Investment Analysis & Portfolio Management Notes MCQs

 Investment Analysis & Portfolio Management Notes  

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Investment Analysis And Portfolio Management

 

UNIT – I
1.	1)      Investment is the
	a)	Net addition made to the nation capital stocks		b)	Person’s commitment to buy a flat or  a house
	c)	Employment of funds on assets to earn returns		d)	Employment of funds on goods and services that are used in production process
	Answer:  C
2.	Speculator is a person
	a)		Who evaluates the performance of the company	b)	Who uses his own funds only
	c)		Who is willing to take high risk for high return	d)	Who considers heresays and market behaviours
	Answer: D
3.	The stock is
	a)		Small units of equal value called shares	b)	Expressed in terms of money
	c)		Expressed in terms of numbers of shares	d)	Fully paid up and partly paid up shares
	Answer: B
4.	The negotiable financial investment is different from the non- negotiable financial investment in terms of
	a)		Maturity period	b)	Interest rate
	c)		Transferability	d)	Face value
	Answer: C
5.	Investment made on a house property is a
	a)		Financial investment	b)	Economic investment
	c)		Non-negotiable financial investment	d)	Non-financial investment
	Answer: D
6.	Which one of the following is not a money market security?
	a)		Treasury bills	b)	National savings certificates
	c)		Certificate of deposit	d)	Commercial paper
	Answer: B
7.	Commercial papers are
	a)		Unsecured promissory notes	b)	Secured promissory notes
	c)		Sold at a premium	d)	Issued for a period of 1 to 2 years
	Answer: A
8.	This particular scheme helps in deferring the tax payment
	a)		Public provident fund	b)	National savings scheme
	c)		National savings certificate	d)	Life insurance scheme
	Answer: B
9.	The open ended schemes are
	a)		Open for a particular period	b)	Have fixed period of maturity
	c)		Listed in the stock exchanges	d)	Open on a continuous basis
	Answer: D
10.	Interval fund is
	a)		Index fund	b)	Open end fund
	c)		A closed end fund	d)	A combination of close and open end fund
	Answer: D
11.	Primary and secondary markets
	a)	Compete with each other		b)	Complement each other
	c)	Function independently		d)	Control each other
	Answer: B
12.	At present , the par value of the share is
	a)		Fixed one	b)	Variable
	c)		Equal to 10	d)	Equal to 5
	Answer: B
13.	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
	Answer: C
14.	Stock exchange
	a)		Helps in the fixation stock prices	b)	Ensures safe and fair dealing
	c)		Includes good performance by the company	d)	All the above
	Answer: D
15.	In BSE share are divided into
	a)		Two categories	b)	Three categories
	c)		Four categories	d)	Five categories
	Answer: B
16.	The settlement cycle in BSE and NSE are
	a)		10 days	b)	8 days
	c)		7 days	d)	15 days
	Answer: C
17.	Carry forward transactions are permitted for a period of
	a)		70 days	b)	75 days
	c)		80 days	d)	90 days
	Answer: D
18.	Allotment of securities should done within
	a)		60 days	b)	30 days
	c)		75 days	d)	90 days
	Answer: B
19.	The market maker has to
	a)		Buy the shares	b)	Sell the shares
	c)		Buy and sell shares	d)	None of the above
	Answer: C
20.	Compulsory delisting is due to
	a)		Violation of listing agreement	b)	Capital size is small
	c)		Merger	d)	Thin trading
	Answer: A
21.	The minimum size of issued capital to be listed on BSE is
	a)	20 cr		b)	5 cr
	c)	10 cr		d)	15 cr
	Answer: C
22.	To frame the investment policy the investor should have
	a)		Knowledge about the company and brokers	b)	Investible funds
	c)		Knowledge about the investment alternatives	d)	Knowledge about the markets with funds
	Answer: D
23.	In a limited company
	a)		The shareholders have to divide the debt of the company and pay	b)	The shareholders are not liable to pay the debt
	c)		The shareholders have to pay the debt to the extent of their shares in the capital	d)	Common stock and preference shareholders have to pay the debt
	Answer: C
24.	In the case of non-voting shares
