The rolling return gives a better picture as it provides the average return for a particular

holding period and does away with the limitations of a point-to-point return estimation. 
Basics of Investing
80%
 
An investment plan needs to consider …. all of these

 The important thing to remember about stocks, though, is that an investor doesn`t lose
anything until he _____________.
-------Calculates the value of investment(wrong),sells
As per John Bogle, investing is an act of _____, a willingness to postpone present
consumption and save for the future. 
..faith 
If beta  1.0, the security is less risky than average 
..true 
_______Both Capital Appreciation and Dividend Yield___   _ is the component of total
returns 
..both 
Risk Tolerance is the measurement of an investor`s willingness to suffer a decline in the
value of investments, while waiting and hoping for them to increase in value 
..true 
How active an investor wants to be in management of his money is dependent on the time
that the investor wants to spend on investing. True
Lack of investment planning can lead to 
..Investing erratically 
A highly variable return could lead to investment losses if the investment needs to True
Which of the following statements are false about asset allocation? 
..wrong answer..It strives to obtain the desired portfolio characteristics to suit distinct
investor profiles (wrong) ,    Asset allocation varies with investor profiles 
..asset allocation varies..(wrong) ,  it is a group of assets held together.(wrong),  None of
these. 
 

As per Burton G. Malkiel, investing is a method of purchasing assets to gain profit in the
form of reasonably ______________ over the long term 
..Predictable income and / or appreciation 
Volatility (s) is normally in the range of _________ to _________ for government
securities 
..wrong answer..0.5 to 2.5% (wrong),  15% to 20%
..2.5 to 3% (wrong),    5 to 7 %
 
During the US Great Depression, equity iVolatility (s) is normally in the range of 5% to
___ for government securitiesnvestments could have lost _____ % of their value if one
would have bought stocks at the high in 1929. 
..0.8 
Will the investor need to live off the investment in later years? - is a statement associated
with Retirement Planning. 
..true 
Commiting money to something one does not understand is called investment 
..false (wrong),

Which of the following statements are true? 

..The return correlations among stocks and bonds bills are low hence holding these
investments in a portfolio is effective
 
 
The return correlations among stocks and bonds bills are low hence holding these
investments in a portfolio is effective====true
 
 
Volatility (s) is normally in the range of _________ to _________ for an \ 
..wrong answer..15 to 20% 
..10 to 1vestment risk is related to the probability of earning a ___________ actual return 
..Low or Negative ` 
Investing involves long term planning wherein you need to know the following 
..All of these 
Volatility (s) is normally in the range of 5% to ___ for government securities 
..wrong answer..0.09 (wrong),    0.08 (wrong),
Every rupee that is used for speculation and lost is not working for the investor over the
long-term to create __________. 
..Wealth 
Ms. R has Rs. 10,000/-, which he invests in a bank that offers him a rate of 20%. What
would be his expected return after 3 years? 
..17820(wrong), 17280

How active an investor wants to be in management of his money is dependent on 

..1636000 
How active an investor wants to be in management of his money is dependent on
------The time that the investor wants to spend on investing
During the US Great Depression, equity investments could have lost _____ % of their
value if one would have bought stocks at the high in 1929. 
..wrong answer..0.8 
..0.4 w
If we adjust returns obtained for inflation we arrive at _________ 
..real return 
If you invest Rs.10,00,000 in a equity mutual fund for a period of 40 years which earns
you a return of 12%. At the end of this period, through the power of compounding, what
will be your earning? 
..93.05l 
When you invest your savings in a stock, bond, or mutual fund, you do so because you
think its value will appreciate over time
---------True
As per the `Rule of 72` the principal will double at compounded at the rate of 7% in 7
years 
..false 
Which from the following are measures of risk-reward ratio 
..Both Sharpe and Treynor Ratio 
Diversification is achieved because asset returns are strongly correlated 
..true 
Which of the following statements are false about risk premium 
..wrong answer..It is the basis for any asset allocation decision ....................2F
If you invest Rs.1,00,000 in a equity mutual fund for a period of 40 years which earns
you a return of 12%. At the end of this period, through the power of compounding, your
earning will be 4.01L 
..false 
A retired person in his late 60s, with little experience in financial matters will ideally
have 
..Low appetite for risk 
Calculate the mean for the following data points  14, 15, 15, 15, 16,16,16,17 
..15.5 (wrong), 17.5(wrong),
Investors __________ every time they commit money to something they don`t
understand. 
..Speculate 
Consciously paying more in the hope that it can soon be sold for a still higher price
should be labeled as ________________. 
..Speculation 
Market risk premium is the additional return over the risk-free rate needed to compensate
investors for assuming an average amount of risk. 
..true 
When you invest your savings in a stock, bon
d, or mutual fund, you do so because you think ________________. 
..wrong answer..It is in line with your investment objective 
Investments with wider variation in returns 
..wrong answer..are less risky(wrong),  Are more risky(w),carry no risk (w)
The amount of money that an investor will need to reach his investment goal 
..Depends on current and the future investment scenarios with the chosen investment
duration 
Beta indicates a stocks _____________ relative to the market 
..Sensitivity 
Calculate the standard deviation for the following series 14, 15, 15, 15, 16,16,16,17 
..0.9258
 Every rupee that is used for speculation and lost is not working for the investor over the
long-term to create Wealth.
------true

