1. Two bonds are selling at par value and each has 17 years to maturity.

The first bond has a

coupon rate of 8% and the second bond has a coupon rate of 12%. Which of the following is
true about the durations of these bonds?
a. The duration of the higher-coupon bond will be higher.
b. The duration of the lower-coupon bond will be higher.
c. The duration of the higher-coupon bond will equal the duration of the lower-coupon bond.
d. There is no consistent statement that can be made about the durations of the bonds.
e. The bond's durations cannot be determined without knowing the prices of the bonds.
2. If the interest rate on debt is lower than ROA, then a firm will __________ by increasing
the use of debt in the capital structure.
a. increase the ROE
b. not change the ROE
c. decrease the ROE
d. change the ROE in an indeterminable manner
e. none of the above
3. A firm has a P/E ratio of 18 and a ROE of 13% and a market to book value of __________.
a. 0.64
b. 0.92
c. 2.34
d. 1.56
e. none of the above
4. In a well diversified portfolio
a. market risk is negligible.
b. systematic risk is negligible.
c. unsystematic risk is negligible.
d. nondiversifiable risk is negligible.
e. none of the above.
5. 6. Your opinion is that security A has an expected rate of return of 0.125. It has a beta of
1.5. The risk-free rate is 0.04 and the market expected rate of return is 0.11. According to the
Capital Asset Pricing Model, this security is
a. underpriced.
b. overpriced.
c. fairly priced.
d. cannot be determined from data provided.
e. none of the above.
6. 14. According to the efficient market hypothesis, financial markets fluctuate daily because
they:
a. are inefficient.
b. slowly react to new information.
c. are continually reacting to new information.
d. offer tremendous arbitrage opportunities.
e. none of the above
7. 15. Which of the following statements is true?
a. In efficient markets, a stock's price should change with the arrival of new information.
b. Strong form market efficiency is not supported by the empirical evidence.
c. Studies by Fama and French and others find returns of high book to market stocks are
higher than
low book to market value stocks.
d. All of the above.
e. None of the above.
8. 16. An IPO of a firm formerly financed by venture capital is carried out for what primary
purposes:
A) Generate cash to pay down bank indebtedness.
B) To establish a market value for the equity and provide funds for operations.
C) Insiders can sell their shares or cash out.
D) A and C.
E) all of the above.
9. 26. Concerning convertible bonds, which of the following statements is not correct?
A) The value of a convertible bond will generally be greater than its conversion value.
B) The difference between the conversion value and the straight bond value is the conversion
or option premium.
C) The coupon rate on a nonconvertible bond will generally exceed the coupon rate on an
otherwise identical convertible bond.
D) The value of a convertible bond will generally be greater than its straight bond value.
E) All of the above are correct.
10. A liquid asset may
a. be converted into cash
b. be converted into cash with little chance of loss
c. not be converted into cash
d. not be converted without loss

11. What does the market price of a bond depend on?

a. The coupon rate and terms of the indenture
b. The coupon rate and maturity date
c. The terms of the indenture, and maturity date
d. The coupon rate, terms of the indenture, and maturity date
12. While bond prices fluctuate,
a. yields are constant
b. coupons are constant
c. the spread between yields is constant
d. short-term bond prices fluctuate even more
13. If interest rates rise, the price of preferred stock
a. is not affected
b. rises
c. falls
d. may rise or fall
14.Which of the following is an example of a depreciable asset?
a. Land
b. Cash
c. Accounts receivable
d. Equipment
15. The net asset value of a mutual fund investing in stock rises with
a. higher stock prices
b. lower equity values
c. an increased number of shares
d. increased liabilities
16. Equity does NOT include
a. cash and paid-in capital
b. common stock and paid-in capital
c. paid-in capital and retained earnings
d. common stock, paid-in capital and retained earnings
17. If you were confident that the price of stock X would drop dramatically within two
months, which of the following investment transactions would yield the highest return on
your investment?
a. Purchase stock X
b. Sell stock X short
c. Purchase a call on stock X
d. Purchase a put on stock X
18. "Shareholder wealth" in a firm is represented by:
a. the number of people employed in the firm.

b. the book value of the firm's assets less the book value of its liabilities.

c. the amount of salary paid to its employees.

d. the market price per share of the firm's common stock.

