Security Analysis Portfolio Management 10

LIST OF ATTEMPTED QUESTIONS AND ANSWERS
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

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

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

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

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
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

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

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

Question The Peer group of Bharat Forge consists of which all
companies?
Correct Answer Am forge industries , Kalyani Forge , EL Forge

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

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

Question The features of bond are :-
Correct Answer Collateral , Call provision , Sinking fund and protective
covenants

Question What are the features of
company fixed deposits?
Correct Answer Interest rate offered is
higher than banks , No
benefits under 80 L , No
TDS for interest income
upto Rs. 5000
Your Answer Interest rate offered is
higher than banks , No
benefits under 80 L , No
TDS for interest income
upto Rs. 5000

Question What are the features of point
and figure charts?
Correct Answer Charts are constructed using a
combination of X's and O's
known as boxes. , X's show that
the prices are moving up , O's
show that the prices are moving
down
Your Answer Charts are constructed using a
combination of X's and O's
known as boxes. , X's show that
the prices are moving up , O's
show that the prices are moving
down

Question What are the features of post
office monthly income scheme?
Correct Answer Investor earns bonus of 10% on
completion of term , Rate of
return is 8 % , Interest payable
monthly
Your Answer Rate of return is 8 % , Interest
payable monthly , Investor earns
bonus of 10% on completion of
term

Question The firm issuing bonds
operating sinking fund and
repurchases bonds either :-
Correct Answer Calling in a certain number
of bonds by lot , Buying
bonds in the open market ,
Buying bonds issued to
banks and financial
institutions
Your Answer Calling in a certain number
of bonds by lot , Buying
bonds in the open market ,
Buying bonds issued to
banks and financial
institutions

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

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

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

Question Explain what are leverage ratios ?
Correct Answer 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 , Help in assessing the
risk arising using the debt capital
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

Question What developments had taken
place during the year 2000 in case
of Bharat Forge Ltd.?
Correct Answer Demerger of investment division
and windmills , Nominee director of
UTI resigned and ceased to be the
director - nomination withdrawn by
UTI
Your Answer Demerger of investment division
and windmills , Nominee director of
UTI resigned and ceased to be the
director - nomination withdrawn by
UTI

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

Question 1 Return can be in the form of :-
Correct Answer Dividends , Interests , Capital appreciation
Your Answer Dividends , Interests , Capital appreciation

Question 5 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

Question 35 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 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

Question 41 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

Question 46 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

Question 47 Which are the most popular types of orders
placed through an online trading account?
Correct Answer Limit orders , Market orders
Your Answer Market orders , Hedging orders , Arbitrage orders

Question 4 A firm's growth is determined by how
much is re-invested into new assets and
the quality of these investments, and
these includes :-
Correct Answer Acquisitions , Building distribution
channels , Expanding marketing
capabilities and investing in new facilities
Your Answer Acquisitions , Expanding marketing
capabilities and investing in new facilities ,
Mergers

Question 5 Which of the following are important
momentum indicators used widely?
Correct Answer Rate of change (ROC) , Relative strength
indicator (RSI) , Moving average
convergence divergence(MACD)
Your Answer Rate of change (ROC) , Relative strength
indicator (RSI) , Moving average
convergence divergence(MACD)

Question 14 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

Question 15 What were the Chairman's comments during
the speech in the Annual report of the FY
2002-03?
Correct Answer Best year in the history of the company ,
146% growth in exports , Highest pre and
post tax profits
Your Answer Best year in the history of the company ,
146% growth in exports , Highest pre and
post tax profits

Question 20 Who are the constituents of a
mutual fund?
Correct Answer Sponsor & trustees , Asset
management company ,
Custodian
Your Answer Sponsor & trustees , Asset
management company ,
Custodian

Question 26 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

Question 38 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

Question 41 The return to the bond investor can be
measured in terms of :-
Correct Answer Current yield , Yield to maturity , Realised
yield
Your Answer Yield to maturity , Realised yield

Question 5 Which are the different types of accounts offered to
investors by the stock brokers?
Correct Answer Cash trading , Margin trading
Your Answer General trading , Cash trading , Margin trading

Question 7 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 Securities can be bought from the RBI , Safest
investment option available , Demat account is required
for investment

Question 10 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 Transportation Average

Question 16 The security market is the market for :-
Correct Answer Equity , Debt , Derivatives
Your Answer Equity , Debt , Bank deposits

Question 18 In a typical stock market cycle which are the types of
trends?
Correct Answer Trends upward , Trend downward , Sideway trend
Your Answer Trends upward , Trend downward , Flat trend

Question 22 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

Question 24 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.

