Wednesday, March 2, 2011

Security Analysis And Portfolio Management - 6

Security Analysis And Portfolio Management - 6

Multiple Choice Multiple Answer
Question Gilt Edged Securities are :-
Correct Answer Central Govt , State Govt. , Quasi-Govt

Multiple Choice Single Answer
Question What is GDP at factor cost ?
Correct Answer Excludes net income received from abroad

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

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

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

Multiple Choice Multiple Answer
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

Select The Blank
Question Risk can be referred as the ________ in the return with
respect to the expected return.
Correct Answer Volatility
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

True/False
Question The price earning ratio can be estimated for the firms with
negative earnings per share.
Correct Answer False

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

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

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

True/False
Question A share certificate indicates that the investor owns a certain
number of shares.
Correct Answer True

Multiple Choice Single Answer
Question What is the percentage of variation the market and industry
influence account for?
Correct Answer 2/3rd

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

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

Match The Following
Question -Correct Answer
NSE- Nifty

SEBI -Redressal of investor
complaints

NAV- Net asset value
AMFI- Association of mutual
funds of India

Multiple Choice Multiple Answer
Question 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

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

Multiple Choice Single Answer
Question When was the Dow theory first published?
Correct Answer Between 1900 and 1902

Multiple Choice Multiple Answer
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

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

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

Select The Blank
Question When a debenture is sold to the general public a ________
is appointed.
Correct Answer Trustee

Select The Blank
Question A security is said to be ________ if its current market price is
over its intrinsic value.
Correct Answer Over priced

Multiple Choice Multiple Answer
Question What are the different types of profitability ratios?
Correct Answer Gross profit margin ratio , Earnings power , Return on equity

Select The Blank
Question Dow Jones transportation average was previously known as
________.
Correct Answer Rail average

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

Multiple Choice Single Answer
Question When was the first mutual fund set up?
Correct Answer 1963

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

Multiple Choice Single Answer
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

Multiple Choice Single Answer
Question In any Economy, bridge is created between savers and who
need the funds by this system :-
Correct Answer Financial

True/False
Question The basic inputs of the general model are expected
dividends and required rate of return on stock.
Correct Answer True

True/False
Question Quick assets consist of current assets less inventories.
Correct Answer True

True/False
Question Bonds and Debentures represent long term debt
instruments.
Correct Answer False

Multiple Choice Single Answer
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

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

True/False
Question If rupee weakens against the dollar, it has favourable impact
for the importers.
Correct Answer False

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

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

Multiple Choice Multiple Answer
Question What are the warning indicators to be considered before
analysing the financial statements of a firm ?
Correct Answer Growth in profits outstripping the revenue growth by a large
extent , Non operating expenses occur frequently ,
Accounting rules changed frequently


Select The Blank
Question ________ is the value today of a stream of cash flows that
occurs in future.
Correct Answer Present value

Select The Blank
Question Under futures market ________ process provides for
collection of losses that have already occurred.
Correct Answer The daily settlement

Multiple Choice Single Answer
Question A security represent evidence of :-
Correct Answer A property right

Match The Following
Question- Correct Answer

The yield to maturity is
same as the
-Geometric mean return
or the internal rate of
return


payments and principal
repayment at the time of
maturity
Debt instrument/Bonds Debt instrument/Bonds
The actual yield earned
by an investor on a bond
Realised yield Yield to maturity
Present value interest
factor of annuities and
present value interest
factor
Yield to maturity Interest rate risk

True/False
Question A price rise accompanied by expanding volume denotes a
potential trend reversal.
Correct Answer False






Security Analysis And Portfolio Management - 5

Select The Blank
Question ________ measures the profitability of operations without
considering the influence of financial structure and tax rate.
Correct Answer Earnings power

True/False
Question While calculating geometric mean calculation of root is not
important.
Correct Answer False

Multiple Choice Single Answer
Question What could be a better approach to flow-of -funds analysis?
Correct Answer An examination of liquidity trends in the banking system

