Investment Analysis & Portfolio Management - FIN630 Quiz 4

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Question # 1 of 15 ( Start time: 02:45:58 AM ) Total Marks: 1
Which of the following type of markets deals the trading between institutions?
Select correct option:
Primary
Secondary
Third
Fourth

Which of the following strategies emphasize on minimizing transaction costs and time
spent in managing the portfolio?
Finance mortgage strategies

Innovative finance strategies
Passive stock strategies
Innovative consolidation strategies

Which of the following is the possibility that the realized return will be different than the
expected return?
Profit
Risk
Loss
Evasion

Current yield is defined as:
Internal rate of return that equates the prevailing market price with future interest and
principal payments
Approximate yield to call for premium bonds
Coupon interest divided by the average of market and call prices
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Coupon rate expressed as a percent of the prevailing market price

All of the following are the broad sectors of stocks, EXCEPT:
Interest-sensitive stocks
Consumer durable stocks
Capital goods stocks
Hostile stocks

On which of the following financial statements would you expect to find revenues and
expenses?
Balance sheet
Income statement
Statement of cash flows
Statement of changes in equity

In order to analyze long term investment, the most suitable analysis will be.
Fundamental analysis
Technical analysis
Vertical analysis
Horizontal analysis

The three broad categories of financial assets are:
Debt, equity and money market securities

Corporate securities, derivatives and equity
Debt, equity and derivatives
long-term debt and equity and money market securities

Which of the following statements holds TRUE for strategic asset allocation?

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It is as a moderately active strategy since managers’ return to the portfolio's original
strategic asset mix when desired short-term profits are achieved
It is a portfolio strategy that involves periodically rebalancing the portfolio in order to
maintain a long-term goal for asset allocation
This strategy allows portfolio managers to create extra value by taking advantage of
certain situations in the marketplace
It is an active management portfolio strategy that rebalances the percentage of assets
held in various categories to take advantage of market pricing anomalies

Which of the following is the point of difference between cash flow statement and
income statement?
Cash items
Non-cash items
Purchases
All of the given options

Which of the following is accounting value of a share in case a company goes bankrupt?
Market value
Book value
Intrinsic value
Present value

Profit from sale of stocks for a manufacturing concern is an example of:
Direct income
Other income
Operating income
None of the given options

Which of the following are the required inputs of the present value approach?
Discount rate and the expected cash flows

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Expenses paid in cash and dividends disbursed
Earnings in valuing stocks and stock-in-trade
Retained earnings and dividends paid out ratio

Of the following which point will NOT be examined by the investor from the balance
sheet before investing in the company?
The firm’s ability to meet its financial obligations

The money already being invested in this company
The company being overly indebted
The money the firm has spent to settle shipment costs

Total sales for company are Rs. 1,000, 000, out of which credit sales are Rs. 200, 000.
Cost of goods sold is Rs. 450, 000. What will be gross profit for the company?
250,000
350,000
450,000
550,000

Which of the following is the right to sell?
System option
Strategic option
Call option
Put option

Which of the following is rated as “‘BB” or lower because of its high default risk?
Convertible bonds
Municipal bonds
Government bonds
Junk bonds

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Which of the following function removes the fear of buying or selling at rip off price?
Fair pricing function

Economic function
Exchange function
Continuous pricing function

If there is increasing volume of trade in the stock market it will show:
High level of investors’ interest

Low level of investors’ interest
Constant level of investors’ interest
No interest of investors

Which of the following bonds do not pay interest during the life of the bonds?
Municipal bonds
Callable bonds
Convertible bonds
Zero coupon bonds

In which of the following cases will the buy decision be taken?
Where the intrinsic value is greater than the current market price as the asset is
undervalued
Where the intrinsic value is lesser than the current market price as the asset is overvalued
Where the intrinsic value is equivalent to the current market price as the asset is acquired
Where the current market price has doubled from the intrinsic value as the asset is
distributed

On which of the following financial statements would you expect to find assets,
liabilities, and stockholders' equity?
Balance sheet

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Income statement

In the point and figure charts all of the following will be NOT be present, EXCEPT:
Data points
Lines
Bars
Zeros

Which of the following estimates are needed while applying fundamental analysis to the
market?
Stream of shareholder benefits

Earnings and dividends
Required return or earnings multiple
All of given options

In which of the following cases will the sell decision be taken?
undervalued
distributed

All of the following are the causes of change in investor’s circumstances, EXCEPT:
Investment horizon changes

Liquidity requirement changes
Authority circumstance changes
Regulatory considerations

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Which of the following can lead to irrational investment decisions?
Behavioral finance
Dividend discount model
Efficient market hypothesis
Dow theory

Which of the following is required of both the buyer and seller to reduce default risk?
A security deposit called retail margin

A good faith deposit called margin
A rent deposit called profit margin
A sure deposit called price margin

Leverage ratios are designed to:
Measure a company's capital structure

Measure the quality of a company's operations
Measure a company's ability to cover its short-term obligations
Measure the percentage of earnings paid to shareholders

Short term investment analysis requires ___________ days moving averages.
200
100
50
10
Question # 1 of 15 ( Start time: 08:26:43 PM ) Total Marks: 1

Total sales of ABC Company are Rs. 15, 00, 000, which includes credit sales of Rs. 200,
000. Net profit of company is Rs. 600, 000. Company will have net profit margin:
56%
50%

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46%
40%

Which of the following is not a type of the multistage dividend discount model?
Two-stage models
Y models
H models
Three-stage models

Diversification is the only way to protect investors from:
Nonsystematic risk
Systematic risk
General risk
Market risk

While investing internationally which of the following risk is of most importance for
investors?
Political
Social
Sovereign
Political and sovereign

Which of the following compares the magnitude of recent gains to recent losses in an
attempt to determine overbought and oversold conditions of an asset?
Moving Average Convergence/Divergence

Relative Strength Index
On Balance Volume
Bollinger Bands

Which of the following is a risk that a company or an individual will be unable to pay the

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contractual interest or principal on its debt obligations?
Default risk
Country risk
Interest rate risk
Market risk

If relative stock index indicates oversold level in the market what will be best for an
investor?
Selling
Holding
Buying
Doing nothing

A stock index ____________ as a bond index
Should be used
Should not be used
Should always be used

Which of the following is the theories searching the patterns in randomness?
Elliott wave theory

Chaos theory
Portfolio theory
Valuation theory

Which of the following is the only way to protect investors from nonsystematic risk?
Sector rotation
Securitization
Diversification

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Risk aversion

All are the bases for identification of bonds EXCEPT:
Maturity date
Coupon rate
Receiver
Issuer

Which of the following equation is FALSE?
Total risk = general risk + specific risk

Total risk = market risk + issuer risk
Total risk = systematic risk + nonsystematic risk
Total risk = un-diversified risk + equity risk

Which of the following stages of the industry life cycle offers the highest potential
returns and greatest risk?
Pioneering stage
Stabilization stage
Declining stage
Expansion stage

What will be earning per share if profit available for the shareholders is $ 650, 000 and
company has 500,000 outstanding shares @ $10 each?
2.0 Per share

2.5 Per share
0.13 Per share
1.3 Per share

Which order will be executed automatically at the current bid or ask price?

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Limit order
Market order
Stop order
Good till cancelled

In estimating the security market line which of the following rate is used to estimate
returns on risk free asset?
Discount rate
Treasury bill rate
Exchange rate
Growth rate

Which of the following must hold TRUE in case of stocks that are completely
uncorrelated?
Correlation must always be positive

Correlation must always be infinite
Correlation must always be negative
Correlation must always be zero

A stock index ____________ as a bond index
Should be used
Should not be used
Should always be used

Which of the following is defined as a point at which revenues equal costs?
Break-even
Margin
Leverage point
Yield to maturity

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Nominal interest rate is the function of real rate of interest and ____.
Expected inflation premium

Risk-free rate of return
Required risk premium
Compensation for the actual rate of inflation

One of the main objectives of the cash flow statement is to determine:
Debt and equity ratio of the company

Profits or losses of company
Management of company’s cash outflow and inflow
Total assets of the company

Which of the following bonds give the issuer the right to repay the debt prior to maturity?
Municipal bonds
Callable bonds
Convertible bonds
Zero coupon bonds

Which of the following is a computer- and telephone-linked network of dealers at
financial institutions, corporations, and fund managers?
Handheld counter
Off-shore counter
Over-the-counter
Spill counter

Elliott believed that the market has a rhythmic regularity that can be used to do which of
the following?