Question 26 Gilt Edged Securities are :-
Correct Answer State Govt. , Quasi-Govt , Central Govt
Your Answer Central Govt , State Govt. , Quasi-Govt

Question 33 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 , Calculating the Return on
investment
Question 44 What are the different types of profitability ratios?
Correct Answer Gross profit margin ratio , Earnings power , Return on

equity
Your Answer Gross profit margin ratio , Earnings power , Return on
equity

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

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

Question Features of PSU Bonds are :-
Correct Answer No TDS , Transferable by endorsement , No stamp duty on transfer
Your Answer No TDS , Transferable by endorsement , No stamp duty on transfer

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

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
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

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

Question Which are the different styles of displaying charts?
Correct Answer Bar and line charts , Candle stick charts , Point and figure charts
Your Answer Candle stick charts , Point and figure charts , Bar and line charts

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

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 made by
equity research analyst who follow the firm , Estimates from a
firm's fundamentals

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
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

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

Question The return to the bond investor can be measured in terms of :-
Correct Answer Current yield , Yield to maturity , Realised yield
Your Answer Realised yield

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

Question What are the important macro economic indicators?
Correct Answer GNP growth rate , Price Conditions , Monsoons
Your Answer GNP growth rate , Price Conditions , Monsoons
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
Question Stock Exchanges are the part of :-
Correct Answer Secondary market
Your Answer Money Market

Question The index futures symbols of BSE are represented as :-
Correct Answer BSX JAN 2005 (January contract)

Question More than half the variation in stock price could be attributed
to which factor?
Correct Answer Market influence

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

Question In India, the futures on individual securities have been
introduced from :-
Correct Answer 2001

Question What do you understand by the term redemption price?
Correct Answer Price or NAV at which a scheme purchases its units

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

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
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

Question A pledge of real assets as insurance against the non-payment
of default by the buyer represents
Correct Answer Collateral

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
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

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 Price earning ratio X return on equity

Question What is a load fund?
Correct Answer Fund charging a fee for entry and exit
Your Answer Fund charging a fee for entry and exit

Question Investment is a risk free investment when :-
Correct Answer Actual return is = expected return
Your Answer Actual return is = expected return

Question Debt instruments that have a maturity period of more than one
year are called as :-
Correct Answer Bonds
Your Answer Bonds

Question Mr. Sharma is expecting to receive Rs. 50,000/- at the end of 5
years. He wanted to know what is the present value of this
amount, if the rate of interest is 6% p.a?
Correct Answer Rs. 37363/-
Your Answer Rs. 37363/-

Question Which of these is a short-maturity debt issue?
Correct Answer Money market funds and gilts
Your Answer Money market funds and gilts

Question What is Support level?
Correct Answer A point where the prices become relatively attractive for buyers
Your Answer Market resistance to a price fall

Question During the 1980's rate of savings in India has hovered around
what percentage?
Correct Answer 0.21
Your Answer 0.22

Question A market that is trading at a Price earning ratio that is much
higher than its historical norms is considered to be :-
Correct Answer Over valued
Your Answer Over valued

Question The average historical growth rate can be calculated as :-
Correct Answer Arithmetic average or a geometric average

Your Answer Geometric average

Question 4 What are short term trends?
Correct Answer Trends which interrupt the course of the intermediate cycle
Your Answer They are counter-cyclical trends within the confines of a primary
trend
Question 8 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

Question 9 The historical growth rate and the past earnings of a firm are
used in valuing :-
Correct Answer Stable firms, but not appropriate for high growth firms
Your Answer Consistent stable firms, but not appropriate for high growth firms

Question 10 Efficient market hypothesis is based on the assumption that
market comprises of :-
Correct Answer Rational Investors
Your Answer Heterogeneous investors

Question 11 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

Question 13 Mr. Tiwari is expecting to receive Rs.25,000/- at the end of 10
amount, if the rate of interest is 10% p.a:-

Question 18 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

Question 23 A security represent evidence of :-
Correct Answer A property right
Your Answer Safety

Question 24 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?