True/False
Question The Asset management company of the mutual fund must
have 50% independent directors.
Correct Answer True

True/False
Question A higher value of current ratio indicates a better short term
solvency of the firm.
Correct Answer True

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

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

True/False
Question The returns of sector specific funds are solely dependant on
the performance of the respective sectors / industries.
Correct Answer True

Multiple Choice Single Answer
Question The price of the index futures contract is defined as :-
Correct Answer Future price = Spot price + Carry cost

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

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

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

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

True/False
Question Debt is less riskier source of finance than equity.
Correct Answer False

True/False
Question The arithmetic mean is a set of observations is calculated by
finding the sum values and dividing by the number of
observations.
Correct Answer True

Multiple Choice Single Answer
Question What does flow-of fund analysis help in understanding?
Correct Answer Availability of money for the stock market

True/False
Question The normal relationship is for the volume to expand on rallies
and contract on declines.
Correct Answer True

Multiple Choice Multiple Answer
Question Growth of the firm can be estimated through :-
Correct Answer Firm's past earnings/historical growth rate , Estimates made
by equity research analyst who follow the firm , Estimates
from a firm's fundamentals

Multiple Choice Multiple Answer
Question The security analysis process will achieve :-
Correct Answer True picture of a company , Normal earning power ,
Projection of future profitability

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

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 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

True/False
Question Risk on a portfolio of assets is always same as the risk on
individual asset.
Correct Answer False

Select The Blank
Question UTI was set up in the year ________.
Correct Answer 1963

Multiple Choice Multiple Answer
Question Major steps involved in construction of a index are :-
Correct Answer Selecting a set of scrips to be used , Fixing starting date ,
Calculating market capitalisation

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

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

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

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

Multiple Choice Single Answer
Question The objective of fundamental analysis for a security in a
market is to identify either it is :-
Correct Answer Under priced and over priced

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

Select The Blank
Question A ________ rally for stocks generally takes place because of
an improved outlook for business conditions over what was
anticipated.
Correct Answer Bear market

Multiple Choice Multiple Answer
Question Characteristics of Preference shares are :-
Correct Answer Carry a fixed rate of dividend , Dividend payable out of profit
, Redemption in 7 to 12 years

Multiple Choice Multiple Answer
Question What are the SEBI regulations with respect to mutual funds?
Correct Answer Mutual funds to be registered with SEBI before the launching
any scheme , 2/3rds of the directors of the trustee company
must be independent , An AMC approved by SEBI manages
the fund

Multiple Choice Single Answer
Question The bond issuing firm enjoys the flexibility of being able to
call the bonds if :-
Correct Answer Interest rates are falling

Multiple Choice Single Answer
Question We can compare the price earning ratio of a market to its
historical average to make judgements about, whether
market is :-
Correct Answer Under valued or over valued

Multiple Choice Single Answer
Question The growth rate is used to forecast future revenues and
earnings and are inputs in valuing :-
Correct Answer Stable firms

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

Multiple Choice Multiple Answer
Question Which ratios are commonly used?
Correct Answer Debt equity ratio , Interest coverage ratios , Debt service
coverage ratios

Select The Blank
Question An option is a contract which gives the buyer ________ to
buy or sell shares of the underlying security at a specific
price on or before a specific date.
Correct Answer Right but not obligation

Match The Following
Question- Correct Answer

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


Current income Short term debt portfolio

Stability of principal- Fixed - income portfolio

Appreciation -75-100 % in equities

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

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

Multiple Choice Multiple Answer
Question Mutual fund schemes could be broadly classified as :-
Correct Answer Open ended scheme , Close ended scheme

Multiple Choice Multiple Answer
Question What are the features of line charts?
Correct Answer It connects closing prices from one period to the next , It is
ideal for securities with no high or low price data

True/False
Question Investors in high tax bracket would benefit by investing in
equity schemes.
Correct Answer False