	a)		The rights of voting stocks and non-voting stocks are similar	b)	The rights and bonus issues for non-voting shares can be issued in the form of voting shares
	c)		The non-voting shares would become voting shares after a particular period of time	d)	Non-voting shares carry higher dividends instead of voting rights
	Answer: D
25.	Zero coupon bonds has its origin in
	a)		U.S. Security market	b)	Wall street
	c)		Japan’s security market	d)	Dalal street
	Answer: A
26.	NBFCs offer higher interest rate because of
	a)		The best management funds	b)	The competition among the NBFCs
	c)		The risk involved	d)	The credit rating
	Answer: C
27.	Index schemes
	a)		Returns equals to index returns	b)	Reflect the market
	c)		Are income schemes	d)	Are tax saving schemes
	Answer: A
28.	The underwriter has to take up
	a)		The fixed portion of the issue capital	b)	The agreed portion of the unsubscribed part
	c)		The agreed portion or can refuse it	d)	None of the above
	Answer: B
29.	Capital index bonds are linked with
	a)		BSE Sensex	b)	NSE Nifty
	c)		Consumer price index	d)	BSE-100
	Answer: C
30.	The minimum numbers of shares to be applied for is
	a)		100	b)	200
	c)		300	d)	500
	Answer: B
UNIT – II
31.	Identify the  uncontrollable risk of a company
	a)	Labour problem		b)	Increase in loan service charges
	c)	Cut in subsidy		d)	Technological obsolescence
	Answer: C
32.	The market psychology is affected by events
	a)		Tangible	b)	Intangible
	c)		Fictitious	d)	Both A & B
	Answer: D
33.	High leverage leads to
	a)		Market risk	b)	Purchasing power risk
	c)		Finance risk	d)	Interest rate risk
	Answer: C
34.	Decline in bank rate leads to
	a)		Market risk	b)	Purchasing power risk
	c)		Finance risk	d)	Interest rate risk
	Answer: D
35.	Inflation leads to
	a)		Market risk	b)	Purchasing power risk
	c)		Finance risk	d)	Interest rate risk
	Answer: B
36.	Kargil war leads to
	a)		Market risk	b)	Purchasing power risk
	c)		Finance risk	d)	Interest rate risk
	Answer: A
37.	Interest rate risk occurs when
	a)		The market price of bond moves inversely to the prevailing market interest rate	b)	The variability in yields is due to the market interest rate fluctuations
	c)		There is variability in the coupon interest rate	d)	All the above
	Answer: D
38.	The financial risk considers the difference between
	a)		EAIT-EAI	b)	EBIT-EBT
	c)		Revenue-EBIT	d)	Revenue-EAI
	Answer: B
39.	The statistical tool used to measure a company’s risk is
	a)		Mean	b)	Mode
	c)		Variance	d)	Co-variance
	Answer: C
40.	Marketability risk of bond is
	a)		The market risk which affects all the bonds	b)	Variation in return caused by difficulty in selling bonds
	c)		The failure to pay the agreed value of the bond by the issuer	d)	Both A and B
	Answer: B
41.	Default risk is lower in
	a)	Treasury bills		b)	Government bonds
	c)	ICICI bonds		d)	IDBI bonds
	Answer: A
42.	The value of the bond depends on
	a)		The coupon rate	b)	Years to maturity
	c)		Expected yield to maturity	d)	All the above
	Answer: D
43.	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 its life gets longer
	c)		At an increasing rate as its life gets shorter	d)	At an increasing rate as its life gets longer
	Answer: C
44.	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 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
	Answer: C
45.	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
	Answer: D
46.	Riding the yield curve means
	a)		Switching over from short term bonds to long term when the latter yields better	b)	Switching from bonds to stocks
	c)		Switching over from long term bonds to short term bonds to get more yield	d)	Switching over to short term bonds from long term bonds when yield curve is downward sloping
	Answer: A
47.	Coupon yield of the bond is
	a)		The discounted value of bond	b)	Coupon payment stated as a percentage of bonds features
	c)		Coupon payment stated as a percentage of bond’s present price	d)	Both A &C
	Answer: C
48.	The bond portfolio manager has to watch carefully
	a)		The shape of the yield curve	b)	The market interest rate
	c)		The shape of the yield curve and shifts that occur in the market interest rate	d)	The repaying capacity of the issuers
