Security Analysis And Portfolio Management - 18

Security Analysis And Portfolio Management - 18

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

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

Match The Following
Question - Correct Answer
Future value of a series of cash flows occurring at the end of each period. - Future value of annuity

Value today of a stream of cash flows that occurs in future. - Present Value

Value at a certain future date today of a stream of cash flows that occurs over a period of time. - Future Value

Series of equal payments or receipts occurring at regular intervals of time. -Present value of annuity

True/False
Question 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

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

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

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

Multiple Choice Multiple Answer
Question What are the features of trend lines
Correct Answer A simple and useful tool in technical analysis , Prices move in
trends , The trend lines represent points of support and
resistance

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

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/-

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

Match The Following
Question -Correct Answer

Technical collaboration of
Bharat Forge with SIFCO
industries USA
-1981
Bharat Forge was
incorporated at Mumbai
-1961

Shares of 100 each
subdivided of Bharat forge
-1971

930000 bonus shares
issued by Bharat Forge
-1976

True/False
Question A rally that develops on contracting volumes is suspect and
warns of a potential trend reversal in price
Correct Answer True

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

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

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 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 8% taxable savings bonds are repayable after ________
years.
Correct Answer 6

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

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

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

Select The Blank
Question ________ is due to the fact that a borrower may not pay interest
and/or principal on time.
Correct Answer Default risk

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

Select The Blank
Question ________ model is based on the principle that an initial phase
where the growth rate is not stable and subsequent steady
growth rate and remains for the long-term.
Correct Answer The Two-Stage dividend discount

True/False
Question The cost structure remaining the same, better price realisation
results in lower gross profit ratio.
Correct Answer False

Select The Blank
Question ________ 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

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

Multiple Choice Single Answer
Question The financial contract between the issuer and the purchaser of
the bonds is termed as :-
Correct Answer Bond indenture

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

Multiple Choice Multiple Answer
Question 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

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

Multiple Choice Multiple Answer
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

Multiple Choice Single Answer
Question In estimating the growth of a firm, analyst's forecasts have an
advantage over historical data-based models because :-
Correct Answer They incorporate more recent information about the firm and
inputs future prospects

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

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

Multiple Choice Single Answer
Question What is the limitation of Flow-of funds analysis method?
Correct Answer Cannot give indication of the inclination of market participants to
purchase stock

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

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/-

True/False
Question Equity shares is a high return high risk instrument.
Correct 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

True/False
Question Certificate of Deposits offers high rate of interest than Treasury
Bills.
Correct Answer True

Multiple Choice Multiple Answer
Question Which were the initiatives which the chairman said would focus
on in 2003-04 in the speech in annual report for the year 2003-
03?
Correct Answer Research and development , Capital investment and focus on
balance sheet , Overseas acquisitions

Multiple Choice Single Answer
Question Mr. Suresh is expecting to receive Rs.1,50,000/- at the end of 3
years. He wanted to know what is the present value of this
amount, if the rate of interest is 9% p.a ?
Correct Answer Rs.1,15,827/-

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






Security Analysis And Portfolio Management - 17


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

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

True/False
Question Penetration of a trend line denotes a bearish phase.
Correct Answer False

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

True/False
Question The performance of a scheme is reflected in its NAV
which is disclosed on a daily basis in case of open
ended schemes.
Correct Answer True

Match The Following
Question -Correct Answer

Under options contract -Cost of Carry model Options 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 parties are equally
responsible
-Futures contract

The amount which the
buyer of the option has
to pay to the option
writer to induce him to
accept the risk
associated with the
contract.
-Option price
NSE&BSE are
regulated by
Securities Exchange
Board of India


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 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

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

True/False
Question Investment in gilt edged securities carry a higher
element of risk.
Correct Answer False

Multiple Choice Multiple Answer
Question What was the final analysis on the performance of
Bharat forge for the year FY 02?
Correct Answer Stock currently trades at 15 times its FY 05 consensus
EPS forecasts , Stock will trade at an inexpensive
PEG of 0.6x. , Aim to become US$1 billion Company
by Fy 08 from US$100 million