19. What are the earnings per share (EPS) for a company that earned $100,000 last year in
after-tax profits, has 200,000 common shares outstanding and $1.2 million in retained earning
at the year end?

a. $100,000

b. $6.00

c. $0.50

d. $6.50

20. The market price of a share of common stock is determined by:

a. the board of directors of the firm.

b. the stock exchange on which the stock is listed.

c. the president of the company.

d. individuals buying and selling the stock.

21. A Portfolio means

a. Combination of assets
b. Returns on investments
c. Investment in shares
d. Combination of assets with different risk and retun
22. ……………… analysis focuses on estimating the intrinsic value of a security
a. Technical
b. Fundamental
c. Industry
d. Economic

23. ………… analysis focuses on predicting the future price of a security

a. Technical
b. Fundamental
c. Industry
d. Economic

Multiple Choice Single Answer*Question

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

Select The Blank*Question

________ model is based on the principle that an initial phase where the growth rate is not
stable and subsequent steady growth rate and remains for the long-term.Correct Answer
The Two-Stage dividend discount
Your Answer
The Two-Stage dividend discount

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
Your Answer
Under priced and over priced

Multiple Choice Multiple Answer*Question

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

Select The Blank*Question

Under ________ EMH investors cannot earn abnormal/superior profits on securities on a
consistent basis.Correct Answer
Semi-strong form
Your Answer
Weak form

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
Your Answer
Limit orders , Market orders

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
Your 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

What do you understand by the term Net asset value (NAV)?Correct Answer
Market value of securities divided by the total units
Your Answer
Market value of securities divided by the total units

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
Your Answer
To identify trend changes at an early stage and maintain investment posture till the trend has
reversed

Match The Following

Question
Correct Answer
Your Answer
Technical collaboration of Bharat Forge with SIFCO industries USA
1981
1981
Bharat Forge was incorporated at Mumbai
1961
1961
Shares of 100 each subdivided of Bharat forge
1971
1971
930000 bonus shares issued by Bharat Forge
1976
1976

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
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

Select The Blank*Question

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

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

Multiple Choice Multiple Answer*Question

What was the final analysis on the performance of Bharat forge for the year FY 02?Correct
Answer
Aim to become US$1 billion Company by Fy 08 from US$100 million , Stock currently
trades at 15 times its FY 05 consensus EPS forecasts , Stock will trade at an inexpensive PEG
of 0.6x.
Your Answer
Aim to become US$1 billion Company by Fy 08 from US$100 million , Stock currently
trades at 15 times its FY 05 consensus EPS forecasts , Stock will trade at an inexpensive PEG
of 0.6x.

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
Your 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

Match The Following

Question
Correct Answer
Your Answer
Turnover ratios
Help measure the efficiency of utilisation of assets
Help measure the efficiency of utilisation of assets
Debt Equity ratio
Debt / Equity
Equity / Debt
Quick assets
Highly liquid assets
Highly liquid assets
Average collection period
Similar to debtors turnover
Similar to debtors turnover
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/-
Your Answer
Rs. 29775/-

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
Your 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

Stock Exchanges are the part of :-Correct Answer
Secondary market
Your Answer
Secondary market

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/-
Your Answer
Rs. 6083/-

Multiple Choice Single Answer*Question

What are the assumptions of the Dow theory?Correct Answer
Majority of stocks follow the underlying trend of the market most of the time
Your Answer
Majority of stocks follow the underlying trend of the market most of the time

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/-
Your Answer
Rs. 73466/-

Multiple Choice Single Answer*Question

In any Economy, bridge is created between savers and who need the funds by this system
:-Correct Answer
Financial
Your Answer
Financial
True/False*Question
The returns of sector specific funds are solely dependant on the performance of the respective
sectors / industries.Correct Answer
True
Your Answer
True

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
Your 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

Select The Blank*Question

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

Select The Blank*Question

A security is said to be ________ if its current market price is over its intrinsic value.Correct
Answer
Over priced
Your Answer
Over priced

True/False*Question
European style options are more expensive than American style because they offer greater
flexibility to the buyer.Correct Answer
False
Your Answer
False

Select The Blank*Question

The 8% taxable savings bonds are repayable after ________ years.Correct Answer
6
Your Answer
6

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

True/False*Question
A share certificate indicates that the investor owns a certain number of shares.Correct Answer
True
Your Answer
True