	Answer: C
49.	Duration is the measure of
	a)		Time structure of the bond	b)	Interest rate risk
	c)		Time structure and market risk	d)	Time structure and the interest rate risk
	Answer: D
50.	Mr. A purchase a stock in the stock market. His holding period return depends on the
	a)		Purchase price of the stock	b)	Selling price of the stock
	c)		Dividend paid to the stock	d)	All the above
	Answer: D
51.	MR. X purchased a stock for Rs.50 and he disposed it for Rs.48. During the holding period he received Rs.3 as dividend and his holding period return is
	a)	1 per cent		b)	2 per cent
	c)	3 per cent		d)	1.5 per cent
	Answer: B
52.	Mr. Y purchased a stock for Rs.60 which will not pay any dividend during the current year. He anticipates equal likelihood of the following prices to prevail in the market Rs.50, Rs.65, Rs.60 and Rs.70. The expected holding period return is
	a)		Rs.10	b)	Rs.15
	c)		Rs.1.25	d)	Rs.3.75
	Answer: C
53.	Mr. X expects 20 per cent return from his investment. The dividend from the Y stock is Rs.2.0 and the present price is Rs.50. What should be the future price of the stock?
	a)		Rs.58.00	b)	Rs.60.00
	c)		Rs.55.33	d)	Rs.63.33
	Answer: A
54.	A stock of Rs.10 face value has declared 35% dividend for the current year. The stock is currently selling for Rs.40. What s its dividend yield?
	a)		35%	b)	70%
	c)		8.75%	d)	8.5%
	Answer: C
55.	According to constant growth model, the next year’s dividend is 20%, required rate of return is 10% and the growth rate is 15 per cent. The market price would be
	a)		Rs.50	b)	Rs.55
	c)		Rs.45	d)	Rs.40
	Answer: D
56.	If the current price is Rs.100, the required rate of return is 20% and the dividend paid on a share of Rs.10 face value is Rs.3. What is the expected growth rate?
	a)		15%	b)	16%
	c)		17%	d)	18%
	Answer: C
57.	Conceptual frame work of valuation through P/E ratio arises from
	a)		Multiple year holding model	b)	Constant growth model
	c)		Two stage growth model	d)	Three stage growth model
	Answer: B
58.	Suppose a preferred stock’s annual dividend is of Rs.3 and required rate of return is 15per cent, what is its worth today?
	a)		Rs.20	b)	Rs.25
	c)		Rs.30	d)	Rs.15
	Answer: A
59.	When the security index moves upward haltingly for a significant period of time, it is known as
	a)		Bear market	b)	Risk market
	c)		Bull market	d)	Security market
	Answer: C
60.	Systematic risk classified under
	a)		Two categories	b)	Three categories
	c)		Four categories	d)	Five categories
	Answer: B
UNIT – III
61.	Gross domestic product is a logical factor to analyze the economy in picking up a stock because it indicates
	a)	Inflation or deflation		b)	The market value of assets
	c)	The status of the economy		d)	The condition of the stock market
	Answer: C
62.	The fall in the interest rate is conducive to the stock market because
	a)		Money may flow from the bond market to stock market	b)	Corporate can borrow at easy terms
	c)		Brokers can do business at borrowed funds	d)	Both B and C
	Answer: D
63.	One of the following factors leads the activity of stock market
	a)		Money supply	b)	Per capita income
	c)		Unemployment rate	d)	Manufacturing and trade
	Answer: A
64.	The rise of dividend tax from 10%  to 20 % in a broader sense affects
	a)		The investor	b)	The corporate
	c)		The stock market	d)	The financial institutions
	Answer: C
65.	The LIFO inventory valuation technique results in
	a)		Underestimation of the firm’s cost of goods sold during inflationary period	b)	Minimization of firms income taxes during inflation
	c)		Reflection of firm’s true earning during inflation	d)	All the above are true
	Answer: D
66.	The price earnings ratio of a stock reflects
	a)		The growth of the company	b)	The market mood for the company’s stock
	c)		The earnings retained and invested in the company	d)	The dividend paid out of the company’s stock
	Answer: B
67.	Dow theory was developed to explain
	a)		New york stock market movement	b)	The Dow jones industrial averages
	c)		Security market price movement	d)	The buy and sell strategy