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

Multiple Choice Multiple Answer
Question What are the important macro economic indicators?
Correct Answer GNP growth rate , Price Conditions , Monsoons

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

Multiple Choice Single Answer
Question What are primary trends?
Correct Answer Reflection of investor's attitudes towards unfolding
fundamentals in the business cycle

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

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

Match The Following
Question- Correct Answer

NSE Nifty Nifty
-SEBI Redressal of investor
complaints

NAV- Net asset value

AMFI- Association of mutual
funds of India

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 What is an open ended fund or scheme?
Correct Answer Which is available for subscription and repurchase on
a continuous basis

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

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

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

Multiple Choice Multiple Answer
Question The underlying assumptions of Technical analysis are
that :-
Correct Answer Prices move in predictable patterns , Market value is
determined by supply & demand , Investors are
emotional than being rational

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

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

Multiple Choice Multiple Answer
Question A firm's growth is determined by how much is reinvested
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

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

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

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

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

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

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

Multiple Choice Single Answer
Question What is the objective of an income fund?
Correct Answer To provide regular and steady income

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/-

Multiple Choice Multiple Answer
Question The commonly used charts to measure the
movements in price under the technical analysis are :-
Correct Answer Line Charts , Bar Charts , Point and Figure Charts
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

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

Multiple Choice Single Answer
Question If the price of a share at the beginning of the year was
Rs.100/-, no dividend received during the year and the
price at the end is Rs.115/-. What is the rate of return?
Correct Answer 0.15

True/False
Question Because of statutory compulsion, generally Govt.
securities are held by banks, financial institutions,
insurance companies etc.
Correct Answer True

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

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

Multiple Choice Single Answer
Question What is the minimum investment amount in G-secs?
Correct Answer 1000

True/False
Question Sensex is the index of Calcutta Stock Exchange.
Correct Answer False

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

Security Analysis And Portfolio Management - 16

Multiple Choice Single Answer
Question 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

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

Multiple Choice Single Answer
Question Mr. Tiwari is expecting to receive Rs.25,000/- at the end of
10 years. He wanted to know what is the present value of this amount, if
the rate of interest is 10% p.a:-
Correct Answer Rs. 9639/-

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 Which year marked increase in growth rate?
Correct Answer 2003 -04

