Security Analysis and Portfolio Management - 24

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

 

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 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

 

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

 

Select The Blank

Question Debentures rated ________ are judged to offer sufficient safety of timely

payment of interest and repayment of principal.

Correct Answer "BBB"

 

Multiple Choice Single Answer

Question Stock Exchanges are the part of :-

Correct Answer Secondary market

Your Answer Money Market

 

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 Equity analysts provides estimates of earnings and earnings growth for

future, using historical data and :-

Correct Answer Macro economic information that may impact future growth ,

Private information about the firm , Firm's specific information and public information

 

Multiple Choice Multiple Answer

Question What are the features of short-term trends?

Correct Answer They last from 1 to 3 or 4 weeks , They interrupt the course of the

intermediate cycle , They are usually influenced by random news events

 

True/False

Question 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

 

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

 

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 What are the features of candle stick charts?

Correct Answer Indicates in black if the closing price is lower than the opening

price , Indicates in white if the closing price is higher than the opening price

Your Answer , Displays the correlation between the high and low prices

 

True/False

Question A firm uses a combination of equity and debt for financing its assets.

Correct Answer True

 

Select The Blank

Question A pattern which does not result in reversal of a trend but reaffirmation of

the underlying trend is called ________.

Correct Answer Consolidation pattern

 

True/False

Question Policies of the government and the attitude of the government towards the

industry have a considerable influence on the industry.

Correct Answer True

 

Multiple Choice Single Answer

Question The index futures symbols of BSE are represented as :-

Correct Answer BSX JAN 2005 (January contract)

 

Multiple Choice Multiple Answer

Question 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 , HModel

unlike the classic two stage model

 

Multiple Choice Multiple Answer

Question What are the features of line charts?

Correct Answer It connects closing prices from one period to the next , It is ideal

for securities with no high or low price data

 

True/False

Question Investors in high tax bracket would benefit by investing in equity schemes.

Correct Answer False

 

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

 

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 Your Answer

Price pattern Resistance level Head and shoulders formation

Primary trend Last between 1-2 years Last between 1-2 years

Intermediate trend Last between 3 weeks to as long as 6 monthsLast between 3 weeks

to as long as 6 months

Short term trend Last 1 to 3-4 weeks Last 1 to 3-4 weeks

 

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

 

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

 

Multiple Choice Single Answer

Question In India we have index futures contracts based on :-

Correct Answer S&P CNX Nifty and the BSE sensex

 

True/False

Question When we invest in only one asset we are not exposed to any specific or

market risk.

Correct Answer False

 

Multiple Choice Single Answer

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

Correct Answer 2001

 

Select The Blank

Question ________ measures the efficiency of credit management.

Correct Answer Average collection period

 

Multiple Choice Single Answer

Question What do you understand by the term redemption price?

Correct Answer Price or NAV at which a scheme purchases its units

 

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

Your Answer Calculating the Return on investment

 

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

 

True/False

Question Five paisa.com is an example of on line trading portal.

Correct Answer True

 

Multiple Choice Single Answer

Question A security analysis is done :-

Correct Answer For decision making for investments

 

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

 

Select The Blank

Question Dow Jones transportation average was previously known as ________.

Correct Answer Rail average

Your Answer Freight average

 

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 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

 

Multiple Choice Single Answer

Question As per the exhibit 18-1 for individual stock futures on NSE, the price steps

in respect of all futures contract admitted to the dealings of the exchange shall be :-

Correct Answer 0.05

 

Multiple Choice Multiple Answer

Question The features of bond are :-

Correct Answer Collateral , Call provision , Sinking fund and protective covenants

 

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

 

Match The Following

Question Correct Answer Your Answer

MCX Commodity ExchangeCommodity Exchange

Sensex BSE Index BSE Index

Nifty NSE Index NSE Index

Lifex ET Index Gold Index

 

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

 

True/False

Question Bearish actions come from a series of declining peaks and troughs.

Correct Answer True

 

Multiple Choice Single Answer

Question Who developed Dow's Principles and organised them into a theory as it is

known today?

Correct Answer William Peter Hamilton

Your Answer Charles.H.Dow