Security Analysis & Portfolio Management SCDL Solved Exam Paper 31

Select The Blank
Question	An ________ is a series of equal payments or receipts occurring at regular intervals of time.
Answer	Annuity
True/False
Question	The basic inputs of the general model are expected dividends and required rate of return on stock.
Answer	TRUE
Multiple Choice Single Answer
Question	Dividend discount model is considered as the simplest model for :-
Answer	Valuing Equity
Multiple Choice Multiple Answer
Question	Formula for calculation of portfolio variance requires :-
Answer	Expected return on portfolio , Expected return on assets , Weight of asset in the portfolio
Multiple Choice Single Answer
Question	What is the minimum investment amount in G-secs?
Answer	1000
Multiple Choice Multiple Answer
Question	Characteristics of Preference shares are :-
Answer	Carry a fixed rate of dividend , Dividend payable out of profit , Redemption in 7 to 12 years
True/False
Question	Passive investment managers believe that markets are inefficient and Active managers believe that markets are efficient.
Answer	FALSE
Select The Blank
Question	S&P NSE 50 index is known as ________.
Answer	NIFTY
Multiple Choice Single Answer
Question	Which of the following is a money market fund?
Answer	Commercial paper
True/False
Question	Investment in gilt edged securities carry a higher element of risk.
Answer	FALSE
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.
Answer	FALSE
True/False
Question	Penetration of a trend line denotes a bearish phase.
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 :-
Answer	0.0085
Select The Blank
Question	The Dow theory states that there are simultaneously ________ movements in the stock market.
Answer	3
True/False
Question	Policies of the government and the attitude of the government towards the industry have a considerable influence on the industry.
Answer	TRUE
Multiple Choice Single Answer
Question	What is Bottom-Up approach also known as?
Answer	Company-industry-economy approach
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?
Answer	0.15
True/False
Question	Investment decisions can be viewed as an integrated process to which security analysis makes its unique contribution.
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 :-
Answer	Forward contract
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 :-
Answer	Equity reinvestment rate X return on equity
Multiple Choice Multiple Answer
Question	The computation of return on a bond involves considering :-
Answer	The entire sequence of cash flows , The timing of cash flows , Calculating the internal rate of return
Multiple Choice Multiple Answer
Question	What are the features of Retail government securities (G-secs) ?
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 represents
Answer	Collateral
Select The Blank
Question	Total risk reduces if operations of combining firms are ________.
Answer	Negatively correlated
Multiple Choice Single Answer
Question	The Public announcement of share buy back has to be made at least :-
Answer	7 Days prior to the commencement of buy back
Select The Blank
Question	The amount to be invested by any single investor in a commercial paper shall not be less than Rs. ________.
Answer	25 lacs
Select The Blank
Question	The number of bidding centers shall not be less than ________ for buy back through book building.
Answer	30
Select The Blank
Question	________ of companies may open at higher or lower price than the issue price.
Answer	IPO's
True/False
Question	Equity shares is a high return high risk instrument.
Answer	TRUE
Multiple Choice Single Answer
Question	What does a Balanced fund seek to achieve?
Answer	Growth and regular income
Multiple Choice Single Answer
Question	Under EMH it is assumed that if markets are efficient, securities are priced to provide a :-
Answer	Normal returns for their given level of risk
Multiple Choice Single Answer
Question	Profits are non existent in pioneering stage because of :-
Answer	Heavy expenses on product introduction
Select The Blank
Question	________ identified five forces that determine the intrinsic long run profit attractiveness of a market or market segment.
Answer	Michael Porter
Multiple Choice Multiple Answer
Question	Which are the most popular types of orders placed through an online trading account?
Answer	Limit orders , Market orders
Multiple Choice Multiple Answer
Question	To measure the movement of stocks in the market which indices were constructed by Dow?
Answer	Dow Jones industrial Average , Dow Jones Transportation Average
Multiple Choice Multiple Answer
Question	Active investment managers :-
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
True/False
Question	The performance of a scheme is reflected in its NAV which is disclosed on a daily basis in case of open ended schemes.
