41. Liquidity risk is:
A. is risk investment bankers face.
B. is lower for small OTC
C. increases whenever interest rates increases
D. is risk associated with secondary market transactions
Answer
C. increases whenever interest rates increases
42. Bond holders usually accept interest payment each.
A. 1 year
B. six months
C. 2 months
D. 2 years
Answer
B. six months
43. Passive management is also referred to as ___. ?
A. index fund management
B. index folio management
C. interest free management
D. none of these
Answer
A. index fund management
44. Multifactor asset pricing model that can be used to estimate the ___ ratefor the valuation of financial asset.
A. discount
B. interest
C. expense
D. risk
Answer
A. discount
45. Arbitrate pricing theory is an ___ model.
A. asset pricing
B. risk evaluation
C. bond pricing
D. none of these
Answer
A. asset pricing
46. CAMP stands for.
A. capital asset pricing model
B. capital assessment pricing model
C. capital asset placement model
D. none of these
Answer
A. capital asset pricing model
47. An asset risk premium is given by :
A. the asset standard deviation
B. the assets expected returns
C. expected return per unit of standard deviation
D. the excess of the assets expected return over the riskless rates
Answer
A. the asset standard deviation
48. Which of the following is an example of a depreciable asset?
A. land
B. cash
C. account receivable
D. equipment
Answer
D. equipment
49. While bond prices fluctuate ,
A. yeilds are constant
B. coupon are constant
C. the spread between yeilds is constant
D. short term bond prices fluctuate even more
Answer
A. yeilds are constant
50. To calculate historical (realised) risk and return, use;
A. ex-post data
B. mean and variance of expected return
C. probability distribution of possible states
D. ex- ante data
Answer
A. ex-post data
51. A price weighted index is an arithmetic mean of
A. future prices
B. current prices
C. quarter prices
D. none of these
Answer
B. current prices
52. A firm that fails to pay dividends on its preferred stock is said to be ___
A. insolvent
B. in arrears
C. in sufferable
D. delinquent
Answer
B. in arrears
53. ___. is not a money market instrument.
A. cerftificates of deposit
B. a treasury bill
C. a treasury bond
D. commercial paper
Answer
B. a treasury bill
54. A bond that has no collateral is called ___. ?
A. collable bond
B. a debenture
C. a junk bond
D. a mortgage
Answer
B. a debenture
55. The process of addition of more assets in an existing portfolio is called ___ ?
A. portfolio revision
B. portfolio addition
C. portfolio exchanging
D. none of these
Answer
A. portfolio revision
56. ___ is the amount left over after individual consumption.
A. Investment
B. Savings
C. Surplus
D. Money.
Answer
B. Savings
57. ___ include “expensive stocks” that offer big rewards but have big risk.
A. The patient portfolio
B. Conservative portfolio
C. Aggressive portfolio
D. Efficient portfolio
Answer
B. Conservative portfolio
58. Find the odd one.
A. Risk
B. Return
C. Safety
D. Tax evasion
Answer
D. Tax evasion
59. An investor committed money for very short period expect ___
A. Return from price fluctuation
B. Dividend
C. Benefit from both price variation and dividend
D. None of these
Answer
A. Return from price fluctuation
60. Investment in precious metals are included in ___ asset class.
A. Liquid assets
B. Financial assets
C. Real assets
D. Monetary assets
Answer
C. Real assets
61. The investment process begins with ___
A. Investment policy
B. Security analysis
C. Portfolio construction
D. Fundamental analysis
Answer
A. Investment policy
62. Total risk includes ___
A. Systematic risk only
B. Unsystematic risk only
C. Both a and b above
D. Only diversifiable risks
Answer
C. Both a and b above
63. Systematic risk includes ___
A. Market risk
B. Interest rate risk
C. Purchasing power risk
D. All the above
Answer
D. All the above
64. Which among the following statements are true about unsystematic risk?
A. It is diversifiable
B. It is company specific
C. Both a and b
D. a only
Answer
C. Both a and b
65. Which among the following is true about systematic risk?
A. It is not diversifiable
B. a only
C. Its measure is Beta
D. Both a and c
Answer
D. Both a and c
66. According to Graham, a stock should have a current ratio of at least ___
A. One
B. Two
C. Three
D. Four
Answer
B. Two
67. ___ is the process of combining together various investment assets to obtain optimumreturns with minimum risk.
A. Portfolio construction
B. Portfolio analysis
C. Portfolio evaluation
D. Portfolio revision
Answer
A. Portfolio construction
68. Modern portfolio theory is a contribution by ___
A. William sharp
B. Benchamin Graham
C. Stephen Rose
D. Harry Markowitz
Answer
D. Harry Markowitz
69. MACD stands for ___
A. Managing asset classes for dividend
B. Multiple asset class deposit
C. Moving average convergence divergence
D. Main asset class deposit
Answer
C. Moving average convergence divergence
70. The concept ‘never putting all your eggs in one basket’ is explained in ___
A. Markowitz Model
B. Sharp single index Model
C. Multi Index Model
D. APT
Answer
A. Markowitz Model
71. Who introduced mean variance analysis in portfolio theory?
A. William Sharp
B. Harry Markowitz
C. F.Amling
D. Kritzman
Answer
B. Harry Markowitz
72. Unsystematic risk may arise due to the following reason.
A. Change in interest rate
B. Increase in population
C. Employee strike in the company
D. Exchange rate fluctuations
Answer
C. Employee strike in the company
73. A higher standard deviation is an indicator of ___
A. Greater risk and higher potential returns
B. Moderate risk and higher potential returns
C. Lower risk and higher potential returns
D. Greater risk and lower potential returns
Answer
A. Greater risk and higher potential returns
74. If the returns of two securities are unrelated, the covariance will be ___
A. Positive
B. Negative
C. Zero
D. One
Answer
C. Zero
75. Portfolios included in the risk return space is called ___
A. Feasible set
B. Efficient portfolio
C. High return portfolio
D. Risky portfolio
Answer
A. Feasible set
76. The concept efficient frontier is a contribution by ___
A. Robert Rhea
B. E.GeorgeSchaefer
C. Charles H.Dow
D. Harry Markowitz
Answer
D. Harry Markowitz
77. A fully diversified portfoliocontains securities which have ___
A. Only unsystematic risk
B. Both systematic and unsystematic risk
C. Only systematic risk
D. No risk
Answer
C. Only systematic risk
78. ___ is the measure of risk in the case portfolio with two securities.
A. Correlation
B. Covariance
C. Standard deviation
D. Beta
Answer
C. Standard deviation
79. Value of Beta above 1 implies ___
A. Higher risk than the market average
B. Less risk than market average
C. Less risk than risk free investment
D. None of the above
Answer
A. Higher risk than the market average
80. CML stands for.
A. Convergence Market Line
B. Critical Market Line
C. Critical Maturity Line
D. Capital Market Line
Answer
D. Capital Market Line
