Security Analysis and Portfolio Management - 24

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

 

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

Your Answer Money 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

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

 

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 Your Answer

Price pattern Resistance level Head and shoulders formation

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

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

to as long as 6 months

Short term trend Last 1 to 3-4 weeks 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

Your Answer Calculating the Return on investment

 

Multiple Choice Multiple Answer

Question The Peer group of Bharat Forge consists of which all companies?

Correct Answer Am forge industries , Kalyani Forge , EL Forge

 

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

Your Answer Freight 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 Your Answer

MCX Commodity ExchangeCommodity Exchange

Sensex BSE Index BSE Index

Nifty NSE Index NSE Index

Lifex ET Index Gold 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

Your Answer Charles.H.Dow

Read more »

Posted in: Security Analysis And Portfolio Management(Set-8)

Security Analysis and Portfolio Management - 23

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

 

Select The Blank

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

Correct Answer Return on equity

Your Answer Return on equity

 

Select The Blank

Question Debentures rated "BB" refers ________ of timely payment of interest and

principal.

Correct Answer Inadequate safety

Your Answer Inadequate safety

 

Select The Blank

Question S&P NSE 50 index is known as ________.

Correct Answer NIFTY

Your 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

Your Answer True

 

Match The Following

Question Correct Answer Your Answer

NSE&BSE are regulated by Securities Exchange Board of India 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 Options contract

A contract where both the parties are equally responsible Futures contract 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 Option price

 

True/False

Question Asegment is unattractive if the buyers possess strong or growing bargaining

powers.

Correct Answer True

Your 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

Your 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

Your 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

Your 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

Your Answer True

 

Select The Blank

Question ________seeks to safeguard against potential losses on the outstanding

position in futures market.

Correct Answer Initial margin

Your 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

Your 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

Your 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

Your 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

Your 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)

Your 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

Your 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

Your 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

Your 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

Your Answer Stock market

 

Match The Following

Question Correct Answer Your Answer

Ratio used as a measure of relative value PEG ratio PEG ratio

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

Market value to replacement cost ratio Market value to replacement cost ratio

Key determiner of revenue multiples Profit margin Profit margin

The market value of the equity in a firmreflects the markets expectations of the firms

earnings power and cash flows. Price to book value ratio Price earning ratio

 

Multiple Choice Multiple Answer

Question Features of PSU Bonds are :-

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

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

 

True/False

Question If a rupee weakens against the dollars it has favourable impact for the

exporters.

Correct Answer True

Your Answer True

 

Multiple Choice Single Answer

Question Credit rating companies assign ratings for which of these investments?

Correct Answer Company deposits

Your Answer Company deposits

 

True/False

Question If rupee weakens against the dollar, it has favourable impact for the

importers.

Correct Answer False

Your Answer False

 

Multiple Choice Single Answer

Question What is the objective of Portfolio management?

Correct Answer To Minimize risk and maximize return

Your Answer To Minimize risk and maximize return

 

Select The Blank

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

________.

Correct Answer Current ratio

Your 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 Your Answer A contract between two parties , Where buyer receives a privilege for

which he pays a premium , Where the seller accepts an obligation for which he receives a

fee

 

Select The Blank

Question ________ is the value at a certain future date today of a stream of cash flows

that occurs over a period of time.

Correct Answer Future value

Your Answer Future value

 

True/False

Question The basic assumption of Technical analysis is that, price discounts everything

and it is the outcome of all forces affecting a stock.

Correct Answer True

Your Answer True

Read more »

Posted in: Security Analysis And Portfolio Management(Set-8)

Security Analysis and Portfolio Management - 22

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

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

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 Your Answer
Price pattern Resistance level Head and shoulders formation
Primary trend Last between 1-2 years Last between 1-2 years
Intermediate trend Last between 3 weeks to as long as 6 monthsLast between 3
weeks
to as long as 6 months
Short term trend Last 1 to 3-4 weeks 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
Your Answer Calculating the Return on investment

Multiple Choice Multiple Answer
Question The Peer group of Bharat Forge consists of which all companies?
Correct Answer Am forge industries , Kalyani Forge , EL Forge

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
Your Answer Freight 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 Your Answer
MCX Commodity ExchangeCommodity Exchange
Sensex BSE Index BSE Index
Nifty NSE Index NSE Index
Lifex ET Index Gold 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
Your Answer Charles.H.Dow

Read more »

Posted in: Security Analysis And Portfolio Management(Set-8)