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

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

Match The Following
Question- Correct Answer Your Answer
Equity shares High risk High risk
Government Securities No risk No risk
Bank Deposits Low risk Low risk
Mutual Funds Average risk Average risk
Multiple Choice Multiple Answer
Question What are the important macro economic indicators?
Correct Answer Price Conditions , Monsoons , GNP growth rate
Your Answer GNP growth rate , Price Conditions , Monsoons
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
Multiple Choice Single Answer
Question What are primary trends?
Correct Answer Reflection of investor's attitudes towards unfolding
fundamentals in the business cycle
Your Answer Reflection of investor's attitudes towards unfolding
fundamentals in the business cycle
True/False
Question Bonds and Debentures represent long term debt instruments.
Correct Answer False
Your Answer False
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
Multiple Choice Single Answer
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 Technical analysis
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
Your Answer Buying bonds issued to banks and financial institutions ,
Calling in a certain number of bonds by lot , Buying bonds in the open
market
True/False
Question The Asset management company of the mutual fund must have
50% independent directors.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question What is an open ended fund or scheme?
Correct Answer Which is available for subscription and repurchase on
a continuous basis
Your Answer Which is available for subscription and repurchase on a
continuous basis
True/False
Question A price rise accompanied by expanding volume denotes a
potential trend reversal.
Correct Answer False
Your Answer False
Multiple Choice Multiple Answer
Question The Two-Stage dividend discount model is best suited for the
firms that are :-
Correct Answer In high growth rate phase , Expecting to maintain the
growth rate phase steadily for a specific time period , Sources of high
growth are expected to disappear after specific period of time
Your Answer In high growth rate phase , Expecting to maintain the
growth rate phase steadily for a specific time period , Sources of high
growth are expected to disappear after specific period of time
Multiple Choice Single Answer
Question If the price of a share at the beginning of the year was
Rs.70/-, dividend received during the year was Rs.5/-per share and the
price at the end is Rs.79/-. What is the rate of return?
Correct Answer 0.2
Your Answer 0.2
Multiple Choice Multiple Answer
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
True/False
Question Investment in gilt edged securities carry a higher element
of risk.
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question What is the percentage of variation the market and industry
influence account for?
Correct Answer 2/3rd
Your Answer 2/3rd
Multiple Choice Multiple Answer
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
True/False
Question A higher value of current ratio indicates a better short
term solvency of the firm.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question Debt instruments that have a maturity period of one year or
less are called as:-
Correct Answer Money market instruments
Your Answer Short term debt instruments
Multiple Choice Single Answer
Question When was the first mutual fund set up?
Correct Answer 1963
Your Answer 1963
Select The Blank
Question ________ measures the efficiency of credit management.
Correct Answer Average collection period
Your Answer Average collection period
True/False
Question A share certificate indicates that the investor owns a
certain number of shares.
Correct Answer True
Your Answer True
Select The Blank
Question ________ take long or short positions only with the
intention of making profits by getting out of the market when conditions
favor them.
Correct Answer Speculators
Your Answer Speculators
Multiple Choice Multiple Answer
Question Which ratios are commonly used?
Correct Answer Debt equity ratio , Interest coverage ratios , Debt
service coverage ratios
Your Answer Debt equity ratio , Interest coverage ratios , Debt
service coverage ratios
Select The Blank
Question The ________ phase is characterized by resistance area and
support level.
Correct Answer Transition
Your Answer Transition
True/False
Question Sensex is the index of Calcutta Stock Exchange.
Correct Answer False
Your Answer False
Select The Blank
Question When a debenture is sold to the general public a ________ is
appointed.
Correct Answer Trustee
Your Answer Trustee
Multiple Choice Single Answer
Question Which market is affected with the improving and higher
growth rate in economy?
Correct Answer Stock market
Your Answer Stock market
Multiple Choice Multiple Answer
Question 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 industrial Average , Dow Jones Transportation
Average
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
Your Answer It connects closing prices from one period to the next ,
It is ideal for securities with no high or low price data
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
Your Answer Rate of return is 8 % , Interest payable monthly ,
Investor earns bonus of 10% on completion of term
Multiple Choice Single Answer
Question In India we have index futures contracts based on :-
Correct Answer S&P CNX Nifty and the BSE sensex
Your Answer S&P CNX Nifty and the BSE sensex
Select The Blank
Question ________ deal in futures to offset a pre-existing risk.
Correct Answer Hedger
Your Answer Hedger
Multiple Choice Multiple Answer
Question 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
True/False
Question A rise in interest rates will push the market prises of
outstanding bonds where as a fall in interest rates will depress the
market prices down.
Correct Answer False
Your Answer False
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
Your Answer Bear market
True/False
Question Following a decline, heavy volume with little price change
is indicative of accumulation and is normally a bearish factor.
Correct Answer False
Your Answer False

Match The Following
Question Correct Answer Your Answer
Gross profit margin Indicates the margin available after meeting the
manufacturing expenses Valuation ratio
ROE Measure the profitability of equity funds Measures the profitability
of debt funds
Earnings power Measure the profitability of operations without
considering the influence of financial structure and tax rate Indicates
the margin available after meeting the manufacturing expenses
Net profit margin Ratio if net profit to sales Measure the profitability
of operations without considering the influence of financial structure
and tax rate

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

Security Analysis And Portfolio Management - 15

Security Analysis And Portfolio Management - 15

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

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

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

True/False
Question There may be convertible clause which gives the debenture holder
the option to convert the debentures into equity shares.
Correct Answer True

Multiple Choice Multiple Answer
Question Active investment managers :-
Correct Answer Do not believe that markets are efficient , Puts efforts to search
mispriced securities in the market , Are relatively active traders in
securities to acquire abnormal returns

Multiple Choice Multiple Answer
Question The Two-Stage dividend discount model is best suited for the firms
that are :-
Correct Answer In high growth rate phase , Expecting to maintain the growth rate
phase steadily for a specific time period , Sources of high growth are
expected to disappear after specific period of time

