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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 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 , Calculating the Return on
investment
Multiple Choice Multiple Answer
Question 44 What are the different types of profitability ratios?
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
Your Answer Growing at a rate equal to or lower that the growth in the economy ,
Which have well established dividend payout ratio policy
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
Your Answer Either to honour or walk away from the contract , To earn a profit
while restricting the downside risk , To use the options for
speculation
Correct Answer Bar and line charts , Candle stick charts , Point and figure charts
Your Answer Candle stick charts , Point and figure charts , Bar and line charts
Correct Answer Carry a fixed rate of dividend , Dividend payable out of profit ,
Redemption in 7 to 12 years
Your Answer Carry a fixed rate of dividend , Dividend payable out of profit ,
Redemption in 7 to 12 years
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
Your 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
Correct Answer A point where the prices become relatively attractive for buyers
Correct Answer Trends which interrupt the course of the intermediate cycle
Your Answer They are counter-cyclical trends within the confines of a primary
trend
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
Your Answer Consistent stable firms, but not appropriate for high growth firms
Correct Answer They are counter-cyclical trends within the confines of a primary
trend
Your Answer They are counter-cyclical trends within the confines of a primary
trend
Correct Answer Majority of stocks follow the underlying trend of the market most
of the time
Your Answer Majority of stocks follow the underlying trend of the market most
of the time
Correct Answer 2
Your Answer 2
Correct Answer A reflection of the idea that prices move in trends which are
determined by various factors
Your Answer A reflection of the idea that prices move in trends which are
determined by various factors
Correct Answer Trends which interrupt the course of the intermediate cycle
Your Answer Trends which interrupt the course of the intermediate cycle
Correct Answer It marks the turning point between a rising and falling market
Your Answer It marks the turning point between a rising and falling market
Correct Answer Transition phases are signalled by clearly definable price patterns
Your Answer Transition phases are signalled by clearly definable price patterns
Correct Answer To identify trend changes at an early stage and maintain investment
posture till the trend has reversed
Your Answer To identify trend changes at an early stage and maintain investment
posture till the trend has reversed
Your Answer 3
Correct Answer 6
Your Answer 5
Your Answer 5
Your Answer 5
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.
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.
True/False
Question Post office monthly schemes have a 10 year tenor.
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.
True/False
Question Passive investment managers believe that markets are
inefficient and Active managers believe that markets are
efficient.
Correct Answer False
True/False
Question 2 Currently in India index options are both European and American
in nature.
Correct Answer False
True/False
Question 3 The cost structure remaining the same, better price realisation
results in lower gross profit ratio.
Correct Answer False
True/False
Question 6 A segment is more attractive when there are actual or potential
substitutes for the product.
Correct Answer False
True/False
Question 15 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
True/False
Question 29 The arithmetic mean is a set of observations is calculated by
finding the sum values and dividing by the number of
observations.
Correct Answer True
True/False
Question 30 Investment in gilt edged securities carry a higher element of risk.
True/False
Question 37 Following a decline, heavy volume with little price change is
indicative of accumulation and is normally a bearish factor.
Correct Answer False
True/False
Question 45 Speculators buy or sell futures contract in an attempt to earn a
profit.
Correct Answer True
True/False
Question 11 Investment decisions can be viewed as an integrated process to
which security analysis makes its unique contribution.
Correct Answer True
True/False
Question 18 Quick assets consist of current assets less inventories.
True/False
Question 22 If a rupee weakens against the dollars it has favourable impact
for the exporters.
Correct Answer True
True/False
Question 23 A price rise accompanied by expanding volume denotes a
potential trend reversal.
Correct Answer False
True/False
Question 35 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 47 PPF is a good retirement planning and tax saving vehicle.
True/False
Question 2 Bonds and Debentures represent long term debt instruments.
True/False
Question 13 Certificate of Deposits offers high rate of interest than Treasury
Bills.
Correct Answer True
True/False
Question 21 Sensex is the index of Calcutta Stock Exchange.
True/False
Question 27 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
True/False
Question 32 If rupee weakens against the dollar, it has favourable impact for
the importers.
Correct Answer False
True/False
Question 36 The risk associated to get the required rate of return on the stock
is measure by market beta.
Correct Answer True
True/False
Question 40 The basic inputs of the general model are expected dividends
and required rate of return on stock.
Correct Answer True
Your Answer True
True/False
Question 42 European style options are more expensive than American style
because they offer greater flexibility to the buyer.
Correct Answer False
True/False
Question When you are making an investment you are expecting certain
future benefits from your investment.
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 The labour conditions do not play an important role in the
industry analysis.
Correct Answer False
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
True/False
Question The Asset management company of the mutual fund must have 50%
independent directors.
Correct Answer True
True/False
Question In case of fixed income securities like debentures, you get the return in the
form of dividend.
Correct Answer False
True/False
Question Investment in gilt edged securities carry a higher element of risk.
True/False
Question American option gives the holder the right, but not the obligation to buy or
sell the underlying instrument on or before the expiry date and the option
can be exercised early.
Correct Answer True
True/False
Question Prices of stocks usually move in trends.
True/False
Question The sideways trend is essentially a transitional one which separates the
two major market movements.
Correct Answer True
True/False
Question With the use of diversification you can reduce the risk.
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
Your Answer True
True/False
Question Fixed assets turnover ratio measures the efficiency of utilisation of total
assets, fixed as well as current.
Correct Answer True
Your Answer True
True/False
Question The price earning ratio can be estimated for the firms with negative
earnings per share.
Correct Answer False
True/False
Question A share certificate indicates that the investor owns a certain number of
shares.
Correct Answer True
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
True/False
Question Bonds and Debentures represent long term debt instruments.
True/False
Question A price rise accompanied by expanding volume denotes a potential
trend reversal.
Correct Answer False
True/False
Question Currently in India index options are both European and American in
nature.
Correct Answer False
True/False
Question A rally that develops on contracting volumes is suspect and warns of a
potential trend reversal in price
Correct Answer True
H-Model For Valuing Initial growth rate is not Initial growth rate is not
Growth constant but linearly falls constant but linearly falls
over time to reach the over time to reach the
stable growth rate stable growth rate
The general model Expected dividends and Expected dividends in the
required rate of return next period, cost of equity
and expected growth rate in
dividends
The Gordons Growth Expected dividends in the Assessment of the growth
model next period, cost of equity rate by looking at how
and expected growth rate much a firm reinvests for
in dividends future growth and the
quality of its reinvestment
The Two-Stage Dividend Based on two Based on two extraordinary
Discount Model extraordinary growth growth phase lasting n
phase lasting n years and years and stable growth
stable growth phase that phase that lasts forever
lasts forever
Weak form model is also Random walk model Random walk model
termed as
Investors are rational Efficient market Efficient market hypothesis
hypothesis
Securities current prices Weak form EMH Fama
fully reflect all historical
information
Framework on efficient Fama Strong form
capital markets, a review
of theory and empirical
work
1. SEBI 5 1. Nifty
The world's first largest Chicago Board of options New York board of Options
options exchange exchange exchange
The most popular pricing Black Scholes Black Scholes
options model published in
the year 1973
When the writer gives the Put option Put option
buyer of the option the right
to sell the underlying asset
on or before the expiry date