	Answer: B
68.	The share prices
	a)		Move either in declining or increasing trend	b)	May remain flat for a period of time
	c)		The movements of the share prices form a straight line	d)	The increasing or decreasing move may be zigzag
	Answer: D
69.	In the stock market psychology
	a)		Investors forge the past	b)	History repeats itself
	c)		More faith in future prediction	d)	Both A and B
	Answer: B
70.	Violation of a trend line means
	a)		Moving away from the trend line	b)	Changing the direction
	c)		Penetration of the trend line	d)	Cutting the rising trend line from above
	Answer: C
71.	In the bull market
	a)	The stock prices are increasing		b)	Each peak is higher than the previous peak
	c)	Each bottom is higher them the previous bottom		d)	Both B and C
	Answer: D
72.	In a bull market, a bearish signal is given when
	a)		Advance decline line slopes down	b)	BSE Sensex is falling
	c)		Fall in the trade volumes	d)	A/D line slopes downward while BSE Sensex is rising
	Answer: D
73.	Mumbai stock exchange ws recognized on a permanent basis in
	a)		1956	b)	1957
	c)		1950	d)	1958
	Answer: B
74.	According to SEBI guidelines, _____ should be traded through NSDL
	a)		All the new issues	b)	All the A group shares
	c)		All the B group shares	d)	All the above are true
	Answer: A
75.	To be listed on the OTCEI, the minimum capital requirement for a company is
	a)		Rs.5 Crores	b)	Rs.3 Crores
	c)		Rs.2 Crores	d)	Rs.1 Crores
	Answer: B
76.	Clearing and settlement operations of the NSE is carried out by
	a)		National security depository Ltd.	b)	National security clearing co-operation
	c)		State bank of india	d)	By the exchange itself
	Answer: B
77.	The accounting period cycle of NSE is
	a)		Wednesday to next Tuesday	b)	Tuesday to next Wednesday
	c)		Monday to next Friday	d)	Wednesday to next Wednesday
	Answer: A
78.	Inter connected stock exchange is to interlink
	a)		The BSE, NSE, OTCEI	b)	All the stock exchanges
	c)		Fifteen regional stock exchanges	d)	Fourteen regional stock exchanges
	Answer: C
79.	In the Indian stock market, one of the following indices is calculated without weights
	a)		Economic times ordinary share index	b)	Financial times ordinary share index
	c)		BSE-100	d)	Business line- 250
	Answer: A
80.	The Sensex has
	a)		25 stocks	b)	30 Stocks
	c)		33 Stocks	d)	35 stocks
	Answer: B
81.	The software stock included in BSE Sensex is
	a)	APTECH		b)	Satyam computers
	c)	Penta softwares		d)	Software Tech
	Answer: D
82.	Dollex is the dollar equivalent of
	a)		Nifty	b)	Sensex
	c)		BSE-200	d)	BSE-100
	Answer: C
83.	The NSE – Nifty’s base period is
	a)		1992	b)	1993
	c)		1994	d)	1995
	Answer: D
84.	The selected companies in S&P CNX500 should have positive network for a period of
	a)		One year	b)	two years
	c)		Three years	d)	Five years
	Answer: C
85.	SEBI would not vet offer documents seeking listing on
	a)		OTCEI	b)	NSE
	c)		BSE	d)	ISE
	Answer: A
86.	At present the merchant bankers
	a)		Are divided into four categories	b)	Are divided into three categories
	c)		Have to segregate fund and fee based activity	d)	Should have net worth of Rs.3 Cr
	Answer: C
87.	Warehousing facility means
	a)		Storing the stocks with the merchant bankers	b)	Storing the stocks with the brokers
	c)		Issuing separate contract notes for different trade	d)	Issuing one contract note for a large quantity traded in parts
	Answer: D
88.	The broker shall have to furnish SEBI a copy of audited balance sheet and profit and loss account within
	a)		One month of each accounting period	b)	Two months of each accounting period
	c)		Three months of each accounting period	d)	Six months of each accounting period
	Answer: D
89.	Mutual fund can make investment
	a)		In any company listed or unlisted	b)	In privately placed securities of associated company
	c)		Up to 40 per cent of the listed or unlisted securities of group companies	d)	Should not exceed 10 per cent of the funds in securities of a single company
	Answer: d
90.	FII’s are permitted to invest
	a)		in the listed companies only	b)	in the listed and unlisted companies
