MCQ question Bank - Hirwal Education Trust

TYBMS sem V Subject: Investment analysis and Portfolio Management (IAPM)

MCQ question Bank

Q.1 Financial markets can be classified into Money markets and ____ markets

a securities

b primary

c secondary

d capital

Q.2 Money markets are markets where borrowers and lenders exchange____funds

a long-term

b short term

c medium term

d government

Q.3 Which of the following are role of investment banks?

a Raising capital

b hiring of employees

c help in day-to-day functions of management

d Earning profit

Q.4 NASDAQ currently uses______ system for reporting and clearing

a Trade Acceptance and Reconciliation Service

b Trade for trade Surveillance

c Automated Confirmation of Transactions

d Both a and c

Q.5 Depositories help investors hold securities in___form


MCQ question Bank a crude

b electronic

c physical

d Depository

Q.6 ______is the legal owner of shares held in dematerialized form

a Depository Participant

b shareholder

c Depositary

d Both b and c

Q.7 Shareholder is______ owner of shares held in dematerialized form

a legal

b beneficial

c physical

d Both and b

Q.8 _____acts as an interface between depositary and shareholder

a Depository Participant

b Company

c Underwriter

d Debenture trustees


MCQ question Bank

Q.9 Portfolio returns are equal to_______of returns of securities in the portfolio

a simple mean

b weighted mean

c median

d mode

Q.10 A measure that compares the behaviour of returns of two securities with each

other is known as___

a coefficient of correlation

b variance

c coefficient of variance

d range

Q.11 Standard deviation of a portfolio consisting of securities with perfect positive

correlation will be equal to _______ of standard deviation of securities in the portfolio

a simple mean

b weighted mean

c median

d mode

Q.12 A portfolio consisting securities with __________ correlation cannot achieve any

risk reduction with any level of diversification

a perfect positive

b perfect negative

c zero

d negative

Q.13 Standard deviation of a portfolio depends upon standard deviation of


MCQ question Bank securities in the portfolio, weight of securities in the portfolio and _______ amongst securities in

the portfolio

a variance

b coefficient of correlation

c range

d coefficient of variance

Q.14 The idea of selecting securities in a portfolio based on coefficient of

correlation of their returns was purported by______

a William Sharpe

b Harry Markowitz

c Black & Scholes

d Walter

Q.15 A portfolio that provides highest possible returns at lowest possible risk is

known as ______ portfolio

a risky

b behaviour

c inefficient

d efficient

Q.16 According to the capital market line, the expected return of any efficient

portfolio is a function of ________ risk

a unique

b total

c systematic

d unsystematic

Q.17 All other things remaining same, diversification is most effective when


MCQ question Bank securities returns are_____

a positively correlated

b uncorrelated

c high

d negatively correlated

Q.18 When a portfolio of two securities with perfect negative correlation is formed,

minimum standard deviation that can be achieved is____

a greater than zero

b equal to zero

c equal to - 1

d total of standard deviations of securities in the portfolio

Q.19 _______measures how the returns of two risky assets move together.

a correlation

b standard deviation

c covariance

d Both a and c

Q.20 Markowitz theory of portfolio management is most concerned with

a the identification of systematic risk

b active portfolio management for better returns

c the elimination of systematic risk

d the effect of diversification on portfolio risk

Q.21 A risky portfolio with expected returns and standard deviation of 18% lies on

A given indifference curve. Which of the following portfolios might lie on the same indifference

curve?

a Expected returns = 15%: standard deviation = 18%


MCQ question Bank b Expected returns = 15%; standard deviation = 20%

c Expected returns = 15%; standard deviation = 15%

d Expected returns = 15%; standard deviation = 10%

Q.22 An indifference curve shows

a The one most desirable portfolio for a particular investor.

b all combinations of portfolios that are equally desirable to all investors

c all combinations of portfolios that are equally desirable to a particular

investor

d the one most desirable portfolio for all investors

Q.23 The optimal portfolio for a risk-averse investor_______

a. cannot be determined

b occurs at the point of tangency between highest expected return and the lowest

risk efficient portfolios

c occurs at the point of tangency between highest indifference curve and highest

expected return

d occurs at the point of tangency between highest indifference curve and the

efficient set of portfolios.