As per Benjamin Graham an investment operation is one which, upon thorough analysis
promises ____________________. 
..adequate return and safety of principal 
When  its value will appreciate over time 
..True 
 ___________ is the component of total returns
------Both Capital Appreciation and Dividend Yield
When you invest your savings in a stock, bond, or mutual fund, you do so because you
think ________________.====Its value will appreciate over time
Mr. Sharma, a retired person, aged 62 years should ideally investment in 
..Balanced Fund 
The statement Will the investor need to live off the investment in later years? is
associated with 
..Retirement Planning 
Rs.150 invested in an equity share falls to Rs. 125 after one year, what is the return on the
investment 
..-0.1667 
As per Burton G. Malkiel, inves
 
ting is a method of purchasing assets to gain profit in the form of reasonably
______________ over the long term 
..Predictable income and / or appreciation 
As per Warren Buffet investing is the act of seeking price at least sufficient to justify the
amount paid 
..false... 4
Sources of risk in investments include the following 
..inflation+business cycle+interest rate 
Sharpe ratio is determined by using the following expression 
..(Return on the portfolio-Risk Free Return)/(Standard Deviation) 
treynors ratio 
..(Return of the fund-Risk Free Return)/(portfolio beta) 
Which of the following statements are true about market risk premium? 
.. ..all of these(wrong)      Its size depends on the current level of the stock market and the
investors expectations on return. (W) 3F
.. 
? 
..Diversification is achieved because asset returns are strongly correlated 
Before investing in any companies equity, one must look at the following, except 
..wrong answer..Quality of management 
Which of the following statements are true? 
...all the three(risk in terms of sd..sd measures variation,variation around mean) 

As per John Bogle, investing is an act of Planning, a willingness to postpone present

consumption and save for the future. 
..false wrong true crct
Stocks, bonds, mutual funds, certificate of deposits, etc., are commonly termed as Gilt 
..false 
An amount of Rs. 100,000 which compounds at 15% after 20 years is worth Rs.
____________ approx. 
..1636000 
As per the `Rule of 72`, at 8% per annum an investment would take 10 years to double 
..false (wrong), 
An investors comfort to see his investment decrease in the near term while waiting for it
to increase over the long term is termed as Speculation. 
..false 
An investors comfort to see his investment decrease in the near term while waiting for it
to increase over the long term is termed as====Risk tolerance

Compounding is 
..Generation of returns on reinvested earnings 
An investor needs to understand his __________ in order to match it with the various
available investment choices. 
..(wrong)Risk Profiles \ indicates a stocks Sensitivity relative to the market 
..true (wrong)

An investment plan needs to consider If you invest Rs.1,00,000 in a equity mutual fund
for a period of 40 years which earns you a return of 12%. At the end of this period,
through the power of compounding, your earning will be 4.01L
..The investment amount required to reach the goal...+The investment time horizon and
the short term financial needs of the investor   +  he type of investments the investor will
make 

In October of 1987 the US Dow Jones Index declined _______ in just one day 
..0.25 
Market risk is that portion of a securitys risk that __________ be eliminated through
diversification 
..wrong..can ,   Cannot(wrong), must(wrong)

