Security Analysis 1

Model Question Paper Security Analysis – I (MSF2D1) Section A : Basic Concepts (30 Marks) • This section consists of questions with serial number 1 - 30. • Answer all questions. • Each question carries one mark. • Maximum time for answering Section A is 30 Minutes. 1. Which of the following statements is false with respect to Support and Resistance Lines under trend analysis? (a) It is an important tool in confirming a reversal, in forecasting the course of prices, and in making appropriate price movement (b) Prices are said to remain in a ‘congestion zone’ a s lon g as they fluctuate in narrow ranges within a support and resistance level (c) The higher the volume accompanying the confirmation of a support or resistance level, the more its significance (d) The direction of break out from a congestion zone can be predicted in advance (e) The speed and extent of the previous move determines the significance of a support or resistance level. 2. Which of the following statements is/are false for duration of a bond? I. As the term to maturity increase the number of coupon payment increases. II. Duration i ncreases as the redempt ion payment is extended , but t he weightage of the redemption decreases as the term to maturity increases. III. The longer the term to maturity of a coupon paying bond the lesser the difference between its term to maturity and duration. IV. A bond which pays interes t for a finite peri od, the duratio n is equal to its ter m to mat urity. (a) Only (I) above (b) Only (III) above (c) Both (I) and (IV) above (d) Both (III) and (IV) above (e) (II), (III) and (IV) above. 3. A 3–year bond is currently yielding 8.4%, while a 4–year bond is currently yielding 8.89%. Assume that the expectations theory holds good, the rate for 1-year bond three years from now is (a) 10.37% (b) 11.47% (c) 12.79% (d) 15.72% (e) 18.04%. 4. Market Extraction Method is one of the methods to derive the capitalization rate of real assets. Which of the following statements is/are true with respect to Market Extraction Method? I. In t his method, net operating income is divided by sa les price t o get the capitalization rate. II. In this method, the rates on equity as well as debt finan cing rates are weighted according t o their proportions to calculate the capitalizati on rate. III. In this metho d, the capitalizati on rate is the sum of the ri sk free rate and r isk premium. IV. In this method comparable property is selected. (a) Only (I) above (b) Only (II) above (c) Both (I) and (IV) above (d) Both (II) and (III) above (e) Both (III) and (IV) above. 5. Which of the following statements is not a condition for perfect immunization? (a) The term structure is upward sloping

Security Analysis 1

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