Tuesday, November 10, 2009

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

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