Once the investor has a rough idea of how much money he will need and how much time
he has to get there. He can start to think about what ________________ might be right
for him and what kind of ___________he can reasonably expect. 
..wrong..Investment plan Returns    Returns Investment vehicles (wrong), Returns
Investment plan(wrong),
 Risk adjusted performance brings out the performance ordering (assuming positive
average returns).
----------true crct

Volatility (s) is normally in the range of 15% to ______ for an equity mutual fund
portfolio 
..wrong ans..0.25 (wrong), 0.2
An Investor invests in an instrument which compounds at 12%. If the investor holds the
investment for a period of 25 years the terminal value of the investment would be 
..Cannot be ascertained 
When one is investing in the stock market, one needs to think 
..long term 
When one is investing in the stock market, one needs to think Long-term.====true
Beta indicates a stocks Sensitivity relative to the market
--------true
If we adjust returns obtained for inflation we arrive at Risk adjusted Returns 
..false 
In investments the safest road ______________________ 
..wrong ans..long term strategy     is always the best 
Which of the following statements are false 
..wrong ans..A highly variable return could lead to investment losses if the investment
needs to be sold 
..The more variable an investments return, the greater its risk 
Sources of risk in investments include the following, except 
..Tax Rates 
The benefit of diversification through addition of more securities dissipates after about
___________ securities 
..25 (wrong),  .............10
Which of the following statements are false? 
 
.If beta  1.0, the security is more risky than market index.+If beta = 1.0, the security is
more risky than market index. 
Real wealth is created almost magically through the most mundane and commonplace
principles of 
..power of compounding (wrong),  all of these 
Investors should not invest any money in stocks that they will need in less than _____
months. 
..6 
Which of the following is the most high risk and high return investment?
----equity
The return correlations among stocks and bonds bills are high hence holding these
investments in a portfolio is ineffective 
..false 
Commiting money to something one does not understand is called speculation
-------true
The important thing to remember about stocks, though, is that an investor doesn`t lose
anything until he 
..sells 
Investment risk is related to the probability of earning a highly negative actual return 
..true (wrong),
Investment risk is related to the probability of earning a ___________ actual return
2
A highly variable return could lead to investment losses if the investment needs to be
Retirement 
..true 
Investors normally lose money in speculative investments because 
..The investor didn`t take the time to understand what he was investing in.
Volatility (s) is normally in the range of _________ to _________ for an equity mutual
fund portf
olio
Volatility (s) is normally in the range of _________ to 30% for an average equity stock 
..0.2 (wrong), 0.15 (Wrong) 
\ depends on
Investors expectation of returns(wrong),  Perceived risk of the stock market  
 
Speculative investments are short term in nature and markets are unpredictable in the
short term
The rolling return gives a better picture as it provides the average return for a particular
holding period and does away with the limitations of a point-to-point return estimation.
True 

Ms. R has Rs. 10,000/-, which he invests in a bank that offers him a rate of 20%. What
would be his expected return after 3 years? 
17820 (wrong), 17720
Risk adjusted performance brings out the absolute post tax profit ordering ====false
 
 
Calculate the mean for the following data points  23,23,23,24,24,24,25,25,25===25
 
Which of the following statements are false=====In investments risk is measured in
terms of standard deviation
 
Most stocks have beta values in the range of =======0.5 to 1.5
 
The benefit of diversification can be achieved by diversification in upto ____
securities===10
 
Portfolio diversification generally aims at ______________===lowering risk 
Which of the following statements are false?===Diversification is not effective if asset
returns are strongly, positively correlated
 
Which of the following statements are false====The longer the investment is held, the
greater the chances of earning the long-run rate of return
 
 Which of the following statements are true about asset allocation?===1,2,3
 When one is investing in the stock market, one needs to think __________.
--------None of these F
 Ravi is 26 years old bachelor, working in a well paying job. The ideal invsetment option
for him would be
======Bank Fixed Deposit(wrong),  GOI Bonds(wrong),Direct Equity / Equity Mutual
Fund 2
Which of the following statements are true about risk premium 123
 
Which of the following is the least risk investment?====Government Bonds
 
Investing money is putting that money into some form of `___________` - a fancy word
for anything that is secured by some assets.============================Asset
Allocation Program(wrong), security
 
