
Question ________ measures the efficiency of credit management.
Correct 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
Multiple Choice Single Answer
Question Which market is affected with the improving and higher growth
rate in economy?
Correct Answer Stock market
True/False
Question Certificate of Deposits offers high rate of interest than Treasury
Bills.
Correct Answer True
Multiple Choice Single Answer
Question What do you understand by money supply?
Correct 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
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
True/False
Question A price rise accompanied by expanding volume denotes a
potential trend reversal.
Correct Answer False
Multiple Choice Multiple Answer
Question Mutual fund schemes could be broadly classified as :-
Correct Answer Open ended scheme , Close ended scheme
Multiple Choice Multiple Answer
Question Features of PSU Bonds are :-
Correct Answer No TDS , Transferable by endorsement , No stamp duty on
transfer
Match The Following
Question -Correct Answer
Future value of a series of
cash flows occurring at
the end of each period.- Future value of annuity
Value today of a stream of
cash flows that occurs in
future.- Present Value
Value at a certain future
date today of a stream of
cash flows that occurs
over a period of time.- Future Value
Series of equal payments
or receipts occurring at
regular intervals of time.-Present value of annuity
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
True/False
Question Following a decline, heavy volume with little price change is
indicative of accumulation and is normally a bearish factor.
Correct Answer False
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 A segment is unattractive if the buyers possess strong or
growing bargaining powers.
Correct Answer True
Select The Blank
Question ________ refers to the possibility that there may not be a readily
available market for the particular bond.
Correct Answer Liquidity risk
Multiple Choice Single Answer
Question What is GDP at factor cost ?
Correct Answer Excludes net income received from abroad
Multiple Choice Single Answer
Question More than half the variation in stock price could be attributed to
which factor?
Correct Answer Market influence
Security Analysis And Portfolio Management - 19
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
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
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 A security is said to be ________ if its current market price is
over its intrinsic value.
Correct Answer Over priced
Multiple Choice Multiple Answer
Question Which are the different types of accounts offered to investors by
the stock brokers?
Correct Answer Cash trading , Margin trading
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/-
Multiple Choice Multiple Answer
Question Return can be in the form of :-
Correct Answer Dividends , Interests , Capital appreciation
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?
Correct Answer Rs. 73466/-
Match The Following
Question -Correct Answer
Turnover ratios -Help measure the
efficiency of utilisation of
assets
Debt Equity ratio- Debt / Equity
Quick assets- Highly liquid assets
Average collection period- Similar to debtors turnover
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
True/False
Question Investment decisions can be viewed as an integrated process to
which security analysis makes its unique contribution.
Correct Answer True
Match The Following
Question- Correct Answer
Gross profit margin- Indicates the margin
available after meeting the manufacturing expenses
ROE- Measure the profitability of equity funds
Earnings power- Measure the profitability of
operations without considering the influence
of financial structure and tax rate
Net profit margin- Ratio if net profit to sales
Multiple Choice Single Answer
Question What is the highest denomination offered by Kisan Vikas patra
instruments?
Correct Answer 50000
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 Single Answer
Question What is Flow-of-funds analysis?
Correct Answer Consists of an analysis of the financial positions of various
investor groups
Multiple Choice Single Answer
Question What is an open ended fund or scheme?
Correct Answer Which is available for subscription and repurchase on a
continuous basis
Select The Blank
Question The SEBI act was passed in the year ________.
Correct Answer 1992
Select The Blank
Question The Derivative market is divided into Future market and
________ market.
Correct Answer Options
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 Mr.Rohan invests Rs.25,000/- today. The rate of interest is 6%
compounded annually. What will be the value of his investment
after 3 years?
Correct Answer Rs. 29775/-
Select The Blank
Question Debentures rated as "A" are judged to offer ________ of timely
payment of interest and principal.
Correct Answer Adequate safety
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 Which are the most popular types of orders placed through an
online trading account?
Correct Answer Limit orders , Market orders
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
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
Select The Blank
Question Security analysis serves the investment decision maker by
identifying ________securities.
Correct Answer Under priced
True/False
Question The sideways trend is essentially a transitional one which
separates the two major market movements.
Correct Answer True
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
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
True/False
Question A firm uses a combination of equity and debt for financing its
assets.
Correct Answer True
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 In a typical stock market cycle which are the types of trends?
Correct Answer Trends upward , Trend downward , Sideway trend
Multiple Choice Single Answer
Question Avenues can be broadly classified into the which type of assets?
Correct Answer Financial and Real
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
True/False
Question A price rise accompanied by expanding volume denotes a
potential trend reversal.
Correct Answer False
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
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
Multiple Choice Single Answer
Question What is the minimum investment amount in G-secs?
Correct Answer 1000
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
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/-
Select The Blank
Question The Dow theory states that there are simultaneously ________
movements in the stock market.
Correct Answer 3
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 Single Answer
Question 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:-
Correct Answer Rs. 9639/-
Multiple Choice Single Answer
Question A derivative is a product whose value is derived from :-
Correct Answer Value of an underlying asset
Multiple Choice Multiple Answer
Question What are the important macro economic indicators?
Correct Answer GNP growth rate , Price Conditions , Monsoons
Multiple Choice Single Answer
Question What are sector specific funds?
Correct Answer Scheme which invest in certain sectors
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
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