Security Analysis And Portfolio Management - 21

LIST OF ATTEMPTED QUESTIONS AND ANSWERS
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 Either to honour or walk away from the contract , To earn a
profit
while restricting the downside risk , To use the options for
speculation
Multiple Choice Single Answer
Question Free Float index considers this to calculate market capitalisation
:-
Correct Answer Actual no. of shares available
Your Answer Actual no. of shares available
True/False
Question A rise in interest rates will push the market prises of outstanding
bonds where as a fall in interest rates will depress the market
prices down.
Correct Answer False
Your Answer True
Multiple Choice Single Answer
Question Who operates the sinking fund under the sinking fund provision
of a firm?
Correct Answer The bond trustee or the issuer
Your Answer The bond trustee or the issuer
Multiple Choice Single Answer
Question In India, the futures on individual securities have been
introduced from :-
Correct Answer 2001
Your Answer 2001
Select The Blank
Question ________ measures the profitability of equity funds invested in
the firms.
Correct Answer Return on equity
Your Answer Return on equity
True/False
Question Given the accounting standards across firm, price to book value
ratios can be compared across similar firms for signs of under
valuation.
Correct Answer True
Your Answer True
Select The Blank
Question A line is defined as a price movement two or three weeks or
longer, during which period the price variation of both averages
moves within a price range of approximately________%.
Correct Answer 5
Your Answer 10
Select The Blank
Question ________ measures the efficiency of credit management.
Correct Answer Average collection period
Your Answer Interest coverage ratio
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 ,
Fixing
ending date
Select The Blank
Question Risk can be referred as the ________ in the return with respect
to the expected return.
Correct Answer Volatility
Your Answer Difference
True/False
Question Bearish actions come from a series of declining peaks and
troughs.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question What were the achievements of Bharat Forge during the year
2003?
Correct Answer Secured second largest customer in China , Appointed a
Company Secretary to act as compliance officer , New contracts
won in passenger car components
Your Answer Secured second largest customer in China , Appointed a
Company Secretary to act as compliance officer , New contracts
won in passenger car components
Multiple Choice Single Answer
Question As per the exhibit 18-1 for individual stock futures on NSE, the
price steps in respect of all futures contract admitted to the
dealings of the exchange shall be :-
Correct Answer 0.05
Your Answer 0.05
Multiple Choice Single Answer
Question The Top-down approach is also known as :-
Correct Answer Economy-industry-company approach
Your 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
Your Answer A reflection of the idea that prices move in trends which are
determined by various factors
Multiple Choice Single Answer
Question More than half the variation in stock price could be attributed to
which factor?
Correct Answer Market influence
Your Answer Market influence
Multiple Choice Multiple Answer
Question Formula for calculation of portfolio variance requires :-
Correct Answer Expected return on portfolio , Expected return on assets ,
Weight
of asset in the portfolio
Your Answer Expected return on portfolio , Expected return on assets ,
Standard deviation
Multiple Choice Multiple Answer
Question How can the financial statements can be manipulated while
giving the estimates for growth?
Correct Answer Change method of rate of depreciation , Change method of
stock
valuation , Inflating sales for current year by advancing sales for
the following year
Your Answer Change method of rate of depreciation , Change method of stock
valuation , Inflating sales for current year by advancing sales for
the following year
Multiple Choice Single Answer
Question What are index funds?
Correct Answer Investment in securities in the same weightage which
replicates
a particular index
Your Answer Investment in securities in the same weightage which replicates
a particular index
Select The Blank
Question All trades in the futures market are cash settled on a ________
basis.
Correct Answer T+1
Your Answer T+1
Select The Blank
Question ________ measures the profitability of operations without
considering the influence of financial structure and tax rate.
Correct Answer Earnings power
Your Answer ROE
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
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 , Growth schemes
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 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 , Displays the correlation between the high and
low prices
Select The Blank
Question ________ identified five forces that determine the intrinsic long
run profit attractiveness of a market or market segment.
Correct Answer Michael Porter
Your Answer Harold Koontz
Match The Following
Question Correct Answer Your Answer
H-Model For Valuing
Growth
Initial growth rate is not
constant but linearly falls
over time to reach the
stable growth rate
Initial growth rate is not
constant but linearly falls
over time to reach the
stable growth rate
The general model Expected dividends and
required rate of return
Expected dividends and
required rate of return
The Gordons Growth
model
Expected dividends in the
next period, cost of equity
and expected growth rate
in dividends
Expected dividends in the
next period, cost of equity
and expected growth rate
in dividends
The Two-Stage Dividend
Discount Model
Based on two
extraordinary growth
phase lasting n years and
stable growth phase that
lasts forever
Based on two
extraordinary growth phase
lasting n years and stable
growth phase that lasts
forever
True/False
Question Because of statutory compulsion, generally Govt. securities are
held by banks, financial institutions, insurance companies etc.
Correct Answer True
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 , Expecting a
established dividend payout ratio
Match The Following
Question Correct Answer Your Answer
Weak form model is also
termed as
Random walk model Random walk model
Investors are rational Efficient market
hypothesis
Efficient market hypothesis
Securities current prices
fully reflect all historical
information
Weak form EMH Fama
Framework on efficient
capital markets, a review
of theory and empirical
work
Fama Strong form
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 , Tax benefits under 80 L available
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 , Investors are emotional
than being rational
True/False
Question Sensex is the index of Calcutta Stock Exchange.
Correct Answer False
Your Answer False
Select The Blank
Question ________ refers to the possibility that there may not be a readily
available market for the particular bond.
Correct Answer Liquidity risk
Your Answer Liquidity risk
Multiple Choice Single Answer
Question What could be a better approach to flow-of -funds analysis?
Correct Answer An examination of liquidity trends in the banking system
Your Answer A study of macro economical changes
True/False
Question There may be convertible clause which gives the debenture
holder the option to convert the debentures into equity shares.
Correct Answer True
Your Answer True
Select The Blank
Question ________are good benchmark to compare the ratios for a firm.
Correct Answer Industry averages
Your Answer Trend analysis
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 Futures contract
Select The Blank
Question ________ ratio is the ratio of net profit to the sales.
Correct Answer Net Profit Margin
Your Answer Net Profit Margin
Select The Blank
Question When a debenture is sold to the general public a ________ is
appointed.
Correct Answer Trustee
Your Answer Brokers
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 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
True/False
Question PPF is a good retirement planning and tax saving vehicle.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question What are short term trends?
Correct Answer Trends which interrupt the course of the intermediate cycle
Your Answer Trends which interrupt the course of the intermediate cycle
Select The Blank
Question A security is said to be ________ if its current market price is
over its intrinsic value.
Correct Answer Over priced
Your Answer Over priced
Multiple Choice Single Answer
Question What is the aim of growth funds?
Correct Answer To provide capital appreciation over medium to long term
Your Answer To provide capital appreciation over medium to long term