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Predict future prices
Implicate past trends
Associate past with future
Define current shares



The Standard Industrial Classification codes have how many divisions?
9
11
13
15

Which of the following is NOT true about technical analysis?
It requires some subjective decision-making

It requires much accounting information
Its success would mean markets are not efficient
Technical analysis is older than fundamental analysis

Which of the following is an intangible asset with an identifiable useful life?
Patent
Timber
Furniture
Building

Which of the following is an example of a non-marketable security?

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Treasury bill
Negotiated CD
U.S. government savings bond
Banker’s acceptance

Which of the following contracts are traded in over-the-counter market only?
Futures contracts
Opportunity contracts
Precedent contracts
Forward contracts

Which of the following type of fund do not accept additions funds from investors after
the initial offerings?
Close-ended funds
Exchange traded funds
Open-ended mutual funds

Which of the following level of market efficiency provides public information?
Weak form
Subjective form
Semi-strong form
Strong form



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Which of the following is NOT a factor characteristic?
Each risk must have a pervasive influence on stock returns

Risk factors must influence expected return
Risk factors must not have non-zero prices
Risk factors must be unpredictable to the market

Balance sheet shows the:
Financial position of business

Balances of all accounts
Net profit earned during a period
Expense of a business

Which of the following is the right to buy?
Put option
Strategic option
System option
Call option

Which of the following is similar to stock selection?
Associate rotation
Sector rotation
Audit rotation
Corporate rotation

What is the relationship between price sensitivity and bond’s coupon rate?
It has an inverse relationship

It has a direct relationship

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It has no relationship
It has a countless relationship

Which of the following is a pattern that occurs during high volatility, when a security
shows great movement with little direction?
Broadening Formation
On Balance Volume
Bollinger Bands

Which of the following is the objective of formulating an investment policy?
Liquidity horizon
Time horizon
Return requirement
Law and regulation

If a company decides to issue new securities, these should be issued in:
Primary market
Secondary market
Third market
Fourth market

Bond is a type of Direct Claim Security whose value is NOT secured by __________.
Tangible assets
Intangible assets
Fixed assets
Real assets

In which of the following accounts do investors place funds to be borrowed by finances?

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Instant access savings accounts
Continuous funding system account
Personal finance access accounts
International savings accounts

Which of the following bonds are high yield bonds issued by companies that are
considered highly speculative because of risk of default?
Junk bonds
Municipal bonds
Callable bonds
Convertible bonds

In the mutual fund investment if an investor has to pay fee on the purchase of securities,
the fee will be known as:
Front end load

Back end load
No load fund
Redemption load

Which of the following is the ratio of share price to stockholder equity as measured on
the balance sheet?
Price to book value ratio

Price to sales ratio
Leverage ratio
Debt coverage ratio

Which of the following is accounting value of a share in case a company goes bankrupt?
Market value
Book value
Intrinsic value

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Present value

Which of the following must hold TRUE in case of stocks that are inversely correlated?
Correlation must always be positive

Correlation must always be infinite
Correlation must always be negative
Correlation must always be zero

In which of the following risks the factors are specific, unique and related to the
particular industry or company?
Nonsystematic risk
Pressure risk
Odd risk
Even risk

Which of the following is NOT true about expansion stage?
Marketplace is full of competitors

Firm operations more stable, dependable
Financial policies firmly established
Dividends often become payable

In a bar chart what does the blue line represents?
Stock prices are getting low

Stock prices are getting high
Stock prices are closing
Stock prices are opening

All are the bases for identification of bonds EXCEPT:

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Maturity date
Coupon rate
Receiver
Issuer

If a company pays $6 dividend this year on stock A and pays $ 4 on stock B and the
dividend has been growing 4% annually, then what will be the price of the stock A,
assuming a required rate of return of 10%?
$150
$100
$66
$50
9:53 PM
Qazi: 1?

All of the following are examples of financial assets EXCEPT.
Stocks
Transport vehicles
Bonds
Bank deposits

Which of the following trading systems is used by the Lahore Stock Exchange?
ISECTS
LOTS
KATS
PETS

What does EMH stands for?
Eastern Marine Heritage

European Market Healthcare
Effective Market Hypothesis

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European Mayor House

Support level if formed by joining _______________ with a line on the graph.
Low points
High points
Medium points

All of the following are the risk/return positions at various life cycle stages, EXCEPT:
Consolidation phase
Abstracting phase
Spending phase
Gifting phase

Which of the following refers to the act of investments in a number of different assets
needed for portfolio diversification?
Business diversification
Naïve diversification
Portfolio diversification
Concentric diversification

If an investor wants to reduce or eliminate the reinvestment risk from the security, which
of the following will be preferable for the investor?
A 20-year bond with 6% coupon rate

Zero-coupon bond

In a bar chart what does the red line represents?

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Which of the following retunes are more long lasting for the investors?
Quick and low returns

Slow and steady returns
Slow return
Quick returns

All of the following are characteristics of stop orders EXCEPT:
Protecting profits
Minimizing losses
Rapid execution
It is seldom used by investors

In the trend line analysis if the results show a downwards trend investor should go for:
Doing nothing
Holding
Selling
Buying

Which of the following markets is the market for investment in short-term activities?
Android market
Capital market
Money market
Target market

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Which of the following statements hold TRUE for spread?
It is the price asked by a seller of securities from buyers

It is the quoted price in an order to buy shares of a company
It is the rate at which a dealer will buy the base currency
It is the difference between the bid and ask price

Which of the following does not include the interest and other financing costs?
Earnings before interest and tax

Operating income
Earnings after interest and tax
Non-operating income

The practice of spreading money among different investments to reduce risk is known as
_________.
Diversification
Risk aversion
Securitization
Sector rotation

Which of the following are the securities whose value is derived from another security or
derived from underlying assets?
Mutual funds securities

Collateral securities
Borrowing securities
Derivative securities

200
100

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50
10

Which of the following is a positive function of term to maturity & a negative function of
size of the coupon of the bond?
Yield to maturity
Duration
Convexity
Immunization

Which of the following is applied on the shares only?
Brick breaker
Circuit breaker
Bubble breaker
Suburb breaker

Which of the following is the basic exchange rate in the economy?
External rate of return

Real rate of return
Rate of return on assets
Net present value rate of return

Which of the following statements hold TRUE for ask price?
It is the price at which a broker is willing to sell a certain security

It is the price at which a broker is willing to buy a certain security

Which of the following programs propagate the ethics?

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London Instruments Fiscal Attachment
Laurel Immigration Fairness Analysis
Low Income Financial Association
Licensed International Financial Analyst

Which of the following statement is not a characteristic of a line chart?
It is simplest and most familiar chart

It is efficient in showing more details
It is an extension of a scatter graph
It is created by connecting a series of points.

What is the relationship between price sensitivity and bond’s coupon rate?
It has an inverse relationship

It has a direct relationship
It has no relationship
It has a countless relationship

Which of the following prices can be different from the rate at which your shares are to
be sold?
Skimming price
Consumer price
Retail price
Trigger price

With respect to the capital asset pricing model which of the following is NOT the
assumption for all investors?
They use the same information to generate an efficient frontier

They have the same one-period time horizon
They can borrow or lend money at the risk-free rate of return
They have diverse expectations about asset returns

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Which of the following orders is used to secure your profits?
Market order
Stop order
Limit order
Mitigate order

undervalued
distributed

Dow Jones Industrial Average is composed of how many “blue-chip” stocks?
10
30
50
70

Which of the following is also referred to as the diversifiable risk?
Nonsystematic risk
Systematic risk
Financial risk
Production risk

Which of the following is an example of derivative security?