Question 27 In India futures on individual securities have been introduced
by :-
Correct Answer BSE & NSE
Your Answer BSE & NSE

Question 43 The issuing firm enjoys the flexibility to call the bonds if the
interest rates fall significantly and it can issue :-
Correct Answer New bonds at a lower rates
Your Answer New bonds at a lower rates

Question 2 When was the first mutual fund set up?
Correct Answer 1963
Your Answer 1963

Question 7 How can transition phases be projected?
Correct Answer Transition phases are signalled by clearly definable price

patterns
Your Answer By working out the resistance and support levels

Question 8 If the price of a share at the beginning of the year was Rs.50/-,
dividend received during the year was Rs.10/-per share and the
price at the end is Rs.60/-. What is the rate of return?
Correct Answer 0.4
Your Answer 0.2

Question 27 Investing in this avenue enable you participate in the equity
market indirectly :-
Correct Answer Mutual Funds
Your Answer Mutual Funds

Question 29 In any Economy, bridge is created between savers and who
need the funds by this system :-
Correct Answer Financial
Your Answer Economic

Question 30 Agriculture account for how much portion of the economy?
Correct Answer Quarter
Your Answer Three fourths

Question 37 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

Question 40 How did Dow use the behaviour of stock markets?
Correct Answer As a barometer of business conditions rather than a basis for

forecasting stock prices
Your Answer As a barometer of business conditions rather than a basis for
forecasting stock prices

Question 42 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
Question 3 What is the limitation of Flow-of funds analysis method?
Correct Answer Cannot give indication of the inclination of market participants to

purchase stock
Your Answer Cannot give indication of the inclination of market participants to
purchase stock

Question 6 Sentiment indicators are based on what assumption
Correct Answer Different groups of investors are consistent in their actions at

major market turning points
Your Answer Different groups of investors are consistent in their actions at
major market turning points

Question 12 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

Question 25 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

Question 29 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

Question 38 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

Question 39 Mr.Rohan invests Rs.25,000/- today. The rate of interest is 6%
after 3 years?

Question 41 How many measures of money supply are used commonly?
Correct Answer 2
Your Answer 2

Question 43 Under which simple model the value of the stock is the present
value of expected dividends on it :-
Correct Answer The Dividend discount model
Your Answer The Dividend growth model

Question 46 Avenues can be broadly classified into the which type of assets?
Correct Answer Financial and Real
Your Answer Tangible and Intangible

Question The average investor in the market is driven more by emotions
than by rational analysis is a rule of :-
Correct Answer Technical analysis
Your Answer Fundamental Analysis

Question What is the objective of an income fund?
Correct Answer To provide regular and steady income
Your Answer To provide guaranteed returns to investors

Question What does lower level of unemployment indicates?
Correct Answer Positive economic conditions

Your Answer Economic slowdown

Question The GDP growth rate in the economy in real terms has
fluctuated between :-
Correct Answer 4% and 5%
Your Answer 4% and 5%

Question Mr.Satish invests Rs.10,000/- today. The rate of interest is 8%
after 5 years?
Correct Answer Rs.14.693/-
Your Answer Rs.14.693/-

Question Which market is affected with the improving and higher growth
rate in economy?
Correct Answer Stock market
Your Answer Stock market

Question What do you understand by money supply?
Correct Answer Total money in existence at any given time
Your Answer Total money in existence at any given time

Question What is Gross National Product ?
Correct Answer Gross income generated from within the country
Your Answer Gross income generated from within the country

Question The greater the deviation of the actual returns from the actual
return :-
Correct Answer Greater the variance
Your Answer Greater the variance

Question What is GDP at factor cost ?
Correct Answer Excludes net income received from abroad
Your Answer Includes indirect taxes

Question More than half the variation in stock price could be attributed to
which factor?
Correct Answer Market influence
Your Answer Market influence

Question Free Float index considers this to calculate market
capitalisation :-
Correct Answer Actual no. of shares available
Your Answer Actual no. of shares available

Question The Top-down approach is also known as :-
Correct Answer Economy-industry-company approach
Your Answer Economy-industry-company approach

Question What is a technical approach to investment?
Correct Answer A reflection of the idea that prices move in trends which are
Your Answer A reflection of the idea that prices move in trends which are

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

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

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

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

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

Question This is not a stock exchange :-
Correct Answer MCX
Your Answer MCX

Question Under EMH it is assumed that if markets are efficient, securities are
priced to provide a :-
Correct Answer Normal returns for their given level of risk
Your Answer Normal returns for their given level of risk

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?