Answer	TRUE
Multiple Choice Multiple Answer
Question	A firm's growth is determined by how much is re-invested into new assets and the quality of these investments, and these includes :-
Answer	Acquisitions , Building distribution channels , Expanding marketing capabilities and investing in new facilities
Select The Blank
Question	The regulations of SEBI with respect to mutual funds were fully revised in the year ________.
Answer	1996
Select The Blank
Question	________ is affected by the leverage decisions of the firm.
Answer	Return on equity
Multiple Choice Multiple Answer
Question	The investor in bonds receives income from :-
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 company fixed deposits?
Answer	Interest rate offered is higher than banks , No benefits under 80 L , No TDS for interest income upto Rs. 5000
True/False
Question	A firm uses a combination of equity and debt for financing its assets.
Answer	TRUE
True/False
Question	The cost structure remaining the same, better price realisation results in lower gross profit ratio.
Answer	FALSE
Multiple Choice Single Answer
Question	How many measures of money supply are used commonly?
Answer	2
True/False
Question	PPF is a good retirement planning and tax saving vehicle.
Answer	TRUE
Multiple Choice Multiple Answer
Question	The security analysis process will achieve :-
Answer	True picture of a company , Normal earning power , Projection of future profitability
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.
Answer	Call risk
Multiple Choice Single Answer
Question	What is the goal of the Dow theory?
Answer	To determine changes in the primary or major movement in the market
Multiple Choice Single Answer
Question	What is the indicator of buoyant economy?
Answer	Increased level of housing construction activity
Select The Blank
Question	________ is also known as random walk model.
Answer	Weak form EMH
Multiple Choice Single Answer
Question	Futures contract on individual securities shall expire on the last Thursday of the expiry month and if the last Thursday is a trading holiday then the contract shall expire on the :-
Answer	Previous day
Select The Blank
Question	________ ratio is estimated by dividing the market value of a firm's assets by the replacement cost of these assets.
Answer	Market value to replacement cost ratio
Select The Blank
Question	Debentures rated ________ are judged to offer sufficient safety of timely payment of interest and repayment of principal.
Answer	"BBB"
Multiple Choice Single Answer
Question	What is the limitation of Flow-of funds analysis method?
Answer	Cannot give indication of the inclination of market participants to purchase stock
Multiple Choice Single Answer
Question	A Portfolio means :-
Answer	Combination of assets
Select The Blank
Question	The margining system is future contract is based on ________ recommendations.
Answer	J R verma committee
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?
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.
Answer	The Two-Stage dividend discount
Select The Blank
Question	Under ________ EMH investors cannot earn abnormal/superior profits on securities on a consistent basis.
Answer	Semi-strong form
Multiple Choice Single Answer
Question	What do you understand by the term Net asset value (NAV)?
Answer	Market value of securities divided by the total units
Multiple Choice Multiple Answer
Question	What are the ways of measuring relative strength?
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.
Answer	T+1
True/False
Question	The ratios between profits and investments are called rate of return measures.
Answer	TRUE
Multiple Choice Single Answer
Question	Stock Exchanges are the part of :-
Answer	Secondary market
True/False
Question	A share certificate indicates that the investor owns a certain number of shares.
Answer	TRUE
Select The Blank
Question	________ ratio is the ratio of net profit to the sales.
Answer	Net Profit Margin
True/False
Question	Prices of stocks usually move in trends.
Answer	TRUE
True/False
Question	A segment is more attractive when there are actual or potential substitutes for the product.
Answer	TRUE
True/False
Question	The sideways trend is essentially a transitional one which separates the two major market movements.
Answer	TRUE
Multiple Choice Single Answer
Question	In a perfectly efficient market all securities are ly priced means there are no :-
Answer	Under priced and over priced securities
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.
Answer	Speculators
Select The Blank
Question	________ deal in futures to offset a pre-existing risk.
Answer	Hedger
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?
Answer	Rs. 6083/-
Multiple Choice Single Answer
Question	In estimating the growth of a firm, analyst's forecasts have an advantage over historical data-based models because :-
Answer	They incorporate more recent information about the firm and inputs future prospects
Note: Please tally the answers and verify them from SCDL textbooks as all answers might not be correct