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Objective Type Set
Online MCQ Assignment
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In each of the cases given below, one out of four is correct. Indicate the correct answer and give workings/reasons briefly in support of your answer.
Q1: MS BRISTI, a prospective investor has collected the following information pertaining to two securities A and B.

ParticularsSecurity ASecurity B
Expected Return %
Standard deviation of returns (%)
Beta
15
18
0.90
18
22
1.40

The correlation co-efficient between the returns on security A and B is 0.75. If the variance of returns on the market index is 225%, the systematic risk of a portfolio consisting of these two securities in equal proportions will be :
(A) 125.78%
(B) 297.56% [Ans]
(C) 420.50%
(D) None of the above.
 
Q2: The current market price of stock of Royal Ltd. is Rs.67. If the price of the stock is Rs.95 on maturity, the net profit at expiration will be
(A) Rs.1.50
(B) Rs.10.50
(C) Rs.12.50 [Ans]
(D) Rs.72.50
 
Q3: The beta of stock of ANKIT Ltd. is 2·00 and is currently in equilibrium. The required return on
the stock is 12% and expected return on the market is 10%. Suddenly due to change in the
economic conditions, the expected return on the market increases to 12%. Other things
remaining the same what would be new required return on the stock?
(A) 15·0%
(B) 16·0% [Ans]
(C) 20·0%
(D) 22·5%
 
Q4: The share price of RANA Ltd. (F. V. Rs.10) quotes Rs.500 in the NSE and the 3 months future price quotes at Rs.525. The borrowing rate is 12% p.a. If the expected annual dividend yield is 15% payable before expiry, then the price of 3 months RANA Ltd’s future would be
(A) Rs.500·00
(B) Rs.513.50 [Ans]
(C) Rs.516·50
(D) Insufficient information
 
Q5: The NAV of each unit of a closed-end fund at the beginning of the year was Rs.18. By the end
of the year its NAV equals Rs.18·50.At the beginning of the year each unit was selling at a 2%
Premium to NAV and by the end of the year each unit is selling at a 4% discount to NAV.
If the closed-end fund paid year end distribution of income of Rs.2·50 on each unit, the rate of
return to the investor in the fund during the year would be
(A) 10·35% [Ans]
(B) 11·51%
(C) 11·95%
(D) None of the above
 
Choose the most appropriate one from the stated options and write it down (only indicate A or B or C or D as you think correct)
Q1: Residual analysis is a test of
(A) Weak form of market efficiency
(B) Semi-strong form of market efficiency [Ans]
(C) Strong form of market efficiency
(D) Super-strong form of market efficiency
 
Q2: Arbitrage pricing theory model helps to
(A) Reduce risk
(B) Eliminate arbitrage
(C) Identify the equilibrium asset price [Ans]
(D) None of the above
 
 
Q3: Which of the following is/are assumption(s) common to both Markowitz model and CAPM?
(A) Investors can borrow and lend at risk free rate
(B) There are no market imperfection
(C) Investors choose portfolios on the basis of their expected mean and variance of returns [Ans]
(D) None of the above
 
Q4: Non-systematic (Non-Market) Risk is attributable to factors unique to
(A) Then Industry
(B) A Security [Ans]
(C) A Company
(D) Concerned stock exchange
 
Q5: An investor has received bonus shares from ALBUNO LTD., a listed company, in the ratio of 1 : 2. Afet the receipt of bonus shares :
(A) There is no change in stockholding and it remains the same
(B) There is no change in stockholding, but more shares available for trading [Ans]
(C) Stockholding has gone up with more shares available for trading
(D) Stockholding has gone up.
 
Fill in the blanks in the following sentences by using appropriate word(s)/phrase(s)/number(s).
Q1: “Term money” is a form of ___________ market instrument.
Ans: Money
Q2: Insurance Regulatory and Development Authority (IRDA) Act was passed in the year __________.
Ans: 1999
Q3: In an arbitrage portfolio, the change in the proportions of different securities will add upto__________.
Ans: ZERO
Q4: Chart reading as a comprehensive technique, was developed by ___________ .
Ans: Rosenberg
Q5: As per existing SEBI Regulations, the allocation of shares under IPO to QIBs, NIIs and retail investors has to be in the ratio of ___________ .
Ans: 50 : 15 : 35
 
SECTION – II
(Corporate Laws)
 
Choose the most appropriate one from the stated options and write it down (only indicate A or B or C or D as you think correct)
Q1: Which of the following statements is true, in respect of constitute an ‘Audit Committee’ under section 292A of the Companies Act, 1956?’
(A) The Audit Committee shall have a minimum of three members. [Ans]
(B) The members of an Audit Committee are elected by the members of a Company in general
meeting.

(C) All Companies whether private or public have to constitute an Audit Committee.
(D) None of the above.
 
Q2: If in a general meeting of a Company, a matter could not be resolved because of tie, then
(A) Meeting will be adjourned
(B) Meeting will be postponed
(C) Chairman of the meeting can give his second/casting vote [Ans]
(D) Managing Director can give his casting/second vote
 
Q3: The Competition Commission shall consist of a chairperson and not less than two but not more than ___________ other members to be appointed by the Central Government. (Fill in the gap from the below.)
(A) 7
(B) 10 [Ans]
(C) 5
(D) None of the above
 
Q4: Which of the following committee set up by SEBI had submitted its report in February, 2003 on Corporate Governance?
(A) Narasimham Committee
(B) Kumar Mangalam Birla Committee
(C) Narayana Murthy Committee [Ans]
(D) Naresh Chandra Committee
 
Q5: In the context of classification of Risks, System Risks fall under :
(A) Obsolescence risks [Ans]
(B) War Risks
(C) Tax Risks
(D) Contract Risks
 
Fill in the blanks in the following sentences by using appropriate word(s)/phrase(s)/number(s) :
Q1: The prospectus issued by a financial institution for one or more issues of securities specified therein, is called ___________ prospectus.
Ans: Shelf
Q2: When two firms working in different stages of production of the same product combine, merger ___________ takes place.
Ans: Vertical
Q3: The requirement of minimum 50 percent of the total number of directors to be independent directors in the case of listed companies, is mandated by Clause ___________ of the Listing Agreement.
Ans: 49
Q4: As regards corporate governance, apart from those mandated by the Listing Agreement, section ___________ of the Companies Act, 1956 contains additional requirements.
Ans: 292A
Q5:___________ is not a linear process; it is the balancing of a number of interwoven elements.
Ans:  Risk Management