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

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

Question Mr. Suresh is expecting to receive Rs.1,50,000/- at the end of 3
amount, if the rate of interest is 9% p.a ?
Correct Answer Rs.1,15,827/-
Your Answer Rs.1,15,827/-

Question What is Flow-of-funds analysis?
Correct Answer Consists of an analysis of the financial positions of various

investor groups
Your Answer Consists of an analysis of the financial positions of various
investor groups

Question Mr. Suhas is expecting to receive Rs.1,00,000/- at the end of 7
amount, if the rate of interest is 7% p.a ?
Correct Answer Rs. 62,275/-
Your Answer Rs. 62,275/-

Question What do you understand by term pioneering stage in the industry
life cycle analysis?
Correct Answer Slow sales growth product recently introduced
Your Answer Slow sales growth product recently introduced

Question Till 1990's secular Indian economy's inflation rate has been of
what percentage?
Correct Answer 0.07
Your Answer 0.07

Question Credit rating companies assign ratings for which of these
investments?
Correct Answer Company deposits
Your Answer Company deposits

Question If index future is taken under futures contract, the underlying
asset would be :-
Correct Answer Stock index
Your Answer Stock index

Question What is balance of payments?
Correct Answer Credit and debit transactions of a country
Your Answer Credit and debit transactions of a company

Question Profits are non existent in pioneering stage because of :-
Correct Answer Heavy expenses on product introduction
Your Answer Heavy expenses on product introduction

Question What is the indicator of buoyant economy?
Correct Answer Increased level of housing construction activity
Your Answer Increased level of housing construction activity

Question What does a transitional phase indicate?
Correct Answer It marks the turning point between a rising and falling market
Your Answer It marks the turning point between a rising and falling market

Question Dividend discount model is considered as the simplest model
for :-
Correct Answer Valuing Equity
Your Answer Valuing Equity

Question The present value of all the future cash payments to be
paid on the security to the investor is termed as :-
Correct Answer Intrinsic value of a security
Your Answer Intrinsic value of a security

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

Question What is the objective of Portfolio management?
Correct Answer To Minimize risk and maximize return
Your Answer To Minimize risk and maximize return

Question Capital expenditure -depreciation +change in working capital -(new debt
issued - debt repaid) =
Correct Answer Equity reinvested in business
Your Answer Equity reinvested in business

Question What is the percentage of variation the market and industry influence account
for?
Correct Answer 2/3rd
Your Answer 75%

Question What is the rate of interest on the tax free bonds issue by the government?
Correct Answer 6.5%
Your Answer 6.5%

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

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

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

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

Question How can transition phases be projected?
Correct Answer Transition phases are signalled by clearly definable price patterns
Your Answer Transition phases are signalled by clearly definable price patterns

Question When was the Dow theory first published?
Correct Answer Between 1900 and 1902
Your Answer Between 1900 and 1902

Question When was the first mutual fund set up?
Correct Answer 1963
Your Answer 1963

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

Question The expected price of the stock at the end of the holding period is
determined by future dividends and the value of the stock is the
present value of dividends through infinity are the underlying
assumptions of :-
Correct Answer The General model
Your Answer The Dividend discount model

Question How would you rate a portfolio with 90% investment in stocks?
Correct Answer Highly aggressive
Your Answer Highly aggressive

Question What are primary trends?
Correct Answer Reflection of investor's attitudes towards unfolding fundamentals in the

business cycle
Your Answer Long term trends

Question In a forward contract there is :-
Correct Answer No Exchange of cash
Your Answer No Exchange of cash

Question Under EMH it is assumed that if markets are efficient, securities are
priced to provide a :-
Correct Answer Normal returns for their given level of risk
Your Answer Equal returns for their given level of risk

Question The approach followed to assess the growth rate by looking at how
much a firm reinvests for future growth and the quality of its re-
investments is :-
Correct Answer Estimating growth from a firm's fundamentals
Your Answer Earnings multiplier approach
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
Your Answer Time
Select The Blank

Question Dow Jones transportation average was previously known as ________.
Correct Answer Rail average
Your Answer Rail average
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 Under futures market ________ process provides for collection of losses
that have already occurred.
Correct Answer The daily settlement
Your Answer The daily settlement
Select The Blank

Question The regulations of SEBI with respect to mutual funds were fully revised in
the year ________.
Correct Answer 1996
Your Answer 1996
Select The Blank

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

Question Under the options contract ________ gives the holder the right, but not the
obligation to buy or sell the underlying instrument only on the expiry date.
Correct Answer European option
Your Answer European option
Select The Blank

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

Question Secondary reactions occurs because of ________ which arise in the
market as a result of over optimism and over pessimism.
Correct Answer Technical distortions
Your Answer Bearish trends
Select The Blank