True/False
Question 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

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

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

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

Select The Blank
Question The margining system is future contract is based on ________
recommendations.
Correct Answer J R verma committee

Multiple Choice Multiple Answer
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


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

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

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 When a debenture is sold to the general public a ________ is
appointed.
Correct Answer Trustee

Multiple Choice Single Answer
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 reinvestments
is :-
Correct Answer Estimating growth from a firm's fundamentals

True/False
Question Certificate of Deposits offers high rate of interest than Treasury Bills.
Correct Answer True

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

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 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)

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 Single Answer
Question As per the framework presented by Fama, EMH can be divided as :-
Correct Answer The weak form, semi-strong form & strong form

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

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

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

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 Single Answer
Question A derivative is a product whose value is derived from :-
Correct Answer Value of an underlying asset

Match The Following
Question- Correct Answer
H-Model For Valuing
Growth
Initial growth rate is not
constant but linearly falls
over time to reach the
stable growth rate
Expected dividends and
required rate of returns as
per the market price per
share to the earningsper
share
The general model Expected dividends and
required rate of return
Initial growth rate is not
constant but linearly falls
over time to reach the stable
growth rate
The Gordons Growth model Expected dividends in the
next period, cost of equity
and expected growth rate in
dividends
Based on two extraordinary
growth phase lasting n years
and stable growth phase that
lasts forever
The Two-Stage Dividend
Discount Model
Based on two extraordinary
growth phase lasting n
years and stable growth
phase that lasts forever
Expected dividends in the
next period, cost of equity
and expected growth rate in
dividends

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

Select The Blank
Question ________ 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

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

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

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

True/False
Question Given the accounting standards across firm, price to book value
ratios can be compared across similar firms for signs of under
valuation.
Correct Answer True

Multiple Choice Single Answer
Question Debt instruments that have a maturity period of one year or less are
called as:-
Correct Answer Money market instruments

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

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

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

Multiple Choice Multiple Answer
Question Explain what are leverage ratios ?
Correct 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

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

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 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 What are short term trends?
Correct Answer Trends which interrupt the course of the intermediate cycle

Multiple Choice Multiple Answer
Question 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

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

True/False
Question A segment is more attractive when there are actual or potential
substitutes for the product.
Correct Answer True



Security Analysis And Portfolio Management - 14
Multiple Choice Single Answer
Question What are primary trends?
Correct Answer Reflection of investor's attitudes towards unfolding fundamentals in
the business cycle

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

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 Multiple Answer
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

Multiple Choice Multiple Answer
Question 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

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 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

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

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

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

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 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

True/False
Question If a rupee weakens against the dollars it has favourable impact for the
exporters.
Correct Answer True

True/False
Question Sensex is the index of Calcutta Stock Exchange.
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 ________ 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
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 ________ measures the profitability of equity funds invested in the
firms.
Correct Answer Return on equity

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

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

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

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

Multiple Choice Single Answer
Question What is the limitation of Flow-of funds analysis method?
Correct Answer Cannot give indication of the inclination of market participants to
purchase stock

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

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

Multiple Choice Single Answer
Question Which year marked increase in growth rate?
Correct Answer 2003 -04

True/False
Question A rise in interest rates will push the market prises of outstanding
bonds where as a fall in interest rates will depress the market prices
down.
Correct Answer False

True/False
Question Because of statutory compulsion, generally Govt. securities are held
by banks, financial institutions, insurance companies etc.
Correct Answer True

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

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

Match The Following
Question -Correct Answer

Equity shares -High risk

Government Securities- No risk
Bank Deposits- Low risk

Mutual Funds- Average risk
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

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

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

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

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

Multiple Choice Multiple Answer
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

True/False
Question Passive investment managers believe that markets are inefficient and
Active managers believe that markets are efficient.
Correct Answer False

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 Debentures rated ________ are judged to offer sufficient safety of
timely payment of interest and repayment of principal.
Correct Answer "BBB"

Select The Blank
Question Debentures rated as "A" are judged to offer ________ of timely
payment of interest and principal.
Correct Answer Adequate safety

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

Multiple Choice Multiple Answer
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