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Options
Bonds
Term finance certificate
Preferred stock

Which of the following assumes returns generated by a factor model?
Quantum game theory

Behavioral finance theory
Keynesian capital theory
Arbitrage pricing theory

In which of the following cases does the higher than average values of one variable tend
to be paired with higher than average values of the other variable?
Where the covariance is positive

Where the covariance is infinite
Where the covariance is negative
Where the covariance is zero

Which of the following returns are appropriate for portfolio owners?
Actual diminishing returns

Dollar-weighted returns
Time-weighted returns
Opportunity cost returns

Which of the following lines in charts are the prices formed from the trend lines?
Support lines
Resistance lines
Tangent lines
Interval lines

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Which of the following is a combination of active and passive management?
Contingent liability
Contingent immunization
Contingent beneficiary
Contingent charges

In which of the following account investor can borrow a portion of the share cost from
the brokerage firm?
CFA account
Cash account
Real account
Margin account

A form of the EMH which states that security prices fully reflect all relevant publicly
available information is known as:
Strong form
Weak form
Semi strong form

An upward trend in share prices in a bar chart is represented by _________ color.
White
Black
Red
Blue

Which of the following bonds have the lowest ratings?
Convertible bonds
Junk bonds

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Municipal bonds
Government bonds

Which of the following is defined a number between -1 and 1 that measures the degree to
which two variables are linearly related?
Correlation coefficient
Covariance
Regression
Standard deviation

The sensitivity of a coupon bond price to a change in its yield:
Is directly related to the bond's yield to maturity

Is inversely related to the bond's yield to maturity
Is greater for increases in yield to maturity than it is for decreases in yield to maturity
Is constant regardless of whether the yield to maturity increases or decreases

Which of the following is the discount rate that equates the present value of the future
cash flows with the current price of the bond?
Emotional maturity
Debt maturity
Yield to maturity
Qualitative maturity

In which of the following risks the factors are specific, unique and related to the
particular industry or company?
Nonsystematic risk
Pressure risk
Odd risk
Even risk

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Which of the following is the practice of using derivatives as building blocks to create
specialized products?
Financial engineering
Risk management
Income generation
Portfolio management

The circuit breaker that is applied where stock prices in the market are dropping is known
as which of the following?
Starter
Floor
Ceiling
Simulator

Which of the following is a computer- and telephone-linked network of dealers at
financial institutions, corporations, and fund managers?
Handheld counter
Off-shore counter
Over-the-counter
Spill counter

Apart from the balance sheet or retained earnings what else must the financial analyst
take into consideration in fundamental analysis?
The assortment track record

The previous track record
The crowbar track record
The advisor track record

Which of the following statements holds TRUE for the conservative investor?

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The more conservative the investor the more is placed in risky lending and the less
borrowing
The more conservative the investor the more is placed in risk-free lending and the less
borrowing
The more conservative the investor the less is placed in risk-free lending and the more
borrowing
The less conservative the investor the less is placed in risk-free lending and the more
borrowing

Which of the following is a model of stock returns that decomposes influences on returns
into a systematic factor, as measured by the return on the broad market index, and firm
specific factors?

Single index model
Capital asset pricing model
Binomial models finance



Which of the following ratios measures a company's capital structure?

Leverage ratio
Debt coverage ratio

Of the following statements identify the advantage of the market measures to the
investor.

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These measures identify the population to be measured and its method
These measures offer equivalents for common sizes and metric units
These measures regulate the access to and cost of imports and exports
These measures quickly judge the overall portfolio performance

Which of the following statements strips away all of the non-cash accounting items and
tells you how much actual money the company has generated?
Income Statement
Cash Flow Statement
Balance Sheet
Statement of Owner’s Equity

All of the following are the most important implication of the capital asset pricing model,
EXCEPT:
All investors hold the same optimal portfolio of risky assets

The optimal portfolio is at the highest point of tangency
The portfolio of all risky assets is the optimal risky portfolio
The portfolio of all risk-free assets is the market portfolio

If the two random variables are independent then what will be the effect on covariance?
The covariance will be positive

The covariance will be infinite
The covariance will be negative
The covariance will be zero

If the Dow Jones Industrial Average stock splits 3 for 1 then what impact will this have
on the index divisor?
Index divisor will incline

Index divisor remains constant
Index divisor will decline
Index divisor multiply

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Which of the following is NOT the type of moving averages?
Exponential
Density
Simple
Variable

There is _________ relationship between P/E ratio and interest rates.
No
Linear
Indirect
Direct

_____________is an unmanaged fund designed to replicate as closely as possible the
performance of a specified index of market activity.
Index fund
Reserve fund
Mutual fund
Pension fund

Which of the following is NOT included in capital market securities?
Treasury Bills
Preferred shares
Common shares
None of given options

Which of the following means simple interest or return?
Geometric Mean

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Arithmetic Mean
Standard Deviation
Coefficient of Variance



Which of the following bonds have the lowest ratings?
Convertible bonds
Junk bonds
Municipal bonds
Government bonds



The rate of return anticipated on a bond if it is held until the maturity date is known as:
Discount rate
Interest free rate
Return on equity
Yield to maturity

Which of the following factor is NOT involved in rebalancing cost?

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Brokerage commissions
Credit and loan facilities
Possible impact of trade on market price
Time involved in deciding to trade

All of the following are the reasons of investing, EXCEPT:
Compensate inferences
Capital gains
Supplementing their income
Excitement

Which of the following is known as speculative bond?
Government bond
Municipal bond
Sovereign bond
Junk bond

Which of the following gives the concept that “market trend forecasts the trend in the
economy”?
Dow Theory
Bollinger Bands
On Balance Volume

Dividend Discount Model (DDM) is applicable to which of the following companies?
Offering stock splits

Offering bonus shares
Offering cash dividend
Not offering dividends

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Which of the following is defined as the total market value of securities in an investment
company’s portfolio divided by the number of investing company fund shares currently
outstanding?
Discounted value
Present value
Future cash flow value
Net asset value

Investors prefer mutual funds because of:
Diversification
Liquidity
Secured returns

Which of the following is the right to sell?
System option
Strategic option
Call option
Put option


Which of the following captures cash flows during the evaluation period?

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Actual diminishing returns
Dollar-weighted returns
Time-weighted returns
Opportunity cost returns

Which of the following is also called the Gordon’s Growth Model?

Binomial models finance
Capital asset pricing model
Black scholes model finance

Direct income
Other income
Operating income

Which of the following considers the size of the company and needs no adjustment for
stock splits?
Price weighting
Capitalization weighting
Equal weighting
Base weighting

All of the following are the analytical factors revolving around stock, EXCEPT:
Growth rates
Inflation rates
Firm cash flows
Ratio analysis

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Which of the following level of market efficiency provides all non-public information?
Weak form
Subjective form
Semi-strong form
Strong form

The trend lines can have the following trends, EXCEPT:
Upward trend
Downward trend
Trend range
Round phase

The dividends are usually paid out from which of the following?
Previous incomes
Current incomes
Future incomes
Unappropriated profits

Which of the following is considered as the most basic current asset?
Inventory
Marketable securities
Cash
Cash equivalents

Which of the following terms is used synonymously for equity?
Share
Distribution
Section

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Division

In bottom-up approach of fundamental analysis, investors begin their analysis with:
Industry
Economy
Market
Company

What does the abbreviation MACD stands for?

Murray Alliance of Construction Department
Montréal Association of Contraction Districts
Michigan Appliance for Counseling Development

Which of the following is the basic exchange rate in the economy?
External rate of return

Real rate of return
Rate of return on assets
Net present value rate of return

Which of the following is the difference between the expected return and the actual return
on an investment?
Expected return
Abnormal return
Normal return
Tax return

Which of the following statement is TRUE regarding bonds?

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Bond prices are inversely related to bond yields
Bond volatility decreases with maturity
The duration of a coupon bond equals its time to maturity
Bond duration is directly related to coupon rate

In which of the following markets do the investor cannot short sell?
Target market
Historic market
Borough market
Regular market

Bid price for the shares is Rs. 650 and ask price is Rs. 640. What will be the spread in
this case?
Rs. 10
Rs. 1290
Rs. 645
Rs. 200

Which of the following take place at the expansion stage of the industry life cycle?
Firm operations get more stable and dependable

No rapid growth in demand
Costs get stable rather than decreasing or increasing
Sales growth decline as new products are developed

Which of the following theory states that the news arrives randomly, and that security
prices adjust rapidly and accurately to the arrival of news?
Valuation theory
Random walk theory
Pecking order theory
Corporate finance theory

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Nominal interest rate is the function of real rate of interest and ____.
Expected inflation premium

Risk-free rate of return
Required risk premium
Compensation for the actual rate of inflation

the brokerage firm?
CFA account
Cash account
Real account
Margin account

Which of the following approaches is a valuation relative to financial performance
measure?
Present value approach

Multiple of earning approach
Communicative approach
Integrated eclectic approach

The Standard Industrial Classification codes have the divisions named as which of the
following?