Question Debentures rated as "A" are judged to offer ________ of timely payment of
interest and principal.
Correct Answer Adequate safety
Your Answer Adequate safety
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"
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 ________ is due to the fact that a borrower may not pay interest and/or
principal on time.
Correct Answer Default risk
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
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
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
Select The Blank

Question ________ measures the efficiency of credit management.
Correct Answer Average collection period
Select The Blank

Question 16 ________ is affected by the leverage decisions of the firm.
Correct Answer Return on equity
Your Answer Return on equity
Select The Blank

Question 20 ________ refers to the possibility that there may not be a readily available
market for the particular bond.
Correct Answer Liquidity risk
Your Answer Interest rate risk
Select The Blank

Question 21 The govt allowed public sector banks and institutions in mutual funds in
________.
Correct Answer Early 90's
Your Answer Early 90's
Select The Blank

Question 36 The 8% taxable savings bonds are repayable after ________ years.
Correct Answer 6
Your Answer 5
Select The Blank

Question 39 Security analysis serves the investment decision maker by identifying
________securities.
Correct Answer Under priced
Your Answer Blue chip
Select The Blank

Question 42 ________ absorbs the excess demand or supply generated by hedgers
and assume the risk of price fluctuations.
Correct Answer Speculators
Your Answer Brokers
Select The Blank

Question 44 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 1 UTI was set up in the year ________.
Correct Answer 1963
Your Answer 1963

Select The Blank
Question 6 An ________ is a series of equal payments or receipts occurring at regular
intervals of time.
Correct Answer Annuity
Your Answer Annuity
Select The Blank

Question 12 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
Select The Blank

Question 13 Measures of ________ tells us what we can expect a typical or middle
data point of a distribution to be.
Correct Answer Central tendency
Your Answer Central tendency
Select The Blank

Question 28 ________ identified five forces that determine the intrinsic long run profit
attractiveness of a market or market segment.
Correct Answer Michael Porter
Your Answer Michael Porter
Select The Blank

Question 36 ________is a hybrid form of security which has characteristics of both
equity and debentures
Correct Answer Preference shares
Your Answer Preference shares
Select The Blank

Question 39 Debentures rated "BB" refers ________ of timely payment of interest and
principal.
Correct Answer Inadequate safety
Your Answer Inadequate safety
Select The Blank

Question 43 The Derivative market is divided into Future market and ________ market.
Correct Answer Options
Your Answer Options
Select The Blank

Question 46 The Dow theory was published in a series of editorials in the ________.
Correct Answer Wall street journal
Your Answer Wall street journal
Select The Blank

Question 1 ________ deal in futures to offset a pre-existing risk.
Correct Answer Hedger
Your Answer Speculator
Select The Blank

Question 8 Under ________ EMH investors cannot earn abnormal/superior profits on
securities on a consistent basis.
Correct Answer Semi-strong form
Your Answer Semi-strong form
Select The Blank

Question 11 ________ take long or short positions only with the intention of making
profits by getting out of the market when conditions favor them.
Your Answer Hedgers
Select The Blank

Question 14 ________ 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 Gordons dividend growth
Select The Blank

Question 17 ________ 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 PEG ratio

Select The Blank
Question 19 ________involves a simultaneous sale and repurchase agreement.
Correct Answer Repos
Your Answer Repos
Select The Blank

Question 28 Current liabilities include all liabilities due in the next ________ and
provisions.
Correct Answer 12 months
Your Answer 12 months
Select The Blank

Question 30 S&P NSE 50 index is known as ________.
Correct Answer NIFTY
Your Answer NIFTY
Select The Blank

Question 31 ________seeks to safeguard against potential losses on the outstanding
position in futures market.
Correct Answer Initial margin
Your Answer Daily settlement
Select The Blank

Question 35 ________ ratio is the ratio of net profit to the sales.
Correct Answer Net Profit Margin
Your Answer Net Profit Margin
Select The Blank

Question Mutual fund is to be registered with ________ before raising funds from
public.
Correct Answer SEBI
Your Answer SEBI
Select The Blank

Question An investor with a higher tolerance of risk should tilt his portfolio in favour
of ________.
Correct Answer Stocks
Your Answer Bank deposits
Select The Blank

Question The ________ phase carries a lot of significance because it marks the
turning point between a rising and a falling market.
Correct Answer Transitional
Your Answer Sideways
Select The Blank

Question Acid test ratio is more stringent measure of liquidity compared to the
________.
Correct Answer Current ratio
Your Answer Current ratio
Select The Blank

Question ________ measures the efficiency of credit management.
Correct Answer Average collection period
Your Answer Average collection period
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
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
Select The Blank