Investing money is putting that money into some form of `Security` - a fancy word for
anything that is secured by some assets.====true
 
Following are the sources of risks which are Firm specific===Management, business,
Financial
 
Following are the sources of risks which are Firm specific, except====Tax Rates
 
______________ is the measurement of an investor`s willingness to suffer a decline in
the value of investments, while waiting and hoping for them to increase in
value====Risk Tolerance
 Stocks, bonds, mutual funds, certificate of deposits, etc., are commonly termed as
______________
-----instruments(false)
Market risk premium varies from year to year and most estimates suggest for US that it
ranges between ____________ per year====4 to 8%
 
In the compounding formula, V = (P)*(1+k)^n, P stands for=====principal 
An investor needs to understand his investment style in order to match it with the various
available _____________.=====Investment choices
 
 
 
 -An amount of Rs. 100,000 which compounds at 15% after 20 years is worth Rs.
4,05,000 approx.(right ans-false) 
 
 A widow with little experience in financial matters will ideally have(wrong ans-
speculation) lower risk 
 
As per Benjamin Graham an investment operation is one which, upon thorough analysis
promises reasonable safety of principal but very high return.=====true(w),false
 
As per Benjamin Graham an investment operation is one which, upon thorough analysis
promises ____________________.===High return at high risk===Safety of
principal(wrong)
 
 
 
Market risk is that portion of a securitys risk that cannot be eliminated through
diversification===false(wrong),
 
Market risk is that portion of a securitys risk that __________ be eliminated through
diversification===can(wrong), must
 If we adjust returns obtained for inflation we arrive at Risk adjusted Returns.
=====True(wrong)
Which of the following statements are false======A highly variable return could lead to
investment losses if the investment needs to be sold
 
Portfolio diversification generally aims at enhancing return====true(wrong),
 
Which of the following statements are false=====In investments risk is measured in
terms of standard deviation
 
Volatility (s) is normally in the range of _________ to _________ for an equity mutual
fund portfolio=====15 to 20%w,25to 30w 2f
-In investments the safest road _______________________.)
 
A widow with little exper
ience in financial matters will ideally have=====Low appetite for risk
 
Before investing in any companies equity, one must look at===1,3,4
 
Compounding is generation of returns on reinvested earnings===true
 
Which of the following statements are true?===If beta = 1.0, the security is just as risky
as the market index.
===1,3
 
+===Non-diversifiable part of Market risk
 
Beta DOES NOT measures a stocks=====Business cycle risk====Financial
risk====Inflation risk
 
An investment operation as one which, upon thorough analysis promises safety of
principal and an adequate return.====true
 
As per the `Rule of 72` the principal will double at compounded at the rate of 9% in 8
years====true
As per the `Rule of 72` the principal will double at compounded at the rate of 7% in 7
years====false 
 
 The __________ gives a better picture as it provides the average return for a particular
holding period and does away with the limitations of a point-to-point return
estimation.----Absolute return..
 
 
  
 
 
 
 
 
 
 
 
wrong
======
 
 
  Sharpe ratio is determined by using the following expression
-Volatility (s) is normally in the range of _________ to _________ for an average equity
stock 3
-Which of the following statements are true?
-The benefit of diversification can be achieved by diversification in upto ____ securities.
-Market risk is that portion of a securitys risk that __________ be eliminated through
diversification
-Stocks, bonds, mutual funds, certificate of deposits, etc., are commonly termed as
______________
-Which of the following statements are false
-Beta measures a stocks
-Most stocks have beta values in the range of
-Risk adjusted performance brings out the performance ordering (assuming positive
average returns).
-Volatility (s) is normally in the range of 5% to ___ for government securities
-Investments with wider variation in returns
-Volatility (s) is normally in the range of _________ to _________ for an equity mutual
fund portfolio
-Consciously paying more in the hope that it can soon be sold for a still higher price
should be labeled as Investment.
 