	c)		in the debentures	d)	All the above
	Answer: D
UNIT - IV
91.	Put option gives the owner the right to
	a)	buy an asset or any securities to someone else		b)	sell an asset
	c)	buy but not an obligation		d)	sell but not an obligation
	Answer: D
92.	The call option price is higher when
	a)		The striking price is higher than the stock price	b)	The striking price is lower than the stock price
	c)		The option period is shorter	d)	The option period is longer and the striking price is lower
	Answer: D
93.	The option is at the money when
	a)		Stock price > striking price	b)	Striking price > stock price
	c)		Stock price = Striking price	d)	There is a high premium
	Answer: C
94.	Which one of the following statement is true
	a)		The premium of the call option and the stock price is very inversely related	b)	Option prices are not affected by the dividends
	c)		Stock market volatility does not affect the option price	d)	The premium of the call option is directly related to stock price
	Answer: D
95.	The put option buyer gains
	a)		In the bullish market	b)	In the bearish market
	c)		In the stable market	d)	When the strike price is lower than stock price
	Answer: B
96.	The black scholes option pricing theory is based on the following assumption
	a)		The stock price movement is taken to be random	b)	The stock pays regular dividends
	c)		There is cyclical change in interest rate	d)	The call option can be exercised any time during its life period
	Answer: A
97.	An investor who anticipates fall in price of Telco shares after an year could hedge his risk by
	a)		Buying future contracts now itself	b)	Selling the future contract now itself
	c)		Both of the above	d)	Neither of the above
	Answer: B
98.	Margin money of the future contracts depends on
	a)		The nature of the buyer and seller	b)	The stock market indices movement
	c)		Speculative activity	d)	Both A and B
	Answer: D
99.	Which of the following statement is true
	a)		Arbitrageurs simultaneously buy and sell two different securities	b)	Arbitrageurs force the price of stock index future contract to remain close to the underlying index
	c)		Arbitrageurs make the price stock index futures to derivate from the underlying index value	d)	Arbitrageurs buy two different securities at the same price in different markets
	Answer: B
100.	One of the following market index futures is different from others
	a)		Standard & poor’s 500	b)	CMEs Standard and poor’s Midcap-400
	c)		Nikkel-225	d)	New york stock exchange-composite stock index
	Answer: D
101.	An options is the ____ to buy or sell something on a specified date at a specified price
	a)	Right		b)	Obligation
	c)	Responsibility		d)	Duty
	Answer: A
102.	Call option gives the particular of
	a)		Name of the company	b)	Number of shares
	c)		Purchase price or exercise price	d)	All the above
	Answer: D
103.	Put option is the right to the owner to ____ a security
	a)		Sell	b)	Buy
	c)		Lease	d)	None
	Answer: A
104.	For a given striking price, higher the stock price, the ____ will be the call option price
	a)		Higher	b)	Lower
	c)		Equal	d)	None
	Answer: A
105.	____  the option  period, the higher will be the option price
	a)		Longer	b)	Shorter
	c)		Medium	d)	None
	Answer: A
106.	Put buyer has the right to sell the shares at the _____ price even if the price falls
	a)		Increased	b)	Decreased
	c)		Prefixed	d)	None
	Answer: C
107.	The gains of the put buyer are the ___ of the put writer
	a)		Gains	b)	Losses
	c)		Receipts	d)	None
	Answer: B
108.	Future is a financial ____  which derives  its value  from the underlying assets  on future  dates  at a  stated price  and quantity
	a)		Asset	b)	Liability
	c)		Contract	d)	None
	Answer: C
109.	Market index futures are directly related to with _______
	a)		Stock market	b)	Commodity market
	c)		Forex market	d)	None
	Answer: A
110.	In a forward contract, _____ parties agree to buy and sell some underlying asset on future date
	a)		One	b)	Two
	c)		Three	d)	None
	Answer: B
111.	_____ is the current market price at which an asset is bought or sold for immediate payment and delivery.