Question ________ measures the profitability of equity funds invested in the firms.
Correct Answer Return on equity
Your Answer Return on equity
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
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 ________ 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
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
Select The Blank

Question ________ is the value at a certain future date today of a stream of cash
flows that occurs over a period of time.
Correct Answer Future value
Your Answer Future value
Select The Blank

Question Mutual fund is to be registered with ________ before raising funds from
public.
Correct Answer SEBI
Your Answer SEBI

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
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
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 Semi-strong form
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
Select The Blank

Question ________ is the ratio of the market price per share to the earnings per
share.
Correct Answer Price earning ratio
Your Answer Price earning ratio
Select The Blank

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

Select The Blank
Question UTI was set up in the year ________.
Correct Answer 1963
Your Answer 1963
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
True/False
Question A firm uses a combination of equity and debt for financing its
assets.
Correct Answer True
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
True/False
Question Investors in high tax bracket would benefit by investing in
equity schemes.
Correct Answer False
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
True/False
Question When we invest in only one asset we are not exposed to any
specific or market risk.
True/False
Question Five paisa.com is an example of on line trading portal.
Correct Answer True
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
True/False
Question Bearish actions come from a series of declining peaks and
troughs.
Correct Answer True
True/False
Question Default is normally evaluated and indicated by the rating
assigned to the debt instruments by independent credit ratings
agencies.
Correct Answer True
Your Answer True
True/False
Question With the use of diversification you can reduce the risk.
Correct Answer True
Your Answer True
True/False
Question A segment is unattractive if the buyers possess strong or
growing bargaining powers.
Correct Answer True
Your Answer True
True/False
Question Risk on a portfolio of assets is always same as the risk on
individual asset.
Your Answer False
True/False
Question Debt is less riskier source of finance than equity.

Your Answer True
True/False
Question Post office monthly schemes have a 10 year tenor.
Your Answer False
True/False
Question With the introduction of on-line trading by NSE and BSE, the role
of regional stock exchanges have diminished.
Correct Answer True
Your Answer True
True/False
Question Penetration of a trend line denotes a bearish phase.
Your Answer True
True/False
Question Passive investment managers believe that markets are
inefficient and Active managers believe that markets are
efficient.
Your Answer False
True/False
Question 2 Currently in India index options are both European and American
in nature.
Your Answer False
True/False
Question 3 The cost structure remaining the same, better price realisation
results in lower gross profit ratio.
Your Answer True
True/False
Question 6 A segment is more attractive when there are actual or potential
substitutes for the product.
Your Answer True
True/False
Question 15 Bond ratings by credit rating agencies provide superior and low
cost information to the investor serving as a basis for a proper
risk-return trade off by investors.
Correct Answer True
Your Answer True
True/False
Question 29 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
True/False
Question 30 Investment in gilt edged securities carry a higher element of risk.
Your Answer True
True/False
Question 37 Following a decline, heavy volume with little price change is
indicative of accumulation and is normally a bearish factor.
Your Answer True
True/False
Question 45 Speculators buy or sell futures contract in an attempt to earn a
profit.
Correct Answer True
Your Answer True
True/False
Question 11 Investment decisions can be viewed as an integrated process to
which security analysis makes its unique contribution.
Correct Answer True
Your Answer True

True/False
Question 17 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
True/False
Question 18 Quick assets consist of current assets less inventories.
Correct Answer True
Your Answer True
True/False
Question 22 If a rupee weakens against the dollars it has favourable impact
for the exporters.
Correct Answer True
Your Answer True
True/False
Question 23 A price rise accompanied by expanding volume denotes a
potential trend reversal.
Your Answer True
True/False
Question 35 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
True/False
Question 47 PPF is a good retirement planning and tax saving vehicle.
Correct Answer True
Your Answer True
True/False
Question 2 Bonds and Debentures represent long term debt instruments.
Your Answer True