Select The Blank*Question

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

Multiple Choice Multiple Answer*Question

The growth rate in the initial phase is not constant but declines linearly over time to reach the
stable growth rate in steady state is a phenomena of :-Correct Answer
H- Model for valuing growth , H-Two stage model for growth , H-Model unlike the classic
two stage model
Your Answer
H-Two stage model for growth , H-Model unlike the classic two stage model

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

True/False*Question
Prices of stocks usually move in trends.Correct Answer
True
Your Answer
True

Select The Blank*Question

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

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

True/False*Question
The sideways trend is essentially a transitional one which separates the two major market
movements.Correct Answer
True
Your Answer
True

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
Your Answer
To earn a profit while restricting the downside risk , To use the options for speculation ,
Either to honour or walk away from the contract

Multiple Choice Multiple Answer*Question

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
Your 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

Select The Blank*Question

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

Multiple Choice Single Answer*Question

In a perfectly efficient market all securities are correctly priced means there are no :-Correct
Answer
Under priced and over priced securities
Your Answer
High priced and low priced securities

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
Your 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

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/-
Your Answer
Rs.14.693/-
at 4:24 AM 0 comments Links to this post
Labels: Security Analysis And Portfolio Management
Security Analysis And Portfolio Management - 2
LIST OF ATTEMPTED QUESTIONS AND ANSWERS

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

True/False*Question
Bonds and Debentures represent long term debt instruments.Correct Answer
False
Your Answer
False

Select The Blank*Question

________ deal in futures to offset a pre-existing risk.Correct Answer
Hedger
Your Answer
Hedger

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
Your Answer
False

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/-
Your Answer
Rs. 62,275/-

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
Your 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

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

Multiple Choice Single Answer*Question

Co variance of asset with market portfolio 85 and variance of market portfolio is 100 then
beta is :-Correct Answer
0.0085
Your Answer
0.0085

Select The Blank*Question

The Dow theory states that there are simultaneously ________ movements in the stock
market.Correct Answer
3
Your Answer
3

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

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
Your 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

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
Your Answer
True

Multiple Choice Single Answer*Question

What is Bottom-Up approach also known as?Correct Answer
Company-industry-economy approach
Your Answer
Company and industry approach

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
Your Answer
Consolidation pattern

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

Select The Blank*Question

An investor with a higher tolerance of risk should tilt his portfolio in favour of
________.Correct Answer
Stocks
Your Answer
Stocks

True/False*Question
Investment decisions can be viewed as an integrated process to which security analysis makes
its unique contribution.Correct Answer
True
Your Answer
True

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
Your Answer
Forward contract

Multiple Choice Single Answer*Question

What is a resistance level?Correct Answer
A point where there is opposition to further price rise
Your Answer
A point where there is opposition to further price rise

Multiple Choice Single Answer*Question

When a firm can grow net profits by issuing equity, the expected growth rate in net profits is
determined by :-Correct Answer
Equity reinvestment rate X return on equity
Your Answer
Equity reinvestment rate X return on equity

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
Where the seller accepts an obligation for which he receives a fee , A contract between two
parties , Where buyer receives a privilege for which he pays a premium

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

The compounded annual return of Kisan Vikas patra is ________.Correct Answer
0.084
Your Answer
0.084

Select The Blank*Question

________ ratio indicates the margin available after meeting the manufacturing
expenses.Correct Answer
Gross Profit margin
Your Answer
Gross Profit margin

True/False*Question
With the use of diversification you can reduce the risk.Correct Answer
True
Your 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 rate phase steadily for a specific
time period , Sources of high growth are expected to disappear after specific period of time
Your 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
Following a decline, heavy volume with little price change is indicative of accumulation and
is normally a bearish factor.Correct Answer
False
Your Answer
False

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
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
Match The Following
Question
Correct Answer
Your Answer
Future value of a series of cash flows occurring at the end of each period.
Future value of annuity
Future value of annuity
Value today of a stream of cash flows that occurs in future.
Present Value
Present Value
Value at a certain future date today of a stream of cash flows that occurs over a period of
time.
Future Value
Future Value
Series of equal payments or receipts occurring at regular intervals of time.
Present value of annuity
Present value of annuity

