ASSIGNMENT – FIN006 TEST1
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Question 1:
Which one is incorrect statement? To get listed
a. the company has to apply to the stock exchange
b. its article of association should be approved
c. the draft prospectus should be approved by the SEBI and concerned stock exchange
d. none of these
Question 2:
In an efficient market.
a. security prices react quickly to new information
b. security prices are seldom far above or below their justified levels
c. security analysts will not enable investors to realize superior returns consistently
d. All of these
Question 3:
A statistic that measures how the returns of two risky assets move together is
a. Mean & Correlation
b. Standard Deviation & Mean
c. Correlation & Covariance
d. Standard Deviation & Correlation
Question 4:
Which of the following statements regarding risk-averse investors is true?
a. They only accept risky investments that offer risk premiums over the risk-free rate
b. They accept investments that are fair games.
c. They only care about rate of return
d. They are willing to accept lower returns and high risk
Question 5:
Primary and secondary markets
a. compete with each other
b. complement each other
c. function independently
d. control each other
Question 6:
The buying and selling activities of the arbitrageur
a. increase the pront
b. Brings equilibrium level
c. Creates disequilibrium
d. Reduces the profit margin
Question 7:
If a person gives too much weight to recent information compared to prior beliefs, they would make…………………………….errors
a. Framing
b. Overconfidence
c. Forecasting
d. Conservatism
Question 8:
Which of the following is not an assumption of technical analysis?
a. Market value is determined solely by the forces of demand and supply
b. Supply and demand are governed by purely irrational factors
c. Ignoring minor fluctuations, stock markets tend to move in trends
d. Changes in trends are caused by shifts in demand and supply
Question 9:
The stock above the security market line is
a. Overpriced
b. Underpriced
c. Appropriately priced
d. Of high risk
Question 10:
Which group contains the companies with large outstanding shares, good track record and large volume of business in the secondary market
a. A group
b. B1 group
c. B group
d. A1 group
Question 11:
Stock exchange
a. helps in the fixation stock prices
b. ensures safe and fair dealing
c. induces good performance by the company
d. all of these
Question 12:
The indices differ from each other on the basis of
a. the number
b. the composition of the stock
c. the weights and the base year
d. all of these
Question 13:
The debate over whether markets are efficient will probably never be resolved because of
a. the lucky event issue.
b. the magnitude issue
c. the selection bias issue
d. All of these
Question 14:
Markowitz approach has root in
a. Good portfolio management
b. Proper entry and exit in the market
c. Estimation Of stock Return
d. Analyzing the risk and return related to stock
Question 15:
If the rate of return earned before the payment of interest and taxes is greater than the interest on debt, then the Return on Equity as leverage increases
a. Increases
b. Decreases
c. Remains same
d. Cannot be determined
Question 16:
Suppose two portfolios have the same average return, the same standard deviation of returns, but portfolio X has a higher beta than portfolio Y. According to the Sharpe measure, the performances of portfolio X
a. is the same as the performance of portfolio Y
b. is better than the performance of portfolio Y
c. is poorer than the performance of portfolio Y
d. cannot be measured as there is no data on the alpha of the portfolio
Question 17:
When the level of economic activity is low, stock prices are
a. High
b. Low
c. Either High or Low
d. Both high and low
Question 18:
The security market line describes the expected return for
a. The efficient portfolio
b. The inefficient portfolio
c. All portfolios and assets
d. The efficient and inefficient portfolios
Question 19:
NSE was recognized on a permanent basis in
a. 1992
b. 1993
c. 1994
d. 2003
Question 20:
An active portfolio manager faces a tradeoff between …………………1. using the Sharpe measure 11. using mean-variance analysis. III. exploiting perceived security mispricing IV. holding too much of the risk-free asset. V. letting a few stocks dominate the portfolio.
a. I and II
b. II and V
c. III and V
d. III and IV
Question 21:
In……………the supply of scrip is greater than the demand and a further rise in price is prevented
a. Resistance level
b. Support level
c. Secondary trend
d. Primary trend
Question 22:
To take advantage of an arbitrage opportunity, an investor would. Short sell the asset in the low-priced market and buy it in the high-priced market & Construct a zero investment portfolio that will yield a sure profit. III. Make simultaneous trades in two markets without any net investment. IV. Construct a zero beta investment portfolio that will yield a sure profit.
a. I and II
b. I and III
c. II and III
d. III and IV
Question 23:
Risk(s) affecting all the securities in the market is/are
a. Risk due to variability in returns due to changed investors expectations
b. Financial risk
c. Inflation risk
d. both inflation risk and risk due to the variability of returns
Question 24:
Delisting may be done compulsorily by the stock exchanges for the
a. unfair trade practices
b. sick business
c. Capital base is small
d. amalgamation and takeover
Question 25:
Markowitz model is used under
a. Traditional approach
b. Modern approach
c. all of these
d. none of these
Question 26:
In the strong form of efficient market,
a. All available information is reflected on the price
b. All published information is reflected on the price
c. Stock price reflects past prices.
d. Stock prices show the growth or fall of the company
Question 27:
In the context of the Capital Asset Pricing Model (CAPM) the relevant measure of risk is
a. Unique risk
b. Beta
c. Standard deviation of returns
d. Variance of returns
Question 28:
Supply-side economists wishing to stimulate the economy are most likely to recommend
a. a decrease in the money supply
b. a decrease in the tax rate
c. an increase in the real interest rate
d. a decrease in production output
Question 29:
As the debt ratio increases,……………………..
a. fewer assets are debt-financed and the ratio of debt-to-equity increases
b. fewer assets are debt-financed, and the ratio of debt-to-equity decreases
c. more assets are debt-financed, and the ratio of debt-to-equity increases
d. more assets are debt-financed, and the ratio of debt-to-equity decreases
Question 30:
An Investor is having a portfolio with the combination of stock and bond in the ratio of 75:25. He is
a. Risk averse
b. risk neutral
c. A risk taker
d. Active in portfolio management