True/False
Question 9 While calculating geometric mean calculation of root is not
important.
Your Answer False
True/False
Question 13 Certificate of Deposits offers high rate of interest than Treasury
Bills.
Correct Answer True
Your Answer True
True/False
Question 21 Sensex is the index of Calcutta Stock Exchange.
Your Answer False
True/False
Question 27 Fundamental analysis focuses on predicting the future price of a
security and Technical analysis on estimating the intrinsic value
of a security.
Your Answer True
True/False
Question 32 If rupee weakens against the dollar, it has favourable impact for
the importers.
Your Answer False
True/False
Question 36 The risk associated to get the required rate of return on the stock
is measure by market beta.
Correct Answer True
Your Answer True
True/False
Question 40 The basic inputs of the general model are expected dividends
and required rate of return on stock.
Correct Answer True
Your Answer True
True/False
Question 42 European style options are more expensive than American style
because they offer greater flexibility to the buyer.
Your Answer True
True/False
Question When you are making an investment you are expecting certain
future benefits from your investment.
Correct Answer True
Your Answer True
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
True/False
Question The labour conditions do not play an important role in the
industry analysis.
Your 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.
Your Answer True
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
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 In case of fixed income securities like debentures, you get the return in the
form of dividend.
Your Answer False
True/False
Question Investment in gilt edged securities carry a higher element of risk.
Your Answer False
True/False
Question American option gives the holder the right, but not the obligation to buy or
sell the underlying instrument on or before the expiry date and the option
can be exercised early.
Correct Answer True
Your Answer True
True/False
Question Prices of stocks usually move in trends.
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 False
True/False
Question With the use of diversification you can reduce the risk.
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
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
True/False
Question Fixed assets turnover ratio measures the efficiency of utilisation of total
assets, fixed as well as current.
Correct Answer True
Your Answer True
True/False
Question The price earning ratio can be estimated for the firms with negative
earnings per share.
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
True/False
Question Balance of payments surplus augments foreign reserves of the
country and have a favourable impact on he exchange rate.
Correct Answer True
Your Answer True
Select The Blank

Question The ________ phase carries a lot of significance because it marks the
turning point between a rising and a falling market.
Correct Answer Transitional
Your Answer Transitional
True/False
Question Bonds and Debentures represent long term debt instruments.
Your Answer True
True/False
Question A price rise accompanied by expanding volume denotes a potential
trend reversal.
Your Answer False
Select The Blank

Question The ________ phase is characterized by resistance area and support
level.
Correct Answer Transition
Your Answer Transition
True/False
Question Currently in India index options are both European and American in
nature.
Your Answer False
Select The Blank

Question Debentures rated as "A" are judged to offer ________ of timely
payment of interest and principal.
Correct Answer Adequate safety
Your Answer High safety
True/False
Question A rally that develops on contracting volumes is suspect and warns of a
potential trend reversal in price
Correct Answer True
Your Answer True
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 Last between 3 weeks to as
long as 6 months long as 6 months
Short term trend Last 1 to 3-4 weeks Last 1 to 3-4 weeks
Match The Following

MCX Commodity Exchange Commodity Exchange
Sensex BSE Index BSE Index
Nifty NSE Index NSE Index
Lifex ET Index Gold Index
Match The Following

Turnover ratios Help measure the Help measure the efficiency

efficiency of utilisation of of utilisation of assets
assets
Debt Equity ratio Debt / Equity Debt / Equity
Quick assets Highly liquid assets Highly liquid assets
Average collection period Similar to debtors turnover Similar to debtors turnover
Match The Following

Development of Dow's William Peter Hamilton Charles H.dow

principles
Breadth Indicator Advance/decline line Moving average
Momentum indicator MACD MACD
Trend lines Useful tool in technical Useful tool in technical

analysis analysis
Match The Following
Question 26 Correct Answer Your Answer
Under options contract Cost of Carry model Futures contract

When you expect prices to
fall, then, you take a long
position by buying puts.
When you expect prises to
rise, then you take a short
position by selling puts.
A contract where both the Futures contract Options contract
parties are equally
responsible
The amount which the Option price Transaction cost model
buyer of the option has to
pay to the option writer to
induce him to accept the
risk associated with the
contract.
NSE&BSE are regulated Securities Exchange Securities Exchange Board
by Board of India of India
Match The Following

Equity shares High risk High risk
Government Securities No risk Low risk
Bank Deposits Low risk No risk
Mutual Funds Average risk Average risk
Match The Following

Risk free investment Actual returns = expected Actual returns = expected

returns returns
Risk Volatility in the return Volatility in the return
Variance Measure of dispersion Measure of dispersion
Returns Future benefits from Future benefits from

investments investments
Match The Following

H-Model For Valuing Initial growth rate is not Initial growth rate is not
Growth constant but linearly falls constant but linearly falls
over time to reach the over time to reach the
stable growth rate stable growth rate
The general model Expected dividends and Expected dividends in the
required rate of return next period, cost of equity
and expected growth rate in
dividends
The Gordons Growth Expected dividends in the Assessment of the growth
model next period, cost of equity rate by looking at how
and expected growth rate much a firm reinvests for
in dividends future growth and the
quality of its reinvestment
The Two-Stage Dividend Based on two Based on two extraordinary
Discount Model extraordinary growth growth phase lasting n
phase lasting n years and years and stable growth
stable growth phase that phase that lasts forever
lasts forever
Match The Following