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A through K
1 through 23
i through xviii
a through h

Which of the following means simple interest or return?
Geometric Mean
Arithmetic Mean
Standard Deviation
Coefficient of Variance

Which of the following do/does not have corresponding liability with it?
Bonds
Shares
Land
Derivatives

Which of the following is shorter than maturity for all bonds except zero coupon bonds?
Yield to maturity
Duration
Convexity
Immunization


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Which of the following risks affect the markets as a whole?
Nonsystematic risk
Systematic risk
Odd risk
Even risk

All of the following are the problems associated to the Dividend Discount Model,
EXCEPT:
This model need infinite stream of dividends

This model has uncertain dividend stream
This model must estimate future dividends
This model requires constant earnings per share

The S&P 500 Composite Stock Index is favored by most institutional investors and
money managers. What does S&P stands for?
Sophisticated and Poised

Standard and Poor
Stylish and Permanent
Sojourn and Perennial

There is __________ situation in Initial Public Offerings.
Win-win
Win-loss
Loss-loss

Which of the following must contain premium for expected inflation?
Power finance risk rate

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Nominal risk free rate
Systematic risk finance rate
Asset risk-free rate

Pioneering stage
Stabilization stage
Declining stage
Expansion stage

Which stage of the industry life cycle is more attractive to the investors?
Pioneering stage
Expansion stage
Stabilization stage
Declining stage

Lahore Stock of Exchange is _____________ based market indicator.
Volume
Capitalization
Price weighting
Profit

Which of the following represents an unusually risky stock?
Blue chip stock

Growth stock
Penny stock

Which of the following is the possibility that the realized return will be different than the

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expected return?
Profit
Risk
Loss
Evasion

On which of the following financial statements would you expect to find operating,
investing, and financing activities?
Balance sheet
Income statement

Support level if formed by joining _________________ with a line on the graph.
Low points
High points
Medium points

Index fund
Reserve fund
Mutual fund
Pension fund

If the risk of non payment of coupon is associated with the Bonds of company A has
bonds of a company, the credit rating company will rate these bonds as:
AAA

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AA
B
C

Which of the following usually resembles a reverse version of a symmetrical triangle?

On Balance Volume
Bollinger Bands

The Islamabad Stock exchange is a (n):
Over the counter market

Third market
Primary market
Secondary market

Which of the following statements highlights the financial condition of a company at any
single point of time?
Income Statement
Cash Flow Statement
Balance Sheet

Risk management
Income generation

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In which of the following condition an investment is considered desirable?
When cost is less then the future value of the present cash flows
When profit is less then the present value of the future cash flows
When present value of the future cash flows is less then the cost
When cost is less then the present value of the future cash flows

200
100
50
10

market?


Identify the correct formula for calculating the tax burden.
EBIT/Income tax expense

Sales/Income taxes payable

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Pre-tax Income/EBIT
Net Income/Pre-tax Income

Which of the following charts give the economic information on weekly or yearly basis?
Line charts
Bar charts
Pie charts
Symbol charts

Which of the following is always positive?
Total return
Relative return
Total and relative return

Which of the following best describes the present discounted value?
The amount of money is worth more, as soon as it is consumed

The amount of money is worth less, as soon as it is received
The amount of money is worth more, as soon as it is received
None of the give options

Diversification is the only way to protect investors from:
Nonsystematic risk
Systematic risk
General risk
Market risk


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Which of the following is a measure of the volatility of stock prices or returns?
ROR
Beta
ROI
Risk premium

An investor wants to buy 100 shares of a company but due to shortage of funds investor
can only 30% of the total share price and will borrow rest of 70% from brokerage firm.
Which of the following type of account will be suitable for investor in this situation?
Cash account
Margin account
Real account
CFA account

____________ focuses on the share price movements in the market.
Technical analysis
Quantitative data analysis
Empirical analysis

Which of the following is defined as a stock whose price tends to move in the opposite
direction from that of interest rates?
Defensive stock
Growth stock
Value stock
Interest sensitive stock

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Emotional maturity
Debt maturity
Yield to maturity

Which of the following ratios distinguishes between total and systematic risk?
Sharpe reward-to-variability ratio

Treynor reward-to-volatility ratio
Jensen's differential return ratio
Jennet’s return on liquidity ratio

Which of the following affects the price of the bond?
Market interest rate

Required rate of return
Interest rate risk

Which of the following equation is FALSE?
Total risk = general risk + specific risk

Total risk = market risk + issuer risk
Total risk = systematic risk + nonsystematic risk
Total risk = un-diversified risk + equity risk

All of the following are characteristics of Earnings per share EXCEPT?
It is calculated by dividing Net income over number of shares outstanding

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Earnings per share is a ratio, which is used for share price evaluation
Earnings per share relate income with ownership
It is based on future forecasted data

In the mutual fund investment if an investor has to pay fee on the sale of securities, the
fee will be known as:
Front end load

Back end load
No load fund
Purchase load

Which of the following is necessary in order to reduce the huge number of possible
investments to a smaller number that can investigate carefully?
Securing
Screening
Saving
Discounting

Risk management
Income generation

_______ is a liability payable within one year.
Account payable
Bonds
Debentures

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Which of the following highlights expense control, asset utilization and debt utilization?
DuPont analysis
Financial modeling analysis
Quantitative analysis
Qualitative analysis

All of the following are the characteristics of the institutional investor, EXCEPT:
They maintain relatively constant profile over time

They are subject to legal and regulatory constraints concerning investment
They are more specific regarding total assets and liabilities
They have great freedom in what they can do regarding investing

The estimated percentage change in the value of a bond derived from the duration rule:
Is less than the actual price change when the yield decreases
Is less than the actual price change when the yield increases
Is greater than the actual price change when the yield decreases
Is always greater than the actual price change

Which of the following factor is NOT involved in rebalancing cost?
Brokerage commissions
Credit and loan facilities
Possible impact of trade on market price

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Time involved in deciding to trade

A closed-end fund versus an open-end fund refers to:
Whether there is a substantial penalty for early withdrawal

The maturity date of the shares in the market
How the shares are distributed and redeemed
The limitation of upside potential and downside risk

__________ is a temporary restriction on program trading in a particular security or
market, usually to reduce dramatic price movements.
SuperDot
NYSE direct
Trading curb
Ticker tape

Company ABC is supplier of raw material of consumer goods, in the moth of February
Company had faced loss due to destruction of crops in flood. This will be ________ for
company.
Extraordinary loss
investing loss
Financial loss

Which of the following refers to buying and selling the shares of intermediaries that hold
securities in portfolio?
Retirement investing
Indirect investing
Online investing
Direct investing

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Which of the following assumes returns generated by a factor model?
Quantum game theory

Behavioral finance theory
Keynesian capital theory
Arbitrage pricing theory

In estimating the security market line which of the following rate is used to estimate
returns on risk free asset?
Discount rate
Treasury bill rate
Exchange rate
Growth rate

Which one of the following is correct formula for calculating gross margin?
Net Profit/Net Sales

Gross Profit/Net Sales
Net income/Net Sales
Gross Profit/credit Sales

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FIN630 7 Midterm Papers & more

than 750 MCQS…
Solved By
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MIDTERM EXAMINATION
Spring 2009 FIN630- Investment Analysis & Portfolio Management (Session - 2)
Question No: 1 ( Marks: 1 ) - Please choose one

Which one of the following financial instruments represents an ownership share in a
corporation?
Common stock
Bond
Preferred stock
Term Finance certificates

There are ____ broad categories of financial assets.
2
3
4
5
three broad categories of financial assets, viz. stocks bonds and cash. Stocks refer to
equity and equity related instruments. Bonds are debt instruments that have a maturity of
more than one year. Cash represents bank deposits and debt instruments that have a
maturity of less than one year.
Shares of McDonald Corporation are an example of a (n):
Standardized financial instrument
Non-standardized financial instrument since their prices can differ over time
Standardized financial liability instrument
Open-end investment
http://highered.mcgraw-hill.com/sites/0073523097/student_view0/chapter3/quiz_1.html

_____________ promotes investment education and ethical behavior among those
involved in the investment business.
Licensed International Financial Analyst (LIFA)
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Securities Investor Protection Corporation (SIPC)
Chartered Financial Analyst Institute (CFAI)
Securities and Exchange Commission (SEC)
The Chartered Financial Analyst Institute (CFAI) program promotes investment

education and ethical behavior among those involved in the investment business

Economic function
Exchange function
The fair price function removes the fear of buying or selling at rip off price. The greater
number of participants and the more formal the marketplace, the greater is the likelihood
that you are getting a fair price.