Match The Following
Question- Correct Answer

Ratio used as a measure
of relative value
PEG ratio
The market value of the
firms assets divided by
the replacement cost of
these assets
-Market value to
replacement cost ratio


Key determiner of
revenue multiples
-Profit margin

The market value of the
equity in a firm reflects
the markets expectations
of the firms earnings
power and cash flows.
-Price to book value ratio






Security Analysis And Portfolio Management - 4

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

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

Multiple Choice Multiple Answer
Question 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

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

Multiple Choice Single Answer
Question In India futures on individual securities have been introduced by :-
Correct Answer BSE & NSE

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

Select The Blank
Question The compounded annual return of Kisan Vikas patra is ________.
Correct Answer 0.084

Select The Blank
Question ________ measures the profitability of operations without considering the
influence of financial structure and tax rate.
Correct Answer Earnings power

Select The Blank
Question The 6.________% tax saving bonds of government of India have a tenure of
5 years.
Correct Answer 5

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

Multiple Choice Multiple Answer
Question Which ratios are commonly used?
Correct Answer Interest coverage ratios , Debt service coverage ratios , Debt equity
ratio

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?
Correct Answer Rs. 6083/-

Select The Blank
Question The ________ phase is characterized by resistance area and support level.
Correct Answer Transition

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

True/False
Question Investment decisions can be viewed as an integrated process to which
security analysis makes its unique contribution.
Correct Answer True

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

True/False
Question Five paisa.com is an example of on line trading portal.
Correct Answer True

Multiple Choice Single Answer
Question What is the percentage of variation the market and industry influence account
for?
Correct Answer 2/3rd

Match The Following
Question- Correct Answer

Price pattern- Resistance level

Primary trend -Last between 1-2 years
Intermediate trend- Last between 3 weeks to as long as 6 months
Short term trend -Last 1 to 3-4 weeks

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 With the use of diversification you can reduce the risk.
Correct Answer True

True/False
Question Post office monthly schemes have a 10 year tenor.
Correct Answer False

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

Multiple Choice Single Answer
Question Mr.Rohan invests Rs.25,000/- today. The rate of interest is 6% compounded
annually. What will be the value of his investment after 3 years?
Correct Answer Rs. 29775/-


Multiple Choice Multiple Answer
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

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 Fixed assets turnover ratio measures the efficiency of utilisation of total
assets, fixed as well as current.
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 The risk associated to get the required rate of return on the stock is measure
by market beta.
Correct Answer True

Select The Blank
Question Acid test ratio is more stringent measure of liquidity compared to the
________.
Correct Answer Current ratio
Multiple Choice Multiple Answer
Question What are the SEBI regulations with respect to mutual funds?
Correct Answer Mutual funds to be registered with SEBI before the launching any
scheme , 2/3rds of the directors of the trustee company must be independent , An AMC
approved by SEBI manages the fund

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

True/False
Question In case of fixed income securities like debentures, you get the return in the
form of dividend.
Correct Answer False


Multiple Choice Single Answer
Question What are the assumptions of the Dow theory?
Correct Answer Majority of stocks follow the underlying trend of the market most of
the time


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

Multiple Choice Single Answer
Question We can compare the price earning ratio of a market to its historical average
to make judgements about, whether market is :-
Correct Answer Under valued or over valued

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

Multiple Choice Multiple Answer
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


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

Multiple Choice Multiple Answer
Question 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

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

Multiple Choice Single Answer
Question Mr.Satish invests Rs.10,000/- today. The rate of interest is 8% compounded
annually. What will be the value of his investment after 5 years?
Correct Answer Rs.14.693/-

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

Match The Following
Question- Correct Answer

Weak form model is also termed as -Random walk model

Investors are rational -Efficient market hypothesis
Securities current prices fully reflect all historical information -Weak form EMH

Framework on efficient capital markets, -a review of theory and empirical work

True/False
Question Quick assets consist of current assets less inventories.
Correct Answer True

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