	a)	Spot price		b)	Future price
	c)	Market price		d)	Exercise price
	Answer: A
112.	The forward market has the problem of
	a)		Lack of centralization of trading	b)	Liquidity
	c)		Counterparty risk	d)	All the above
	Answer: D
113.	The stock index futures  was introduced in _______
	a)		1982	b)	1983
	c)		1992	d)	1993
	Answer: A
114.	A ______ owns the stock  and his aim is to protect himself against the risk  caused by the price changes
	a)		Hedger	b)	Speculator
	c)		Gambler	d)	None
	Answer: A
115.	______ each trading  session, each customer’s  position is estimated according to the new settlement price of the index
	a)		During	b)	At the beginning of
	c)		At the close of	d)	None
	Answer: C
116.	______ is a person  who simultaneously purchases and sells the same shares in two different markets  for different prices
	a)		Investor	b)	Arbitrageur
	c)		Hedger	d)	None
	Answer: B
117.	At the time of _____, the futures price is higher than the current market
	a)		Optimism	b)	Pessimism
	c)		Problem	d)	None
	Answer: A
118.	____  provides the facility of borrowing and lending of shares and funds
	a)		Badla	b)	Hedging
	c)		Arbitrage	d)	None
	Answer: A
119.	Nifty contains a well-diversified portfolio of_____ stocks and Nifty is selected as the base for stock index futures.
	a)		10	b)	25
	c)		50	d)	100
	Answer: C
120.	The black-Scholes theory says that the option price is determined by ______
	a)		The market price of the stock	b)	The exercise price
	c)		The life of the option	d)	All the above
	Answer:
UNIT - V
121.	The common practice in the traditional approach is
	a)	To evaluate the entire stock market		b)	To maximize the expected return for a given level of risk
	c)	To evaluate the entire financial plan of the individual		d)	To select the portfolios
	Answer: C
122.	The need for constant income depends on the
	a)		Market risk	b)	Inflation risk
	c)		Interest risk	d)	Unique risk
	Answer: B
123.	The highly liquid security is
	a)		Mutual fund units	b)	Treasury bills
	c)		Shares	d)	Commercial papers
	Answer: B
124.	Investors invest more in stock during their
	a)		Early career period	b)	Mid-career level
	c)		Retirement stage with huge money	d)	All the above mentioned period
	Answer: A
125.	An investor is having a portfolio with the combination of stock and bonds in the ratio of 75:25, he is
	a)		Risk averse	b)	Risk neutral
	c)		A risk taker	d)	Active in portfolio management
	Answer: C
126.	In the active approach the investor continuously studies
	a)		Group related risk	b)	Market related risk
	c)		Security specific risk	d)	All the above
	Answer: D
127.	Diversification reduces
	a)		Interest rate risk	b)	Market rate risk
	c)		Unique risk	d)	Inflation risk
	Answer: C
128.	Simple diversification means
	a)		Purchase of more than 15 stocks	b)	Purchase of treasury bills
	c)		Purchase of less than 15 stocks at random	d)	Purchase of large varieties of assets
	Answer: C
129.	Markowitz approach has roots 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 stocks
	Answer: D
130.	The risk involved in the purchase of infotech and satyam computers shares are measured with the help of
	a)		Average return of stocks of companies individually	b)	Co-variance between two companies scrip return
	c)		Variance of each company’s stock	d)	All the above
	Answer: C
131.	Risk lover’s utility curves have
	a)	Positive slope		b)	Negative slope
	c)	Convex to  the origin		d)	Negative slope and convex to the origin
	Answer: C
132.	The risk explained by the index is equal to