The trading of listed securities in the NASDAQ market is known as:
Primary market
Third market
Secondary market
Fourth market
The trading of listed securities in the NASDAQ market is known as the third market. The
third market may offer greater trading flexibility than the exchanges, particularly with
regard to trading rules and fees.

Stocks of well-established companies that have stable earnings and no extensive
liabilities are known as _______.
Growth stocks
Income stocks
Defensive stocks
Blue chip stocks
Blue chip stocks are stocks of well-established companies that have stable earnings and
no extensive liabilities. They have a track record of paying regular dividends, and are
valued by investors seeking relative safety and stability. The name comes from the blue-
colored chips in the game of poker, which are typically the most valuable.

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Which of the following statement regarding short sales is NOT true?
Short sales are done with the expectation that prices will rise
Short sales can be executed only on an uptrend
Short sales are all done on margin
Short sales may be executed by both individuals and market makers
When using a broker, you will need to set up an account. The account that's set up is
either a cash account or a margin account. A cash account requires that you pay for your
stock when you make the purchase, but with a margin account the broker lends you a
portion of the funds at the time of purchase and the security acts as collateral.
When an investor goes long on an investment, it means that he or she has bought a stock
believing its price will rise in the future. Conversely, when an investor goes short, he or
she is anticipating a decrease in share price. Short selling is the selling of a stock that the
seller doesn't own. More specifically, a short sale is the sale of a security that isn't owned
by the seller, but that is promised to be delivered

Companies that have capitalization amounts between $500 million and $2billion are
known as _________.
Small cap companies
Mid cap companies
Growth companies
Large cap companies
Although no precise definition has been stated for these terms most analysts consider a
firm with capitalization less than $500 million to be a small cap stock' Lipper Analytical
Services defines a mid-cap firm as one with capitalization between $800 million and $2
billion. Others extend the mid-cap range up to $6 billion.

A procedure for valuing the price of a stock by using predicted dividends and
discounting them back to present value is known as.
Capital Asset Pricing Model
Dividend Discount Model
The Residual Earning Model
Dividend Discount Model is a procedure for valuing the price of a stock by using
predicted dividends and discounting them back to present value.

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In bar chart, which color indicates share prices are going up?
Black
White
Blue
Red

In candlestick chart, what does white body candle depict?
Prices are moving down
Prices are moving up
Prices are constant
Prices are fluctuating
The principle difference between a daily candlestick chart and a bar chart is the white and
black candles augmenting the daily trading range lines. White candles represent stock
advances, with black candle representing declines.

On Balance Volume technique of technical analysis was developed by:
Charles Dow
Joseph Granville
John Bollinger
Welles Wilder
Joseph Granville created an on-balance volume technique in 1976, in his classic “New
Strategy of Daily Stock Market Timing for Maximum Profits.” His “On-balance
Volume” (OBV) has led the way for many other strategies, each assuming the
marketplace is divided between “smart money” and “the general public.”

Which of the following is relevant to market breadth?
Specialist inventory
Advance/declining ratio
Ticker tape
The advance-decline line, often referred to as the breadth of the market, results from
plotting a running of these numbers across time

The Elliot Wave Theory is based on repeating ___________ waves cycle.
4
5

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7
8
Elliott defined two types of waves: The impulse wave (which has a structure made up of
5 waves), and the corrective wave (which has a structure made up of 3 waves). The basic
cycle is comprised of 8 waves: The first 5 waves form an ascending impulse movement.
The 3 sub-waves - a, b, and c - form a corrective wave. This cycle is basically infinite,
each wave can be comprised of one or more cycles of shorter durations
Which of the following is correct formula for calculating short interest ratio?
Average shares sold short / Average daily trading volume
Total shares sold short / Average daily trading volume
Total shares sold short / Total daily trading volume
The short interest for a security is the number of shares that have been sold short but not
yet
bought back. The short interest ratio can be defined relative to shares outstanding or
average
daily volume, as in;
Short interest ratio = Total shares sold short / Average daily trading volume
ABC Furnitures worth $51 million. What is another term for this?
Book value
Earning per share
Market value
Cost per share
The book value of a company is generally considered its net worth; the book value per
share would be the net worth of a company divided by the number of shares outstanding.

Which of the following is TRUE regarding price per earning ratio?
P/E=Earnings available to common stockholders/outstanding shares
P/E=Market price per share/dividend per share
P/E=Market price per share/earning per share
P/E=Dividend per share/earning per share
http://www.investopedia.com/terms/p/price-earningsratio.asp

When inflation and interest rates are low, Price per Earning (P/E) ratio tend to be:
High
Low
Minimum
Average

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P/E ratios are generally depressed when the interest rates and the rates of inflation are
high, such as around 1980-81. P/E ratios tend to be high when inflation and interest rates
are low, such as the period of the mid –to-late-1990s

Which of the following industry is sensitive to business cycle and price changes?
Growth industry
Cyclical industry
Defensive industry
Interest sensitive industry
A fundamental analysis term for an industry that is sensitive to the business cycle and
price changes. Most cyclical industries produce durable goods such as raw materials and
heavy equipment.

Which of the following items will reduce stockholders' equity?
Purchase of equipment
Purchase of supplies
Receiving a loan
Payment of salaries
http://highered.mcgraw-
hill.com/sites/0073136484/student_view0/chapter3/multiple_choice_quiz.html

Mutual funds pool the funds of savers and can be used to buy
Shares in mutual savings banks only
A variety of financial instruments
Shares in the Federal Reserve System

Which of the following is defined as an investment company whose capitalization
constantly changes as new shares are sold and outstanding shares are redeemed?
Unit investment trust
Closed-end investment company
Exchange traded fund company
Open-end investment company
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http://books.google.com.pk/books?id=ZtJXlvNDSc4C&pg=PA78&lpg=PA78&dq=
%22an+investment+company+whose+capitalization+constantly+changes+as+new+s
hares+are+sold+and+outstanding+shares+are+redeemed%22&source=bl&ots=hk7
crs6tXJ&sig=3ikkkZeFKoQsSYZyGLgGfsYVjZ0&hl=en&ei=BdeATZieLI7q4gb16
7iKCA&sa=X&oi=book_result&ct=result&resnum=3&ved=0CCIQ6AEwAg#v=one
page&q=%22an%20investment%20company%20whose%20capitalization%20cons
tantly%20changes%20as%20new%20shares%20are%20sold%20and%20outstandi
ng%20shares%20are%20redeemed%22&f=false

outstanding?
Discounted value
Present value
Net asset value
http://quizlet.com/1195584/investment-chapter-3-flash-cards/

Which of the following would be considered as the most bullish indicator?
A price decrease with heavy volume
A price increase with small volume
A price increase on heavy trading
No change in price but an increase in volume
A price increase on small volume is not as bullish as one accompanied by heavy trading.
Conversely, a price decline on small volume is not as bearish as a decline accompanied
by a large increase in the number of shares traded.