Future value of a series of Future value of annuity Future value of annuity

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

Weak form model is also Random walk model Random walk model
termed as
Investors are rational Efficient market Efficient market hypothesis
hypothesis
Securities current prices Weak form EMH Fama
fully reflect all historical
information
Framework on efficient Fama Strong form
capital markets, a review
of theory and empirical
work
Match The Following

Technical collaboration of 1981 1981

Bharat Forge with SIFCO
industries USA
Bharat Forge was 1961 1961
incorporated at Mumbai
Shares of 100 each 1971 1971
subdivided of Bharat forge
930000 bonus shares 1976 1976
issued by Bharat Forge
Match The Following

The yield to maturity is Geometric mean return or Geometric mean return or

same as the the internal rate of return the internal rate of return
Periodic interest payments Debt instrument/Bonds Debt instrument/Bonds
and principal repayment at
the time of maturity
The actual yield earned by Realised yield Realised yield
an investor on a bond
Present value interest Yield to maturity Yield to maturity
factor of annuities and
present value interest
factor
1. Treasury Bills 1. Foreign Institutional Investors
2. Commercial Papers 3 2. Government of India
3. Certificate of Deposits 3. Corporates
4. Bonds 5 4. Banks and Financial Institutions

5. Central/State Govts/PSU's
6. Post Office
1. ROE 3 1. Measure the profitability of operations without considering

the influence of financial structure and tax rate
2. Earnings 1 2. Ratio if net profit to sales
power
3. Net profit 2 3. Measure the profitability of equity funds
margin
4. Gross profit 6 4. Valuation ratio
margin
5. Measures the profitability of debt funds
6. Indicates the margin available after meeting the
manufacturing expenses
1. SEBI 5 1. Nifty
2. NAV 2 2. Net asset value

3. AMFI 6 3. Net average value
4. NSE 4. Association of merchant financers of India
5. Redressal of investor complaints

6. Association of mutual funds of India
Match The Following

Growth of income 40-60 % debt, 40-60 % 40-60 % debt, 40-60 %

equities 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
Match The Following

Ratio used as a measure of PEG ratio Price to book value ratio

relative value
The market value of the Market value to replacement Market value to replacement
firms assets divided by the cost ratio cost ratio
replacement cost of these
assets
Key determiner of revenue Profit margin Profit margin
multiples
The market value of the Price to book value ratio Price earning ratio
equity in a firm reflects the
markets expectations of the
firms earnings power and
cash flows.
Match The Following

Expiration period for options Nine months Nine months
The world's first largest Chicago Board of options New York board of Options
options exchange exchange exchange
The most popular pricing Black Scholes Black Scholes
options model published in
the year 1973
When the writer gives the Put option Put option
buyer of the option the right
to sell the underlying asset
on or before the expiry date

Security Analysis Portfolio Management 10

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Security Analysis Portfolio Management 10

Uploaded by

Copyright:

Available Formats

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Correct Answer Debt equity ratio and interest

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Correct Answer Dividends , Interests , Capital appreciation

Your Answer Dividends , Interests , Capital appreciation

Multiple Choice Multiple Answer

Your Answer Secured second largest customer in China ,

Multiple Choice Multiple Answer

Correct Answer A contract between two parties , Where buyer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Your Answer Market orders , Hedging orders , Arbitrage orders

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Correct Answer Debt equity ratio , Interest coverage ratios ,

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Correct Answer Term is for 8 years seven months , Provision

Your Answer Term is for 8 years seven months , Provision

Multiple Choice Multiple Answer

Correct Answer True picture of a company , Normal earning

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Your Answer General trading , Cash trading , Margin trading

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Your Answer Equity , Debt , Bank deposits

Multiple Choice Multiple Answer

Your Answer Trends upward , Trend downward , Flat trend

Multiple Choice Multiple Answer

Correct Answer Open ended scheme , Close ended scheme

Your Answer Open ended scheme , Close ended scheme , Growth

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Correct Answer State Govt. , Quasi-Govt , Central Govt

Your Answer Central Govt , State Govt. , Quasi-Govt

Multiple Choice Multiple Answer

Correct Answer Gross profit margin ratio , Earnings power , Return on