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

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

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

Multiple Choice Multiple Answer
Question The security market is the market for :-
Correct Answer Equity , Debt , Derivatives

Security Analysis And Portfolio Management - 13


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

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

Select The Blank
Question All trades in the futures market are cash settled on a ________ basis.
Correct Answer T+1

Multiple Choice Multiple Answer
Question What are the ways of measuring relative strength?
Correct Answer Calculate the rates of return and classify securities that have earned superior
historical returns , Calculating certain ratios will help in analyzing whether a
security has relative strength


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

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

Multiple Choice Single Answer
Question 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

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

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

Multiple Choice Single Answer
Question What does a Balanced fund seek to achieve?
Correct Answer Growth and regular income

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

True/False
Question Fundamental analysis focuses on predicting the future price of a security and
Technical analysis on estimating the intrinsic value of a security.
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

Multiple Choice Multiple Answer
Question The growth rate in the initial phase is not constant but declines linearly over
time to reach the stable growth rate in steady state is a phenomena of :-
Correct Answer H- Model for valuing growth , H-Two stage model for growth , H-Model unlike
the classic two stage model

True/False
Question There may be convertible clause which gives the debenture holder the option
to convert the debentures into equity shares.
Correct Answer True

True/False
Question Bearish actions come from a series of declining peaks and troughs.
Correct Answer True

Multiple Choice Single Answer
Question 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

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

True/False
Question When we invest in only one asset we are not exposed to any specific or
market risk.
Correct Answer False

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
-Fama


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

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 ________ identified five forces that determine the intrinsic long run profit
attractiveness of a market or market segment.
Correct Answer Michael Porter

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 146% growth in exports , Highest pre and post tax profits , Best year in the
history of the company

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

Multiple Choice Single Answer
Question What are short term trends?
Correct Answer Trends which interrupt the course of the intermediate cycle

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

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 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

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

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 100% debt

Appreciation- 75-100 % in equities
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 Multiple Answer
Question What are the different types of profitability ratios?
Correct Answer Gross profit margin ratio , Earnings power , Return on equity

True/False
Question The ratios between profits and investments are called rate of return
measures.
Correct Answer True

Multiple Choice Single Answer
Question Where are gilt funds invested?
Correct Answer Government securities

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 What levels if increased will have unfavourable impact on the stock market?
Correct Answer Higher levels of taxation

Select The Blank
Question The margining system is future contract is based on ________
recommendations.
Correct Answer J R verma committee

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

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

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

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

Multiple Choice Single Answer
Question If the price of a share at the beginning of the year was Rs.70/-, dividend
received during the year was Rs.5/-per share and the price at the end is
Rs.79/-. What is the rate of return?
Correct Answer 0.2

True/False
Question A segment is more attractive when there are actual or potential substitutes for
the product.
Correct Answer True

Multiple Choice Single Answer
Question What are index funds?
Correct Answer Investment in securities in the same weightage which replicates a particular
index

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

Security Analysis And Portfolio Management - 12

Security Analysis And Portfolio Management - 12

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

Select The Blank
Question 8 Under ________ EMH investors cannot earn abnormal/superior profits on
securities on a consistent basis.
Correct 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.
Correct Answer Speculators

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

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

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

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

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

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

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

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

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

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

Select The Blank
Question ________ measures the efficiency of credit management.
Correct 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
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

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

Select The Blank
Question All trades in the futures market are cash settled on a ________ basis.
Correct Answer T+1

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

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

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

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

Select The Blank
Question The govt allowed public sector banks and institutions in mutual funds in
________.
Correct 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

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

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

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

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

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

True/False
Question A segment is unattractive if the buyers possess strong or
growing bargaining powers.
Correct Answer True

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

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

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

True/False
Question Penetration of a trend line denotes a bearish phase.
Correct Answer False

True/False
Question Passive investment managers believe that markets are
inefficient and Active managers believe that markets are
efficient.
Correct Answer False