MCQ question Bank Q.24 _______ analysis is a technique that attempts to determine a security's value by

economic analysis, industry analysis and underlying factors company's actual business.

a Fundamental

b Technical

c Moral

d Both a and c

Q.25 Fundamental analysis assumes that the stock price of a company depends on____

a emotions of stock markets

b capacity to generate income in future

c tips and rumors about the company

d Both a and b

Q.26 Under economic analysis an analyst will study

a government policies

b country's GDP

c Both a and b

d Taxation policy

Q.27 Study of company's financial statements is a part of ______analysis

a Fundamental

b Technical

c Moral

d Economy

Q.28 Income statements are thoroughly analysed under_____ analysis

a economy

b industry

c company


MCQ question Bank d technical

Q.29 Ratio analysis is a part of _____ analysis

a economy

b company

c Both a and b

d technical

Q.30 Current ratio is a ______ ration

a Activity

b Solvency

c Profitability

d liquidity

Q.31 High current ratio & low quick ratio will generally indicate_________

a high Stock levels

b low stock levels

c high cash balance

d low cash balance

Q.32 High asset turnover & high operating profit will lead to high

a debt equity

b ROI

c leverage

d liquidity

Q.33 Debt equity ratio is ________ the better

a higher

b lower


MCQ question Bank c profitability

d liquidity

Q.34 Stock Turnover ratio is a ______ ratio

a activity

b solvency

c profitability

d liquidity

Q.35 Lower the ratio, the more favorable it is, is true for___ratio

a operating ratio

b quick

c net profit

d debtors turnover

Q.36 Return on Net Worth is a ____ratio.

a unlevered

b levered

c solvency

d liquidity

Q.37 Return on Capital employed is a____ ratio

a unlevered

b levered

c solvency

d liquidity

Q.38 Earning before interest and tax is used as numerator for ______ profit ratio.

a net


MCQ question Bank b gross

c Operating

d current

Q.39 A ______ indicates the general direction in which a security price is headed.

a trend

b ratio

c price

d Liquidity

Q.40 The daily high price is represented on a candlestick chart by the_____

a real body

b trend-line

c channel

d shadow

Q.41 Which of the following is the reason stock prices behave the way they do at

resistance lines because

a many investors want to buy at this price

b market makers resist moving prices lower than the

c many investors want to sell at this price

d market makers support prices at this level.

Q.42 A _______ average of a stock index is the average level of the index over a given

interval of time

a static

b moving

c gross

d net


MCQ question Bank

Q.43 Increase in odd-lot selling as compared to odd-lot buying, is a _____ indcator

a bullish

b bearish

c Both a and b

d netural

Q.44 Triple tops and triple bottoms are indicators of ____

a role reversal

b rend reversal

c Both a and b

d high volumes

Q.45 _____is relevant to market breadth

a The number of investors buying and selling

b Tick test

c Advance/declining ratio

d high volumes


MCQ question Bank

Q.46 ____is most closely associated with the terms "primary trend," "intermediate trend,"

and "short-term trend"?

a Bar chart

b Candlestick chart

c Channel

d Dow Theory

Q.47 According to the Dow Theory, daily fluctuations and secondary movements in the

stock market are used to identify the trend

a short term

b long term

c primary

d seasonal

Q.48 Elliott wave theory is a variation of _____Theory

a Markowitz

b Sharpe

c Dow

d

Q.49 As per _______ form of efficient market hypothesis all public information is

reflected in the current market prices in stock markets.

