LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Select The Blank
Question ________ measures the profitability of operations without
considering the influence of financial structure and tax rate.
Correct Answer Earnings power
Your Answer Earnings power
True/False
Question While calculating geometric mean calculation of root is not
important.
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question What could be a better approach to flow-of -funds analysis?
Correct Answer An examination of liquidity trends in the banking system
Your Answer Analyzing the Fiscal issues
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 A higher value of current ratio indicates a better short term
solvency of the firm.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question Investment is a risk free investment when :-
Correct Answer Actual return is = expected return
Your Answer Actual return is = expected return
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
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 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
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
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
Select The Blank
Question Secondary reactions occurs because of ________ which
arise in themarket as a result of over optimism and over
pessimism.
Correct Answer Technical distortions
Your Answer Technical distortions
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
Your Answer Bearish
True/False
Question Debt is less riskier source of finance than equity.
Correct Answer False
Your Answer True
True/False
Question The arithmetic mean is a set of observations is calculated by
finding the sum values and dividing by the number of
observations.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question What does flow-of fund analysis help in understanding?
Correct Answer Availability of money for the stock market
Your Answer Financial strength of various companies
True/False
Question The normal relationship is for the volume to expand on rallies
and contract on declines.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question Growth of the firm can be estimated through :-
Correct Answer Firm's past earnings/historical growth rate , Estimates made
by equity research analyst who follow the firm , Estimates
from a firm's fundamentals
Your Answer Firm's past earnings/historical growth rate , Estimates from a
firm's fundamentals , Forecasting future revenues and
earnings
Multiple Choice Multiple Answer
Question The security analysis process will achieve :-
Correct Answer True picture of a company , Normal earning power ,
Projection of future profitability
Your Answer True picture of a company , Normal earning power ,
Projection of future profitability
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
Your Answer Present value of the expected future cash flow
Multiple Choice Single Answer
Question The index futures symbols of BSE are represented as :-
Correct Answer BSX JAN 2005 (January contract)
Your Answer BSX JAN 2005 (January contract)
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% , Banks offer cheque facility
for investors making it convenient to withdraw
True/False
Question Risk on a portfolio of assets is always same as the risk on
individual asset.
Correct Answer False
Your Answer False
Select The Blank
Question UTI was set up in the year ________.
Correct Answer 1963
Your Answer 1963
Multiple Choice Multiple Answer
Question Major steps involved in construction of a index are :-
Correct Answer Selecting a set of scrips to be used , Fixing starting date ,
Calculating market capitalisation
Your Answer Selecting a set of scrips to be used , Fixing starting date ,
Calculating market capitalisation
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
Your Answer 5
Multiple Choice Multiple Answer
Question The return to the bond investor can be measured in terms of
:-
Correct Answer Realised yield , Current yield , Yield to maturity
Your Answer Current yield , Yield to maturity
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
Select The Blank
Question Debentures rated "BB" refers ________ of timely payment of
interest and principal.
Correct Answer Inadequate safety
Your Answer Inadequate safety
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 Single Answer
Question When the firm is not raising equity by issuing new shares,
the growth rate in net profits is given by :-
Correct Answer Retention ratio X return on equity
Your Answer Price earning ratio X return on equity
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
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
Multiple Choice Multiple Answer
Question What are the SEBI regulations with respect to mutual funds?
Correct Answer Mutual funds to be registered with SEBI before the launching
any scheme , 2/3rds of the directors of the trustee company
must be independent , An AMC approved by SEBI manages
the fund
Your Answer Mutual funds to be registered with SEBI before the launching
any scheme , 2/3rds of the directors of the trustee company
must be independent , An AMC approved by SEBI manages
the fund
Multiple Choice Single Answer
Question The bond issuing firm enjoys the flexibility of being able to
call the bonds if :-
Correct Answer Interest rates are falling
Your Answer Interest rates are falling
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
Your 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
Your Answer High growth firms
Multiple Choice Single Answer
Question A security analysis is done :-
Correct Answer For decision making for investments
Your Answer For decision making for investments
Multiple Choice Multiple Answer
Question Which ratios are commonly used?
Correct Answer Debt equity ratio , Interest coverage ratios , Debt service
coverage ratios
Your Answer Debt equity ratio , Interest coverage ratios , Debt service
coverage ratios
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
Match The Following
Question Correct Answer Your Answer
Growth of income 40-60 % debt, 40-60 %
equities
40-60 % debt, 40-60 %
equities
Current income Short term debt portfolio Fixed - income portfolio
Stability of principal Fixed - income portfolio Short term debt portfolio
Appreciation 75-100 % in equities 75-100 % in equities
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
Select The Blank
Question S&P NSE 50 index is known as ________.
Correct Answer NIFTY
Your Answer NIFTY
Multiple Choice Multiple Answer
Question Mutual fund schemes could be broadly classified as :-
Correct Answer Open ended scheme , Close ended scheme
Your Answer Open ended scheme , Close ended scheme
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 Investors in high tax bracket would benefit by investing in
equity schemes.
Correct Answer False
Your Answer False
Match The Following
Question Correct Answer Your Answer
Ratio used as a measure
of relative value
PEG ratio Price to book value 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 firm reflects
the markets expectations
of the firms earnings
power and cash flows.
Price to book value ratio Price earning ratio
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