Stocks can be purchased for a combination of cash and borrowed funds in:
Margin account
Cash account
IRA account
Option account
http://web.ku.edu/~finmhir/FIN410/EXAMS/htm/key991s.htm

The average price of a security or currency over a specified time period used to spot
pricing trends by smoothing out the large fluctuations is known as:
Moving Average
Standard deviation

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Variance
Beta
http://www.metaglossary.com/meanings/508643/

The use of the earnings multiplier model requires the use of forecast company
earnings. How do investors obtain forecasts of company earnings?
Public companies are required to issue forecasts of quarterly earnings, going out three
years
Securities analysts develop and publish earnings forecasts, based on their understanding
of the company, its industry, and the overall economy
Securities analysts develop and publish earnings forecasts, based on sophisticated
statistical techniques
Because these earnings will be announced in the future, no one can forecast them
Earnings forecasts are based on analysts' expectations of company growth and

profitability. To predict earnings, most analysts build financial models that estimate
prospective revenues and costs. Many analysts will incorporate top-down factors such as
economic growth rates, currencies and other macroeconomic factors that influence
corporate growth. They use market research reports to get a sense of underlying growth
trends. To understand the dynamics of the individual companies they cover, really good
analysts will speak to customers, suppliers and competitors. The companies themselves
offer earnings guidance that analysts build into the models.

Patent
Timber
Goodwill
Trademark

Which of the following categories is NOT a financial statement element?
Cash flow
Contributed capital
Assets
Distributions
https://highered.mcgraw-
hill.com/sites/0073526770/student_view0/chapter1/online_quizzes.html
Question No: 31 ( Marks: 5 )

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Differentiate between income stocks and penny stocks.

Define short selling and describe the procedure of short selling in detail.
MIDTERM EXAMINATION
Spring 2010
FIN630- Investment Analysis & Portfolio Management (Session - 5)
Time: 60 min
Marks: 44

_________ provides an automatic execution of limit orders up to 1,099 shares at the best
bid or offer.
► SuperDOT
► NASDAQ
► Auction market
► NYSE direct
The Exchange launches NYSE Direct+, an automatic execution service, in a pilot
program. NYSE Direct+ provides immediate automatic execution of limit orders up to
1,099 shares at the published NYSE quote.

The trading of listed securities in the NASDAQ market is known as:
► Primary market
► Third market
► Secondary market
► Fourth market
The trading of listed securities in the NASDAQ market is known as the third market.
The third market may offer greater trading flexibility than the exchanges, particularly
with regard to trading rules and fees.

A self-regulatory body that licenses brokers and generally oversees the trading practices
of Over the counter(OTC) securities is known as __________ .
► Securities and Exchange Commission (SEC)
► National Association of Security Dealers (NASD)
► Initial Public Offering (IPO)
► Offered for Sale (OFS)
The National Association of Securities Dealers (NASD) is a self-regulatory body that
licenses brokers and generally oversees trading practices.

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Companies that have historically paid a larger than average percentage of their profit as
dividend to their shareholders is known as:
► Blue chip companies
► Cyclical companies
► Growth companies
► Income companies
Income stocks are those that historically have paid a larger-than-average percentage of
their net income as dividends

Which of the following is suitable for analyzing short term investments?
► Horizontal analysis
► Fundamental analysis
► Technical analysis
► Ratio analysis

A procedure for valuing the price of a stock by using predicted dividends and discounting
them back to present value is known as.
► Dividend Discount Model
► The Residual Earning Model
► None of the given options
► Capital Asset Pricing Model

A good time is characterized by which of following situation?
Market prices moving above the moving average

Market prices moving below the moving average►



►
Market prices exactly same as moving average 


►
None of the given options 



Prices moving above the Moving Average indicate an uptrend. In cases when you have
both high volume and high price, these indicate an uptrend in stock market. Based on
this, you may decide to buy the stock.

Which of the following statement is FALSE about Elliot Wave Theory?
►
It made extensive use of Fibonacci series 



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►
It is based on repeating 8 waves’ cycles 



►
It identified three movements in security prices 



It was proposed by R.N. Elliot► 


Ralph Nelson Elliott developed the Elliott Wave Theory in the late 1920s in fact traded in
repetitive cycles. It states that stock prices are governed by cycles founded upon the
Fibonacci series (1-2-3-5-8-13-21…). Elliott believed that market prices rose and fell in a
series of waves based on the same Golden ratio or Golden mean that Fibonacci proved.

Which of the following depicts ratio of share price to stockholder equity?
Debt coverage ratio ►


►
Price-to-sales ratio 

►
Price-to-market value ratio 



Price-to-book value ratio ►



The price-to-book value ratio (P/B) is the ratio of share price to stockholder equity. Book
value represents the company’s theoretical liquidation value per share if the company
shut down operations, paid off its debts, and sold off its assets. As such, the usefulness of
book value as a valuation tool depends significantly on the industry, with some being
more capital intensive than others.

On which of the following financial statements, revenues and expenses can be found?
► Balance sheet
► Income statement
► Statement of cash flows
► Statement of changes in equity

Which of the following is a basket of stocks that tracks a particular sector, investment
style, geographical area, or the market as a whole?
► Exchange traded fund

► Open-end fund
► Closed-end fund
► Unit investment trust
A new investing trend of increasing importance is the exchange-traded funds (ETFs).

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These new financial assets have some characteristics of index mutual funds, closed-end
funds, and even individual stocks. An ETF is a basket of stocks that tracks a particular
sector, investment style, geographical area, or the market as a whole

Which of the following is defined as an investment strategy that involves ongoing buying
and selling actions by the investors?
► Make or Buy strategy
► Active strategy
► Passive strategy
► Buy-and-Hold strategy
An investment strategy involving ongoing buying and selling actions by the investor.
Active investors purchase investments and continuously monitor their activity in order to
exploit profitable conditions
Which of the following is an example of brokerage fee charged by a stockbroker?
► Margin profit
► Insurance premium
► Transaction cost
► Capital expenditure
Costs incurred when buying or selling securities. These include brokers' commissions
and spreads (the difference between the price the dealer paid for a security and the
price at which it can be sold).

► A price decrease with heavy volume

► A price increase with small volume
► A price increase on heavy trading
► No change in price but an increase in volume

Financial securities with a maturity of less than a year from their original issue date are
sold in which of following market?
► Money market
► Bond market
► Equity market
► Derivative market

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hill.com/sites/0073523097/student_view0/chapter3/quiz_2.html

_____________ enables market participants to get accurate and up-to-date price
information.
► Fair pricing function
► Continuous pricing function [page 6]
► Economic function
► Exchange function
The continuous price function enables market participants to get accurate, up-to-date
price information.

The average price of a security or currency over a specified time period used to spot
pricing trends by smoothing out the large fluctuations is known as:
► Moving Average
► Standard deviation
► Variance
► Beta
(EMA) — The average price of a security or currency over a specified time period used
to spot pricing trends by smoothing out the large fluctuations. The exponential variety
assigns more value or weight to the most recent data.

An investor will purchase shares of companies in the development stage for:
► Current income
► Current income and capital gains
► Passive losses to offset other income
► Capital gains only
http://www1.emath.pu.edu.tw/chchang/test006.pdf

Which of the following industry is NOT sensitive to business cycle and price changes?
► Defensive industry
► Interest sensitive industry
► Growth industry
► Cyclical industry
A defensive industry is one that is relatively insensitive to changes in the economic
environment. Demand for its products will remain fairly level regardless of the economy,
interest rates or fiscal policy. Defensive industries include food, pharmaceuticals and

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utilities.

► Cash flow
► Contributed capital
► Assets
► Distributions

Which of the following statement about a security is true, if it's beta > 1.0?
► Security is more risky than the market
► Security is less risky than market
► Security is exactly as risky as maket
► It is not possible to predict riskiness of a security by beta

A bad time in market will persist when the market prices move:
► Above the moving average

► Below the moving average
► Exactly same as moving average
► Firstly up then down the moving average

What does price earning ratio indicate?
► It indicates how many interest payments could be made with a firm's earnings.
► It indicates how much investors pay for Rs.1 earning of the company.
► It indicates the percentage of earnings paid to shareholders.
► It indicates the per share profit available for distribution to the shareholders.

Which of the following is TRUE regarding price earning ratio?
► P/E=Earnings available to common stockholders/outstanding shares

► P/E=Market price per share/dividend per share
► P/E=Market price per share/earning per share
► P/E=Dividend per share/earning per share

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Which of the following stock’s price move in opposite direction to that of interest rates?
► Growth stock
► Value stock
► Interest sensitive stock
► Defensive stock
A stock that is particularly sensitive to changes in interest rates. Often interest-sensitive
stocks are bank stocks. When interest rates rise, shares of banks may move lower. That
occurs because banks are locked into long-term loan contracts with borrowers and can’t
raise their interest rates up to the market rate, which can pressure earnings. The interest
rate they have to pay to deposit holders increases also.

