Deck 7: Investment and Risk Analysis

Question 1

Which speculator expects a rise in price in future?

A)Bull
B)bear
C)stag
D)lame duck

Answer 1

Bull

Question 2

When a right to purchase a security is given it is called

A)Put option
B)call option
C)put and call option
D)none of the above

Answer 2

call option

Question 3

OTCEI deals in

A)money market
B)industrial securities
C)giving long term loans
D)factoring services

Answer 3

industrial securities

Question 4

The first stock exchange which was fully computerized was

A)BSE
B)NSE
C)OTCEI
D)DSE

Question 5

Interest rate risk is associated with

A)Inflation
B)taxation
C)business cycle
D)bank rate

Question 6

Volatile stock has beta value

A)Greater than one
B)equal to one
C)less than one
D)none of the above

Question 7

Total risk in a security usually measured by

A)Range
B)standard deviation
C)beta
D)co efficient of variation

Question 8

Systematic risk is measured with

A)Range
B)standard deviation
C)beta
D)co efficient of variation

Question 9

The term beta is synonymous with

A)systematic risk
B)unsystematic risk
C)portfolio risk
D)all of the above

Question 10

SEBI has made it mandatory for the companies to disclose

A)The yearly annual report
B)monthly report and annual report
C)Quarterly report and annual report
D)monthly review and annual report

Question 11

The minimum number of shares applied for is

A)100
B)200
C)300
D)500

Question 12

For every RS 1 lakh of fresh issue of capital there should be at least

A)5 share holders
B)10share holders
C)15 share holders
D)20 share holders

Question 13

Marketability risk of bond is

A)The market risk which affect all the bonds
B)variation in return caused by difficulty in selling stocks
C)The failure to pay the agreed value of the bond by the user
D)A & B

Question 14

Default risk is lower in

A)Treasury bills
B)government bonds
C)ICICI bonds
D)IDBI bonds

Question 15

The value of the bond depends on

A)The coupon rate
B)years to monthly
C)expected yield to maturity
D)all of the above

Question 16

The bond yield remains constant over its life and the discount or premium amount will decrease

A)at an decreasing rate as its life gets shorter
B)at an decreasing rate as its life gets longer
C)at an increasing rate as its life gets shorter
D)at an increasing rate as its life gets longer

Question 17

Yield to maturity is the single factor that makes

A)The future value of the present cash flows from a bond equal to bond value
B)The future value of the present cash flows from a bond equal to the future price of the bond
C)Present value of the future cash flows of the bond equal to the current price of the bond
D)The future value of the bond equal to the present price

Question 18

The term structure of the bond is the relationship between the

A)interest rate and bond's maturity period
B)interest rate of the bond and market rate of interest
C)interest rate and the price of bond
D)yield and time taken to mature

Question 19

The problem with Markowitz's model is that a number of covariance have to be estimated. for example for a portfolio of 30 stocks, the covariance that to be estimated are

A)300
B)350
C)435
D)450

Question 20

For portfolio of 40 stocks to adopt Sharpe index model, the bit of information needed are

A)80
B)100
C)120
D)122

Question 21

The risk explained in the index is equal to

A)Beta value of the stock
B)variance of the security return
C)a^2x variance of market index return
D)a^*variance of security return

Question 22

The unsystematic risk is explained by

A)Variance of the index
B)unexplained variance of index
C)Explained variance of the index
D)none of the above

Question 23

For securities X,Y,Z,,T are selected for analysis. The returns of the securities are 10 %, 12%,13% and 16% the risk free rate of interest rate is 6%.the standard deviation of the return of the securities are 4,7,5 and 10 which security yield highest return for the risk undertaken?

A)X
B)Y
C)T
D)Z

Question 24

the X company has the beta of 1.5 .the expected return is 15% the risk free rate of interest is 5 %.which is the market return.

A)6.67%
B)10.33%
C)15.66%
D)12.33%

Question 25

The X stocks return relationship with the stock index is given by its correlation co efficient being 0.8.what is the percentage of variation explained by the index ?

A)80%
B)60%
C)64%
D)20%