Security Analysis And Portfolio Management - 11
Multiple Choice Single Answer
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
Multiple Choice Single Answer
Question If the price of a share at the beginning of the year was
Rs.100/-, no dividend received during the year and the price at the end
is Rs.115/-. What is the rate of return?
Correct Answer 0.15
Your Answer 0.15
Multiple Choice Single Answer
Question What is the objective of Portfolio management?
Correct Answer To Minimize risk and maximize return

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

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

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

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

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

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 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

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

Multiple Choice Single Answer
Question What are primary trends?
Correct Answer Reflection of investor's attitudes towards unfolding fundamentals in the
business cycle

Multiple Choice Single Answer
Question In a forward contract there is :-
Correct Answer No Exchange of cash

Multiple Choice Single Answer
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

Multiple Choice Single Answer
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 reinvestments
is :-
Correct Answer Estimating growth from a firm's fundamentals

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

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

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

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

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

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

Select The Blank
Question Debentures rated as "A" are judged to offer ________ of timely payment of
interest and principal.
Correct 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"

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


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

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

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

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

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

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

Select The Blank
Question 1 UTI was set up in the year ________.
Correct 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

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

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

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

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

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

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

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

Security Analysis And Portfolio Management - 10
Multiple Choice Single Answer
Question 4 What are short term trends?
Correct Answer Trends which interrupt the course of the intermediate cycle

Multiple Choice Single Answer
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

Multiple Choice Single Answer
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

Multiple Choice Single Answer
Question 10 Efficient market hypothesis is based on the assumption that
market comprises of :-
Correct Answer Rational Investors
Multiple Choice Single Answer
Question 11 Co variance of asset with market portfolio 85 and variance of
market portfolio is 100 then beta is :-
Correct Answer 0.0085

Multiple Choice Single Answer
Question 13 Mr. Tiwari is expecting to receive Rs.25,000/- at the end of 10
years. He wanted to know what is the present value of this
amount, if the rate of interest is 10% p.a:-
Correct Answer Rs. 9639/-

Multiple Choice Single Answer
Question 18 What does flow-of fund analysis help in understanding?
Correct Answer Availability of money for the stock market

Multiple Choice Single Answer
Question 23 A security represent evidence of :-
Correct Answer A property right

Multiple Choice Single Answer
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?
Correct Answer Rs. 6083/-

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

Multiple Choice Single Answer
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

Multiple Choice Single Answer
Question 2 When was the first mutual fund set up?
Correct Answer 1963

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

Multiple Choice Single Answer
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

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

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

Multiple Choice Single Answer
Question 30 Agriculture account for how much portion of the economy?
Correct Answer Quarter

Multiple Choice Single Answer
Question 37 Who operates the sinking fund under the sinking fund provision
of a firm?
Correct Answer The bond trustee or the issuer

Multiple Choice Single Answer
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

Multiple Choice Single Answer
Question 42 The growth period in the industry life cycle is defined as :-
Correct Answer Period of rapid market acceptance and substantial profit
improvement

Multiple Choice Single Answer
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

Multiple Choice Single Answer
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

Multiple Choice Single Answer
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

Multiple Choice Single Answer
Question 25 What are intermediate trends?
Correct Answer They are counter-cyclical trends within the confines of a primary
trend


Multiple Choice Single Answer
Question 29 What are index funds?
Correct Answer Investment in securities in the same weightage which replicates
a particular index

Multiple Choice Single Answer
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


Multiple Choice Single Answer
Question 39 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 Single Answer
Question 41 How many measures of money supply are used commonly?
Correct Answer 2

Multiple Choice Single Answer
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

Multiple Choice Single Answer
Question 46 Avenues can be broadly classified into the which type of assets?
Correct Answer Financial and Real

Multiple Choice Single Answer
Question The average investor in the market is driven more by emotions
than by rational analysis is a rule of :-
Correct Answer Technical analysis

Multiple Choice Single Answer
Question What is the objective of an income fund?
Correct Answer To provide regular and steady income

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

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

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

Multiple Choice Single Answer
Question What is Gross National Product ?
Correct Answer Gross income generated from within the country

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

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

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

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

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

Multiple Choice Single Answer
Question What is a technical approach to investment?
Correct Answer A reflection of the idea that prices move in trends which are
determined by various factors

