Wednesday, March 2, 2011

Security Analysis And Portfolio Management - 12

Security Analysis And Portfolio Management - 12

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

Select The Blank
Question 8 Under ________ EMH investors cannot earn abnormal/superior profits on
securities on a consistent basis.
Correct 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

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

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

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Question 19 ________involves a simultaneous sale and repurchase agreement.
Correct Answer Repos

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Question 28 Current liabilities include all liabilities due in the next ________ and
provisions.
Correct Answer 12 months

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Question 30 S&P NSE 50 index is known as ________.
Correct Answer NIFTY

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Question 31 ________seeks to safeguard against potential losses on the outstanding
position in futures market.
Correct Answer Initial margin

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Question 35 ________ ratio is the ratio of net profit to the sales.
Correct Answer Net Profit Margin

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Question Mutual fund is to be registered with ________ before raising funds from
public.
Correct Answer SEBI

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

Select The Blank
Question Acid test ratio is more stringent measure of liquidity compared to the
________.
Correct Answer Current ratio

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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
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 profitability of equity funds invested in the firms.
Correct Answer Return on equity

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Question Risk can be referred as the ________ in the return with respect to the
expected return.
Correct Answer Volatility

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

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Question ________ ratio is the ratio of net profit to the sales.
Correct Answer Net Profit Margin

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

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Question A security is said to be ________ if its current market price is over its
intrinsic value.
Correct 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

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

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

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

Select The Blank
Question ________ absorbs the excess demand or supply generated by hedgers
and assume the risk of price fluctuations.
Correct Answer Speculators

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

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

True/False
Question A segment is unattractive if the buyers possess strong or
growing bargaining powers.
Correct Answer True

True/False
Question Risk on a portfolio of assets is always same as the risk on
individual asset.
Correct Answer False

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

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

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

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

Security Analysis And Portfolio Management - 11
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

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 What is the percentage of variation the market and industry influence account
for?
Correct Answer 2/3rd

Multiple Choice Single Answer
Question What is the rate of interest on the tax free bonds issue by the government?
Correct Answer 6.5%

Multiple Choice Single Answer
Question Investments could be made in retail government securities through :-
Correct Answer Primary dealers

Question The growth rate is used to forecast future revenues and earnings and
are inputs in valuing :-
Correct Answer Stable 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

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

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

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

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

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

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

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

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

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 Dow Jones transportation average was previously known as ________.
Correct Answer Rail average

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

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

Select The Blank
Question The Dow theory states that there are simultaneously ________
movements in the stock market.
Correct 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

Select The Blank
Question ________ ratio indicates the margin available after meeting the
manufacturing expenses.
Correct 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

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 Debentures rated ________ are judged to offer sufficient safety of timely
payment of interest and repayment of principal.
Correct 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

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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

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Question The ________ phase is characterized by resistance area and
support level.
Correct Answer
Transition

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Question ________ measures the efficiency of credit management.
Correct Answer
Average collection period

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Question 16 ________ is affected by the leverage decisions of the firm.
Correct 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

Select The Blank
Question 21 The govt allowed public sector banks and institutions in mutual funds in
________.
Correct Answer Early 90's

Select The Blank
Question 36 The 8% taxable savings bonds are repayable after ________ years.
Correct Answer 6

Select The Blank
Question 39 Security analysis serves the investment decision maker by identifying
________securities.
Correct Answer Under priced

Select The Blank
Question 42 ________ absorbs the excess demand or supply generated by hedgers
and assume the risk of price fluctuations.
Correct Answer Speculators

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

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

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

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

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

Select The Blank
Question 36 ________is a hybrid form of security which has characteristics of both
equity and debentures
Correct Answer Preference shares

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Question 39 Debentures rated "BB" refers ________ of timely payment of interest and
principal.
Correct Answer Inadequate safety

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

Select The Blank
Question 46 The Dow theory was published in a series of editorials in the ________.
Correct Answer Wall street journal

Security Analysis And Portfolio Management - 10
Multiple Choice Single Answer
Question 4 What are short term trends?
Correct Answer Trends which interrupt the course of the intermediate cycle

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

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

Multiple Choice Single Answer
Question 10 Efficient market hypothesis is based on the assumption that
market comprises of :-
Correct Answer Rational 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

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:-
Correct Answer Rs. 9639/-

Multiple Choice Single Answer
Question 18 What does flow-of fund analysis help in understanding?
Correct Answer Availability of money for the stock market

Multiple Choice Single Answer
Question 23 A security represent evidence of :-
Correct Answer A property right

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?
Correct Answer Rs. 6083/-

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

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

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

Multiple Choice Single Answer
Question 27 Investing in this avenue enable you participate in the equity
market indirectly :-
Correct 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

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

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

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

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

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

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

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

Multiple Choice Single Answer
Question 25 What are intermediate trends?
Correct 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

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


Multiple Choice Single Answer
Question 39 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 41 How many measures of money supply are used commonly?
Correct 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

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

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 What is the objective of an income fund?
Correct Answer To provide regular and steady income

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.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/-

Multiple Choice Single Answer
Question Which market is affected with the improving and higher growth
rate in economy?
Correct 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

Multiple Choice Single Answer
Question What is Gross National Product ?
Correct 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

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

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

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 What are index funds?
Correct 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

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 What are short term trends?
Correct 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

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

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/-

Multiple Choice Single Answer
Question The price of the index futures contract is defined as :-
Correct Answer Future price = Spot price + Carry cost
Multiple Choice Single Answer
Question Financial assets can be classified as :-
Correct 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/-

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 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 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

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 Credit rating companies assign ratings for which of these
investments?
Correct Answer Company deposits

Multiple Choice Single Answer
Question If index future is taken under futures contract, the underlying
asset would be :-
Correct Answer Stock index
Multiple Choice Single Answer
Question What is balance of payments?
Correct Answer Credit and debit transactions of a country

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

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

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