Which of the following is NOT a component of ROA?
► Turnover
► Leverage
► Sales
► Net income margin

Which of the following statement about the types of the orders is LEAST accurate?
► Market orders are orders to buy or sell at the best price available.
► Limit orders are orders to buy or sell at or away from the market price.
► A stop buy order is used to protect a short position in a security and is placed below
the current market price.
► Limit order must specify a price and a time limit.

Which of the following statements regarding life cycle of an industry is MOST accurate?
► In the pioneering phase, profits are small or negative.
► In the mature growth phase, sales growth falls below normal for the first time.
► During the stabilization phase, growth rates are still above the growth rates in
economy.
► The growth of the substitute products increases total market share & causes profits to
increase in the deceleration phase.

Outline the rationale for sector rotation?
Answer:
 This strategy is involving the shifting sector weights in the portfolio for taking
advantage of those sectors

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 That are expected to do relatively better and avoid or deemphasize those sectors
 That are expected to do relatively worse.
 Investors employing this strategy are betting that particular sectors will repeat
their price performance relative to the current phase of the business and credit
cycle.

What is meant by cooking the books? What measures should be taken to avoid it?
Answer:
Cooking the books is an unethical practice of misrepresenting company's financial
standing. When cooking the books, corporations typically manipulate their accounting
records and financial statements. Bookmark

What is the purpose of ratio analysis?
Answer:
Purpose of Ration Anaysis:
 It help us to check either a business is doing better this year than previous years
 Also it tell us about our business is doing better and worse comparative to other
businesses who doing business of same the same things.
 By using the ratio analysis we come to know our business is how much
profitable? Mean to know business profit.
 Its purpose to know the money to pay its bills and we can even tell whether its
shareholders should be happy.

What is meant by the required rate of return?
Answer:
Ratio analyses gives us complete look over business. The basic purpose of the ration
analyses is to judge that whare the business stand and also make he future planning of the
business Ratio analysis can also help us to check whether a business is doing better this

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year than it was last year and it can tell us if our business is doing better or worse than
other businesses doing and selling the same things. In addition to ratio analysis being part
of an accounting and business studies.
Discount rate for valuing stock is called required rate of return the required rate of return
for the stock or any security is the minimum required rate of return to persuade any
investor to purchase that stock.
Required rate of return can be calculated by following
Required rate of return = risk – free rate + risk premium
Many different required rate of return for example the average required rate of return of
favorite stock is diverse from average rate of return on bonds
Level of required rate of return is changes over time for example:
Required rate of return is changed and inflationary rat is changed because it is a

component of risk free rate of return which is also a component of required rate of return.
MIDTERM EXAMINATION
Spring 2010
Time: 60 min
Marks: 44

Which of the following is NOT a fixed income security?
► Bonds
► Preferred stock
► Saving deposits
► Options
A fixed income security usually provides a known cash flow with no growth in the
income stream.
________ are qualified and regulated professionals who trade shares and other securities
through market makers on behalf of investors.
► Stock brokers
► Members
► Specialists
► Day traders

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► SuperDot
► NYSE direct
► Trading curb
► Ticker tape


Prices are moving down ► 


Prices are moving up ►
Prices are constant► 


Prices are fluctuating►



Which of the following is a popular price pattern?
Double ups ► 

Head and shoulders ► 


Triangles ► 


Resistance and support ► 


This is one of the most popular and reliable chart patterns in technical analysis. Head and
shoulders is a reversal chart pattern that when formed, signals that the security is likely to
move against the previous trend
Primary trend in Dow Theory is known as __________.
Wave ► 


Triangle ► 

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Tide ► 

Rounded bottom ►

Each market trend has three parts compared to tides, waves and ripples.
The primary (major) trend or tide is a long term trend lasting from a year to several years.
The secondary trend (or mid-term trend) or wave lasts three weeks to three months and
represents corrections of one third to two thirds of the previous movement - most often
fifty percent of the movement. The minor trends (short-term trends) or insignificant
ripples last less than three weeks and represent fluctuations in the secondary trend.
The primary purpose of the liquidity ratios is to determine:
► The amount of earnings paid to shareholders
► The amount of working capital tied up in inventory
► The ability of a firm to pay off short-term obligations
► The relative level of short-term debt
Which of the following statement is TRUE regarding earning per share?
► It represents the company’ s current obligation
► It represents the ability of a company to repay its current liabilities
► It represents per share profit available for distribution to the shareholders
► It represents the percentage of earnings paid to shareholders

Which of the following industries is LEAST sensitive to changes in the business cycle?
► Manufactures of business plant and equipment

► Machine tools and special equipment, such as for pollution control
► Industries specializing in high technology
► A refrigerators manufacturing company

Which of the following industry tend to be composed of relatively volatile and risky
stocks?
► Defensive industries
► Interest sensitive industries
► Growth industries
► Cyclical industries
Growth industries tend to be composed of relatively volatile and risky stocks. Often
investors must be willing to accept increased risk in order to take
Which of the following is defined as an unmanaged, fixed-income security portfolio put

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together by a sponsor and handled by an independent trustee?

► Closed-end investment
► Open-end investment
► Money market fund
An alternative form of. Investment Company that deviates from the normal managed
type is the unit -investment trust, (OIT), which typically is an unmanaged, fixed-income
security portfolio put together by a sponsor and handled by an independent trustee
____________ are financial intermediaries that hold a portfolio of securities on behalf of
their shareholders.
► Banking companies
► Value companies
► Investment companies
The most popular form of Investment Company. Mutual funds hold a portfolio of securities on behalf
of their shareholders, who buy shares from the fund and sell them back to the fund. The shareholders
are entitled to a pro rata share of all income and capital gains earned by the mutual fund, after
deduction of expenses
Which of the following statement about a security is true, if its beta < 1.0?


Which of the following is NOT an asset?
► Accounts payable
► Equipment
► Supplies
► Cash

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Which of the following is NOT a requirement for an efficient market?
► Stock prices incorporate all information
► All known information be reflected in prices
► The adjustments occur very quickly
► Each adjustment be perfect

Which of the following allows you to specify the most you are willing to pay when
buying or the least you are willing to accept when selling?
► Limit order
► Market order
► Stop order
► Good till cancelled order
Another type order allows you to specify the most you are willing to pay when buying or
the least you are willing to accept when selling. This is known as a Limit Order.
In a candlestick chart, what does black body candle depict?
► Prices are moving up
► Prices are moving down
► Prices are constant
► Prices are fluctuating
White candles represent stock advances, with black candle representing declines.
Which of the following is TRUE regarding the Dow Theory?
► Dow Theory is primarily a fundamental analysis tool.
► Dow Theory was developed by the publisher of Forbes magazine.
► Dow Theory identified three movements in security prices.
► Dow Theory states that computer algorithms can be used to look for patterns.
1. The market has three movements
(1) The "main movement", primary movement or major trend may last from less
than a year to several years. It can be bullish or bearish. (2) The "medium swing",
secondary reaction or intermediate reaction may last from ten days to three
months and generally retraces from 33% to 66% of the primary price change since
the previous medium swing or start of the main movement. (3) The "short swing"
or minor movement varies with opinion from hours to a month or more. The three

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movements may be simultaneous, for instance, a daily minor movement in a
bearish secondary reaction in a bullish primary movement.

Which of the following situations implies an upward sloping curve?
► Accelerating economic activity
► Static economic activity
► Slowing economic activity
► A recession period
Upward sloping and steepening curve implies accelerating economic activity. Flat
structure implies a slowing economy. Inverted curve may imply a recession.
► Growth stock
► Value stock
► Defensive stock
► Turnover
► Leverage
► Sales
Which of the following statement about short selling is LEAST accurate?
► The short seller must pay the lender of the stock any dividends paid by the company.
► The short seller is required to replace the borrowed securities within six months of a
short sale.
► Proceeds from the short sale cannot be withdrawn from the account.
► The short seller hoped that the securities prices would decrease in the future.