Multiple Choice Single Answer
Question What are index funds?
Correct Answer Investment in securities in the same weightage which replicates
a particular index

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

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 What are short term trends?
Correct Answer Trends which interrupt the course of the intermediate cycle

Multiple Choice Single Answer
Question What is the aim of growth funds?
Correct Answer To provide capital appreciation over medium to long term

Multiple Choice Single Answer
Question This is not a stock exchange :-
Correct Answer MCX

Multiple Choice Single Answer
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

Multiple Choice Single Answer
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?
Correct Answer Rs. 73466/-

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

Multiple Choice Single Answer
Question Mr. Suresh is expecting to receive Rs.1,50,000/- at the end of 3
years. He wanted to know what is the present value of this
amount, if the rate of interest is 9% p.a ?
Correct Answer Rs.1,15,827/-

Multiple Choice Single Answer
Question What is Flow-of-funds analysis?
Correct Answer Consists of an analysis of the financial positions of various
investor groups

Multiple Choice Single Answer
Question Mr. Suhas is expecting to receive Rs.1,00,000/- at the end of 7
years. He wanted to know what is the present value of this
amount, if the rate of interest is 7% p.a ?
Correct Answer Rs. 62,275/-

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

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

Multiple Choice Single Answer
Question If index future is taken under futures contract, the underlying
asset would be :-
Correct Answer Stock index
Multiple Choice Single Answer
Question What is balance of payments?
Correct Answer Credit and debit transactions of a country

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

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

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

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

Security Analysis And Portfolio Management - 12

Security Analysis And Portfolio Management - 12

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

Select The Blank
Question 8 Under ________ EMH investors cannot earn abnormal/superior profits on
securities on a consistent basis.
Correct 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.
Correct Answer Speculators

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

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

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

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

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

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

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

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

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

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

Select The Blank
Question ________ measures the efficiency of credit management.
Correct 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
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

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

Select The Blank
Question All trades in the futures market are cash settled on a ________ basis.
Correct Answer T+1

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

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

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

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

Select The Blank
Question The govt allowed public sector banks and institutions in mutual funds in
________.
Correct 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

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

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

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

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

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

True/False
Question A segment is unattractive if the buyers possess strong or
growing bargaining powers.
Correct Answer True

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

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

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

True/False
Question Penetration of a trend line denotes a bearish phase.
Correct Answer False

True/False
Question Passive investment managers believe that markets are
inefficient and Active managers believe that markets are
efficient.
Correct Answer False

Security Analysis And Portfolio Management - 11
Multiple Choice Single Answer
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
Multiple Choice Single Answer
Question If the price of a share at the beginning of the year was
Rs.100/-, no dividend received during the year and the price at the end
is Rs.115/-. What is the rate of return?
Correct Answer 0.15
Your Answer 0.15
Multiple Choice Single Answer
Question What is the objective of Portfolio management?
Correct Answer To Minimize risk and maximize return

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

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

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

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

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

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 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

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

Multiple Choice Single Answer
Question What are primary trends?
Correct Answer Reflection of investor's attitudes towards unfolding fundamentals in the
business cycle

Multiple Choice Single Answer
Question In a forward contract there is :-
Correct Answer No Exchange of cash

Multiple Choice Single Answer
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

Multiple Choice Single Answer
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 reinvestments
is :-
Correct Answer Estimating growth from a firm's fundamentals

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

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

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

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

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

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

Select The Blank
Question Debentures rated as "A" are judged to offer ________ of timely payment of
interest and principal.
Correct 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"

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


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

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

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

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

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

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

Select The Blank
Question 1 UTI was set up in the year ________.
Correct 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

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

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

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

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

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

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

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

Security Analysis And Portfolio Management - 10
Multiple Choice Single Answer
Question 4 What are short term trends?
Correct Answer Trends which interrupt the course of the intermediate cycle

Multiple Choice Single Answer
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

Multiple Choice Single Answer
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

Multiple Choice Single Answer
Question 10 Efficient market hypothesis is based on the assumption that
market comprises of :-
Correct Answer Rational Investors
Multiple Choice Single Answer
Question 11 Co variance of asset with market portfolio 85 and variance of
market portfolio is 100 then beta is :-
Correct Answer 0.0085