Select The Blank*Question

The govt allowed public sector banks and institutions in mutual funds in ________.Correct
Answer
Early 90's
Your Answer
Early 90's

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
Your Answer
0.05

Multiple Choice Single Answer*Question

A security analysis is done :-Correct Answer
For decision making for investments
Your Answer
For decision making for investments

Select The Blank*Question

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

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
Your Answer
Am forge industries , Kalyani Forge , EL Forge
Select The Blank*Question
S&P NSE 50 index is known as ________.Correct Answer
NIFTY
Your Answer
NIFTY

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
Your Answer
Term is for 8 years seven months , Provision of premature withdrawal , Interest rate is 8.4%
compounded annually

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

Multiple Choice Multiple Answer*Question

What are the features of public provident scheme?Correct Answer
15 year instrument , Rate of interest is 8% , Partial withdrawal is available from 7th year
Your Answer
15 year instrument , Rate of interest is 8% , Partial withdrawal is available from 7th year

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/-
Your Answer
Rs. 29775/-

Select The Blank*Question

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

Multiple Choice Multiple Answer*Question

The computation of return on a bond involves considering :-Correct Answer
The entire sequence of cash flows , The timing of cash flows , Calculating the internal rate of
return
Your Answer
The entire sequence of cash flows , The timing of cash flows , Calculating the internal rate of
return
Multiple Choice Single Answer*Question
What is the goal of the Dow theory?Correct Answer
To determine changes in the primary or major movement in the market
Your Answer
To determine changes in the primary or major movement in the market

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

Multiple Choice Single Answer*Question

A pledge of real assets as insurance against the non-payment of default by the buyer
representsCorrect Answer
Collateral
Your Answer
Collateral

Multiple Choice Multiple Answer*Question

The investor in bonds receives income from :-Correct Answer
Interest payments at coupon rates , Capital gain/loss arising out of the sale of the bond ,
Redemption of the bond of the issuer at a contracted value
Your Answer
Interest payments at coupon rates , Capital gain/loss arising out of the sale of the bond ,
Redemption of the bond of the issuer at a contracted value

Multiple Choice Multiple Answer*Question

What are the features of bank deposits?Correct Answer
Interest is presently around 6% , Benefits under section 80 L , Banks offer cheque facility for
investors making it convenient to withdraw
Your Answer
Interest is presently around 6% , Benefits under section 80 L , Banks offer cheque facility for
investors making it convenient to withdraw

Match The Following

Question
Correct Answer
Your Answer
Gross profit margin
Indicates the margin available after meeting the manufacturing expenses
Indicates the margin available after meeting the manufacturing expenses
ROE
Measure the profitability of equity funds
Measure the profitability of equity funds
Earnings power
Measure the profitability of operations without considering the influence of financial
structure and tax rate
Measure the profitability of operations without considering the influence of financial
structure and tax rate
Net profit margin
Ratio if net profit to sales
Ratio if net profit to sales
at 4:23 AM 0 comments Links to this post
Labels: Security Analysis And Portfolio Management
Monday, February 4, 2008
Security Analysis & Portfolio Management - 1
LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Select The Blank

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

Multiple Choice Multiple Answer

Question
The investor in bonds receives income from :-
Correct Answer
Interest payments at coupon rates , Capital gain/loss arising out of the sale of the bond ,
Redemption of the bond of the issuer at a contracted value
Your Answer
Capital gain/loss arising out of the sale of the bond , Redemption of the bond of the issuer at a
contracted value , Interest payments at coupon rates

Select The Blank

Question
________ ratio is estimated by dividing the market value of a firm's assets by the replacement
cost of these assets.
Correct Answer
Market value to replacement cost ratio
Your Answer
Market value to replacement cost ratio

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

Select The Blank

Question
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
Your Answer
Right but not obligation

Multiple Choice Multiple Answer

Question
What are the features of public provident scheme?
Correct Answer
15 year instrument , Rate of interest is 8% , Partial withdrawal is available from 7th year
Your Answer
15 year instrument , Rate of interest is 8% , Partial withdrawal is available from 7th year

Multiple Choice Multiple Answer

Question
What are the important macro economic indicators?
Correct Answer
GNP growth rate , Price Conditions , Monsoons
Your Answer
GNP growth rate , Price Conditions , Monsoons