	a)		Beta value of the stock	b)	Variances of the security return
	c)		β2 x variance of market index return	d)	β2 x variance of security return
	Answer: C
133.	The unsystematic risk is explained by
	a)		Variance of the index	b)	Unexplained variance of the index
	c)		Explained variance of the index	d)	None of the above
	Answer: B
134.	The relationship between potential unsystematic risk and reward is given by
	a)		Excess return to beta ratio	b)	Excess return to security’s Standard deviation ratio
	c)		Excess return to security’s variance ratio	d)	Excess return to beta square ratio
	Answer: A
135.	Corner portfolio are calculated where a
	a)		Security enters	b)	Security leaves
	c)		Security enters or leaves	d)	Security with high extreme value enters
	Answer: C
136.	The efficient frontier becomes a straight line through out because of the
	a)		Introduction of risk free assets	b)	Introduction of lending
	c)		Introduction of lending and borrowing	d)	Introduction of borrowing
	Answer: C
137.	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
	Answer: C
138.	The stock above the security market line is
	a)		Overpriced	b)	Underpriced
	c)		Appropriately	d)	Of high risk
	Answer: B
139.	Market imperfections may lead to
	a)		Lower SML	b)	Higher SML
	c)		Band of SML	d)	Non-linear SML
	Answer: C
140.	The buying and selling activities of the arbitrageur
	a)		Increased the profit	b)	Brings equilibrium level
	c)		Creates disequilibrium	d)	Reduces the profit margin
	Answer: B
141.	According to APT theory, an investor would try to increase returns from his portfolio
	a)	By increasing the risk		b)	By increasing the portfolio funds
	c)	By reducing the risk		d)	Without increasing the portfolio funds
	Answer: D
142.	In an arbitrage portfolio, the change in the proportions of different securities will add up to
	a)		Zero	b)	Greater than one
	c)		Less than one	d)	Equal to one
	Answer: A
143.	The mutual funds that are listed in the stock exchanges are
	a)		Closed-end funds	b)	Stock indexed funds
	c)		Open-end funds	d)	Growth schemes
	Answer: A
144.	The investors by investing in the mutual funds get
	a)		Professional management	b)	Diversification
	c)		Return potential	d)	All the above
	Answer: D
145.	The Sharpe index assigns the high value to funds that have
	a)		Low standard deviations	b)	Higher returns
	c)		Higher risk adjusted returns	d)	Higher risk premium
	Answer: C
146.	According to Treynor  index, a steep slope would indicate
	a)		The fund is yielding higher returns	b)	The fund’s volatile return
	c)		The fund is sensitive to the market	d)	The fund is not sensitive to the market
	Answer: C
147.	In the Treynor index, the performance of the fund depends on
	a)		The riskless rate of return	b)	The risk premium and standard deviation of funds return
	c)		The risk premium and beta coefficient	d)	The risk premium and the standard deviation
	Answer: C
148.	Jensen’s performance index gives importance
	a)		To the asset combination	b)	Professional management
	c)		The market condition	d)	The predictive ability of the manager
	Answer: D
149.	The NSE Nifty index fund consists of
	a)		The stocks of high market capitalization in NSE	b)	Blue chip companies’ stocks of the index
	c)		All the stocks of the Nifty index	d)	Consists 90% of the stocks of the index leaving stocks of lesser importance
	Answer: C
150.	The market timer is a
	a)		Professional portfolio manager	b)	Active portfolio manager
	c)		Passive portfolio manager	d)	None of the above
	Answer: B

 

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