 
 
 
 
Section: 1.  Basic of Investing
------------------------------------------------------------------------------------------------------------
----------------
-Beta measures a stocks
-If beta  1.0, the security is less risky than average
-Which of the following statements are false
-Calculate the mean for the following data points  23,23,23,24,24,24,25,25,25
-If we adjust returns obtained for inflation we arrive at _________
-Investors normally lose money in speculative investments because
-Which of the following statements are false
-Which of the following statements are false?
 
ection: 1.  Basic of Investing
------------------------------------------------------------------------------------------------------------
----------------
-Volatility (s) is normally in the range of _________ to _________ for an average equity
stock
-Investors normally lose money in speculative investments because
-A highly variable return could lead to investment losses if the investment needs to be
sold
-The return correlations among stocks and bonds bills are high hence holding these
investments in a portfolio is ineffective
-Which of the following statements are false about asset allocation?
-Before investing in any companies equity, one must look at the following, except
-Market risk premium is the additional return over the risk-free rate needed to
compensate investors for assuming an average amount of risk. 1
-If we adjust returns obtained for inflation we arrive at _________
-The important thing to remember about stocks, though, is that an investor doesn`t lose
anything until he _____________.
-As per John Bogle, investing is an act of Planning, a willingness to postpone present
consumption and save for the future.
-Which of the following statements are true about market risk premium?
-Market risk premium varies from year to year and most estimates suggest for US that it
ranges between ____________ per year
-The important thing to remember about stocks, though, is that an investor doesn`t lose
anything until he _____________.
-Which of the following statements are true?
-
 
 
 
-Which of the following statements are true?
-Calculate the mean for the following data points  14, 15, 15, 15, 16,16,16,17
-Once the investor has a rough idea of how much money he will need and how much time
he has to get there. He can start to think about what ________________ might be right
for him and what kind of ___________he can reasonably expect.
-Beta measures a stocks
-If beta = 1.0, the security involves no risk
-Market risk is that portion of a securitys risk that cannot be eliminated through
diversification
-Ms. R has Rs. 10,000/-, which he invests in a bank that offers him a rate of 20%. What
would be his expected return after 3 years?
-Risk adjusted performance brings out the absolute post tax profit ordering
-Market risk is that portion of a securitys risk that __________ be eliminated through
diversification
-Volatility (s) is normally in the range of _________ to _________ for an average equity
stock
-Which of the following statements are true about market risk premium?
-How active an investor wants to be in management of his money is dependent o
 
 
 
-In October of 1987 the US Dow Jones Index declined _______ in just one day
-An investment operation as one which, upon thorough analysis promises safety of
principal and an adequate return.
-Which of the following statements are false
-The important thing to remember about stocks, though, is that an investor doesn`t lose
anything until he _____________.
-The important thing to remember about stocks, though, is that an investor doesn`t lose
anything until he _____________.
-As per John Bogle, investing is an act of Planning, a willingness to postpone present
consumption and save for the future.
-The return correlations among stocks and bonds bills are high hence holding these
investments in a portfolio is ineffective
-During the US Great Depression, equity investments could have lost _____ % of their
value if one would have bought stocks at the high in 1929.
-Which of the following statements are false about risk

 
 
 
 

Section: 1.  Basic of Investing

------------------------------------------------------------------------------------------------------------
----------------
-Volatility (s) is normally in the range of _________ to _________ for an equity mutual
fund portfolio
-During the US Great Depression, equity investments could have lost _____ % of their
value if one would have bought stocks at the high in 1929.
-Which of the following statements are false about asset allocation?
-Which of the following statements are true about market risk premium?
-Once the investor has a rough idea of how much money he will need and how much time
he has to get there. He can start to think about what ________________ might be right
for him and what kind of ___________he can reasonably expect.
-Which of the following statements are false
-If beta  1.0, the security is less risky than average
 
ection: 1.  Basic of Investing
------------------------------------------------------------------------------------------------------------
----------------
-Volatility (s) is normally in the range of _________ to _________ for an average equity
stock
-If beta  1.0, the security is less risky than average
-Which of the following statements are false
-Volatility (s) is normally in the range of _________ to _________ for an equity mutual
fund portfolio
-Which of the following statements are true?
-Which of the following statements are false?
-Which of the following statements are true about market risk premium?
-Which of the following statements are false
-Investors __________ every time they commit money to something they don`t
understand.
-During the US Great Depression, equity investments could have lost _____ % of their
value if one would have bought stocks at the high in 1929.