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

Multiple Choice Single Answer

Question
In estimating the growth of a firm, analyst's forecasts have an advantage over historical data-
based models because :-
Correct Answer
They incorporate more recent information about the firm and inputs future prospects
Your Answer
They incorporate more recent information about the firm and inputs future prospects

Multiple Choice Single Answer

Question
The growth period in the industry life cycle is defined as :-
Correct Answer
Period of rapid market acceptance and substantial profit improvement
Your Answer
Period of rapid market acceptance and substantial profit improvement

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

Select The Blank

Question
________ 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
Your Answer
Speculators

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
Your Answer
Prices move in predictable patterns , Market value is determined by supply & demand ,
Investors are emotional than being rational

Multiple Choice Multiple Answer

Question
To measure the movement of stocks in the market which indices were constructed by Dow?
Correct Answer
Dow Jones industrial Average , Dow Jones Transportation Average
Your Answer
Dow Jones industrial Average , Dow Jones Transportation Average

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
Your Answer
Term is for 8 years seven months , Provision of premature withdrawal , Interest rate is 8.4%
compounded annually

Select The Blank

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

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
Your Answer
Maintain aggressive exports thrust , Increase shares of value added products , Continue
reducing costs

True/False
Question
The price earning ratio can be estimated for the firms with negative earnings per share.
Correct Answer
False
Your Answer
False

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

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
Your Answer
Expected return on portfolio , Expected return on assets , Weight of asset in the portfolio

Select The Blank

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

Multiple Choice Single Answer

Question
What are sector specific funds?
Correct Answer
Scheme which invest in certain sectors
Your Answer
Scheme which invest in certain sectors

Multiple Choice Single Answer

Question
In India we have index futures contracts based on :-
Correct Answer
S&P CNX Nifty and the BSE sensex
Your Answer
S&P CNX Nifty and the BSE sensex

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
Your Answer
Am forge industries , Kalyani Forge , EL Forge

Multiple Choice Single Answer

Question
What are intermediate trends?
Correct Answer
They are counter-cyclical trends within the confines of a primary trend
Your Answer
They are counter-cyclical trends within the confines of a primary trend

Multiple Choice Single Answer

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

Multiple Choice Single Answer

Question
The price of the index futures contract is defined as :-
Correct Answer
Future price = Spot price + Carry cost
Your Answer
Future price = Spot price + Carry cost

Select The Blank

Question
When a debenture is sold to the general public a ________ is appointed.
Correct Answer
Trustee
Your Answer
Trustee
Multiple Choice Single Answer
Question
During the 1980's rate of savings in India has hovered around what percentage?
Correct Answer
0.21
Your Answer
0.21

True/False
Question
PPF is a good retirement planning and tax saving vehicle.
Correct Answer
True
Your Answer
True

Select The Blank

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

Multiple Choice Single Answer

Question
Financial assets can be classified as :-
Correct Answer
Marketable and non-marketable
Your Answer
Marketable and non-marketable

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

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
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
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
Your Answer
True

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 Multiple Answer

Question
Characteristics of Preference shares are :-
Correct Answer
Carry a fixed rate of dividend , Dividend payable out of profit , Redemption in 7 to 12 years
Your Answer
Carry a fixed rate of dividend , Dividend payable out of profit , Redemption in 7 to 12 years

Select The Blank

Question
The compounded annual return of Kisan Vikas patra is ________.
Correct Answer
0.084
Your Answer
0.084

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

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
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
Your 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
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
________ of companies may open at higher or lower price than the issue price.
Correct Answer
IPO's
Your Answer
IPO's

Match The Following

Question
Correct Answer
Your Answer
Future value of a series of cash flows occurring at the end of each period.
Future value of annuity
Future value of annuity
Value today of a stream of cash flows that occurs in future.
Present Value
Present Value
Value at a certain future date today of a stream of cash flows that occurs over a period of
time.
Future Value
Future Value
Series of equal payments or receipts occurring at regular intervals of time.
Present value of annuity
Present value of annuity

Match The Following

Question
Correct Answer
Your Answer
Development of Dow's principles
William Peter Hamilton
William Peter Hamilton
Breadth Indicator
Advance/decline line
Advance/decline line
Momentum indicator
MACD
MACD
Trend lines
Useful tool in technical analysis
Useful tool in technical analysis

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

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
Your Answer
Stable firms