a weak

b strong

c semi-strong

d market

Q.50 As per form of efficient market hypothesis all public or private

Information is reflected in the current market prices in stock markets


MCQ question Bank a weak

b strong

c semi-strong

d market

Q.51 As per ______ form of efficient market hypothesis current market prices only

reflect past price movements

a weak

b strong

c semi-strong

d market

Q.52 Efficient market hypothesis advocates investment strategy

a active

b buying

c passive

d strong

Q.53 Recent surveys by reputed research firms show increasing demand for foreign

university courses, in an efficient market, it would be correct to expect that share price of XYZ a

foreign study consulting firm would ____

a drop immediately

b increase immediately

c remain unchanged

d gradually increase over next few weeks

Q.54 Definition of _____ differs under various forms of efficient market hypothesis

a efficiency

b information


MCQ question Bank c prices

d returns

Q.55 According to efficient market hypothesis a small investor having 1,00.000

with him should

a try and exploit market anomalies

b invest in risk free securities

c perform fundamental analysis before investing

d invest in mutual funds


MCQ question Bank

Q.56 The risk that cannot be avoided even by the most diversified portfolios known as

_____risk

a company specific

b unsystematic

c unique

d systematic

Q.57 Market risk can also be termed as ______ risk,

a systematic, diversifiable

b unique, non-diversifiable

c systematic, non-diversifiable i

d unique, diversifiable

Q.58 The risk that can be diversified away is ___risk.

a company specific

b unsystematic

c Both a and b

d systematic

Q.59 Beta reflects the stock risk for investor which is usually ____

a collective

b individual

c weighted

d liner

Q.60 As per capital asset pricing model beta is a measure of ___risk

a company specific

b unsystematic


MCQ question Bank c total

d systematic

Q.61 _________market line divides required returns on a stock into risk free rate and risk

premium

a Capital

b Security

c Aggregate

d Beta

Q.62 In capital asset pricing mode the covariance between stock and market is divided by

variance of market returns to calculate _____ of the company

a mean returns

b sales turnover

c variance

d Beta

Q.63 As per capital asset pricing model, securities that lie on security market line

are_____ valued

a correctly

b over

c under

d not

Q.64 If the risk-free rate is 3%, the beta of APL is 1.2, and the rate of return of the

market portfolio is 12%, what is the expected return on APL as per CAPM will be______ %.

a 12.8

b 10.8

c 13.8


MCQ question Bank d 14.8

Q.65 Which of the following are required to calculate returns of a security as per

CAPM?

a risk free rate of return

b beta of the security

c market returns

Semi strong

Q.66 Portfolio beta is ___________of beta of securities in the portfolio

a simple mean

b weighted mean

c aggregate

d media


MCQ question Bank

Q.67 ________returns are the total return earned by an investor during the time period

for which the investment is held

a Holding period

b Annualised

c Expected

d Future

Q.68 The holding period return (HPR) of an investment is equal to

a capital gains on the investment over the period plus the inflation rate

b capital gains on the investment over the period plus the dividend yield

c risk free rate plus the risk premium

d risk free rate plus the risk premium

Q.69 Probability of an event that has no chance of occurrence is always

a one

b zero

c between (a) & (b)

d high

Q.70 Risk is a situation where possible outcomes are__

a highly certain

b certain

c uncertain

d normal

Q.71 Risk is associated with ___________returns

a past

b present


MCQ question Bank c future

d Dividenf

Q.72 ________is a measure of risk

a Range

b Variance

c Standard Deviation

d Coefficient

Q.73 _________is best measure of total risk

a Range

b Variance

c Standard Deviation

d Systematic

Q.74 Internal business risk is a source of_____risk

a Systematic

b Unsystematic

c Both a and b

d None of the above

Q.75 _____ risk is avoidable risk

a Systematic

b Unsystematic

c Both a and b

d Standard Deviation


MCQ question Bank

MCQ question Bank - Hirwal Education Trust

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