Multiple Choice Single Answer
Question 13 Mr. Tiwari is expecting to receive Rs.25,000/- at the end of 10
years. He wanted to know what is the present value of this
amount, if the rate of interest is 10% p.a:-
Correct Answer Rs. 9639/-

Multiple Choice Single Answer
Question 18 What does flow-of fund analysis help in understanding?
Correct Answer Availability of money for the stock market

Multiple Choice Single Answer
Question 23 A security represent evidence of :-
Correct Answer A property right

Multiple Choice Single Answer
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?
Correct Answer Rs. 6083/-

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

Multiple Choice Single Answer
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

Multiple Choice Single Answer
Question 2 When was the first mutual fund set up?
Correct Answer 1963

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

Multiple Choice Single Answer
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

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

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

Multiple Choice Single Answer
Question 30 Agriculture account for how much portion of the economy?
Correct Answer Quarter

Multiple Choice Single Answer
Question 37 Who operates the sinking fund under the sinking fund provision
of a firm?
Correct Answer The bond trustee or the issuer

Multiple Choice Single Answer
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

Multiple Choice Single Answer
Question 42 The growth period in the industry life cycle is defined as :-
Correct Answer Period of rapid market acceptance and substantial profit
improvement

Multiple Choice Single Answer
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

Multiple Choice Single Answer
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

Multiple Choice Single Answer
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

Multiple Choice Single Answer
Question 25 What are intermediate trends?
Correct Answer They are counter-cyclical trends within the confines of a primary
trend


Multiple Choice Single Answer
Question 29 What are index funds?
Correct Answer Investment in securities in the same weightage which replicates
a particular index

Multiple Choice Single Answer
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


Multiple Choice Single Answer
Question 39 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 Single Answer
Question 41 How many measures of money supply are used commonly?
Correct Answer 2

Multiple Choice Single Answer
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

Multiple Choice Single Answer
Question 46 Avenues can be broadly classified into the which type of assets?
Correct Answer Financial and Real

Multiple Choice Single Answer
Question The average investor in the market is driven more by emotions
than by rational analysis is a rule of :-
Correct Answer Technical analysis

Multiple Choice Single Answer
Question What is the objective of an income fund?
Correct Answer To provide regular and steady income

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

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

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

Multiple Choice Single Answer
Question What is Gross National Product ?
Correct Answer Gross income generated from within the country

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

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

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

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

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

Multiple Choice Single Answer
Question What is a technical approach to investment?
Correct Answer A reflection of the idea that prices move in trends which are
determined by various factors

Multiple Choice Single Answer
Question What are index funds?
Correct Answer Investment in securities in the same weightage which replicates
a particular index

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

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 What are short term trends?
Correct Answer Trends which interrupt the course of the intermediate cycle

Multiple Choice Single Answer
Question What is the aim of growth funds?
Correct Answer To provide capital appreciation over medium to long term

Multiple Choice Single Answer
Question This is not a stock exchange :-
Correct Answer MCX

Multiple Choice Single Answer
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

Multiple Choice Single Answer
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?
Correct Answer Rs. 73466/-

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

Multiple Choice Single Answer
Question Mr. Suresh is expecting to receive Rs.1,50,000/- at the end of 3
years. He wanted to know what is the present value of this
amount, if the rate of interest is 9% p.a ?
Correct Answer Rs.1,15,827/-

Multiple Choice Single Answer
Question What is Flow-of-funds analysis?
Correct Answer Consists of an analysis of the financial positions of various
investor groups

Multiple Choice Single Answer
Question Mr. Suhas is expecting to receive Rs.1,00,000/- at the end of 7
years. He wanted to know what is the present value of this
amount, if the rate of interest is 7% p.a ?
Correct Answer Rs. 62,275/-

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

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

Multiple Choice Single Answer
Question If index future is taken under futures contract, the underlying
asset would be :-
Correct Answer Stock index
Multiple Choice Single Answer
Question What is balance of payments?
Correct Answer Credit and debit transactions of a country

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

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

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

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