A stop buy order is MOST likely:
► Used to limit the potential losses on a short sale
► Executed if the market price is less than or equal to the specified level
► An order to purchase a security if the price decreases to a specified level

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► An order that specifies only the time limit
Stop Order specifies a price and time limit, just like a limit order. The difference is that a
stop order is only executed if a specified price, called the stop price is touched.

Keeping in view the business cycle, describe which industries are least sensitive to
changes in the economy? Give two examples.

Why is industry analysis valuable?

State any five objectives of studying balance sheet in fundamental analysis?
INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT

SPRING SEMESTER 2008
Quiz:
1) Which of the following types of orders would normally have the most rapid execution?
a) Market order
b) Limit order
c) Good-till-canceled order
d) Stop order
Market orders are to be executed as soon as possible after reaching the exchange floor.
2) Which of the following statements regarding short sales is not true?

a) Short sales are done with the expectation that prices will rise.
b) Short sales can be executed only on an uptrend.
c) Short sales are all done on margin.
d) Short sales may be executed by both individuals and market makers.
3) The price at which a security dealer sells a security is known as:

a) Bid Price
b) Offer Price
c) Market Price
d) Order Price
4) More investors may be using technical analysis now than in earlier periods because:

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a) There is now more empirical evidence supporting technical analysis.
b) The Internet makes more data available to track stock prices.
c) More investors are able to understand the quantitative calculations of technical
analysis.
d) More business schools are now teaching technical analysis.
5) Which of the following is true regarding the Dow Theory?

a) The Dow Theory was developed by the publisher of Forbes magazine.
b) The Dow Theory is primarily a fundamental analysis tool.
c) The Dow Theory identified three movements in security prices.
d) Dow Theory is a notion that computer algorithms can be taught to look for
optimum patterns.
6) Which of the following would be considered the most bullish indicator?

a) A price increase
b) A price increase with small volume
c) A price increase on heavy trading
d) No change in price but an increase in volume
7) Which are the two ratio areas that are of the greatest concern to stockholders?
a) Liquidity and profitability
b) Liquidity and leverage
c) Profitability and activity
d) Profitability and leverage
8) When might a high return on equity not be desirable?

a) If the firm were not able to sustain the high return on equity
b) If the firm were in the rapid growth cycle of the life cycle
c) If the firm had a large amount of debt financing
d) If the firm did not have as high a return on assets
9) In order for any dividend valuation model to reflect a valid stock price for a company,
a) The company must pay dividends
b) The dividend growth rate must remain constant.
c) The required rate of return (discount rate) must remain constant
d) The company should pay interim dividend.
10) Which type of order is often used by investors who have bought a security and want
to protect themselves from a falling price?
a) Market order

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b) Limit order
c) Stop order
d) Good-till-canceled order

Question No: 1 __ ( Marks: 1 ) - Please choose one
Open-end investment

Companies that have capitalization amounts between $500 million and $2billion are
known as .
Small cap companies
Mid cap companies
Growth companies
Large cap companies
Question No: 8___( Marks: 1 ) - Please choose one

Resistance and support
Double ups
Head and shoulders
Triangles

4
5
7
8

Which one of following statement is true if intrinsic value of a security is lower then its
current market price?
The security is being overvalued
The security is being undervalued
The security is correctly valued
No connection exists between security intrinsic value and market price

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If a company possess higher required rate of return, the justified P/E will be.
Lower
Higher
Both will be same
Lesson #11 ppt
The higher the required rate of return, k, the lower the justified P/E

Which of the following stage is more important for the investors?
Pioneering stage
Expansion stage
Stabilization stage
Decline stage
Pioneering stage offers the highest potential returns, greatest risk Investors interested in
capital gains should avoid maturity stage Expansion stage of most interest to investors

Which of the following stage should be avoided by investors who are interested in capital
gains?
Pioneering stage
Expansion stage
Decline stage
Stabilization stage

Growth industry
Cyclical industry
Defensive industry

Mutual funds pool the funds of savers and can be used to buy ____________ .

In an efficient financial market, there would be no ____________ .

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Under/over priced securities
Financial intermediaries
Commissions
Taxes
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/invemgmt/effdefn.htm

An efficient market reflects which of the following information?
Past, current and inferred information
Future and past information
Past and current information
Current and inferred information

If stock advances are greater than declines by a wide margin, the market is perceived as .
Healthy
Stable
Stronger because of the widespread movement
Weaker because of the widespread movement
The breadth of the market is a measure of the extent to which movement in a market
index is reflected widely in the price movements of al the stocks in the market. The most
common measure of breadth is the spread between the number of stocks that advance and
decline in price. If advances outnumber declines by a wide margin, then the market is
viewed as being stronger because the rally is widespread.

An over-the-counter market can be defined as:
A network of dealers connected electronically
An illegal secondary market for stocks used primarily by those attempting to evade taxes
A primary market for stocks
A form of centralized exchange

________ are qualified and regulated professionals who trade shares and other security
es through market makers on behalf of investors.
► Stock brokers
► Members
► Specialists
► Day traders

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► Continuous pricing function

Which function of capital market facilitates transfer of money from savers to borrowers?
► Continuous pricing function
The most important function is the economic function. This mechanism facilitates the
transfer of money from savers to borrowers. As an example, consider the secondary market
for home mortgages.

___________ is a computerized device that relays financial information to investors
around the world, including the stock symbol, the latest price and the volume of securities
as they are traded.
► SuperDot
► NYSE Direct
► Ticker tape
► Trading Curb
Ticker tape is a computerized device that relays financial information to investors around the world,
including the stock symbol, the latest price and the volume on securities as they are traded

► Blue chip companies
► Cyclical companies
► Income companies
Income stocks are those that historically have paid a larger-than-average percentage of
their net income as dividends

_________ think that supply and demand factors play the most important part.
► Ratio analysts
► Technical analysts
► Research analysts
► Fundamental analysts
Value comes from utility; utility comes from a variety of sources.
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Fundamental analysts believe securities are priced according to fundamental economic
data. Technical analysts think supply and demand factors play the most important role.

According to Dow Theory, primary trend is a:
► Short term trend
► Long term trend
► Medium term trend
The Primary Trend is the broad long-term up or down movements in prices, lasting a
year or more. Inside the Primary Trend is the Secondary Trend which can either interrupt
the Primary Trend's progress or push it forward, depending upon whether this
intermediate term price trend is going with the grain or against it, lasting typically from a
few weeks to several months or occasionally more than a year. Then there are the Minor
Trends, short-term, lasting anywhere from a few days to a few weeks. Again, the Minor
trend can move prices either in the same or opposite direction as the Primary or
Secondary trend.

Which of the following statement is FALSE about Elliot Wave Theory?
► It made extensive use of Fibonacci series
► It is based on repeating 8 waves’cycles
► It identified three movements in security prices
► It was proposed by R.N. Elliot

The idea of long term business cycle with a period of 50-60 years was proposed in which
of the following theory?
► Kondratev Wave Theory [Page 68]
► Dow Theory
► Elliot Wave Theory

Current ratio is also known as:
► Working capital ratio
► Acid test ratio
► Debt coverage ratio
► Dividend yield ratio
The current ratio is also known as the working capital ratio and is normally presented as a
real ratio

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A ratio that indicates the extent to which a firm could pay its current liabilities without
relying on the sale of inventory is known as:
► Current ratio
► Quick ratio
► Inventory turnover ratio
Which of the following ratio depicts a firm’s ability to cover its short-term obligations?
► Dividend yield ratio
► Return on assets ratio
► Current ratio

Which of the following ratios would NOT be used to draw a conclusion about a
company's managerial effectiveness?
► Return on investment
► Return on equity
► Net margin
► Price-Earnings ratio

Which of the following functions do mutual fund companies perform for their investors?
► Record keeping and administration
► Professional management
► Diversification and divisibility
► All of the given options
hill.com/sites/007338237x/student_view0/chapter4/multiple_choice_quiz.html

An alternative form of. Investment Company that deviates from the normal managed type is
the unit -investment trust, (OIT), which typically is an unmanaged, fixed-income security
portfolio put together by a sponsor and handled by an independent trustee.

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Which of the following stocks would be expected to adversely impact during periods of
high interest rates?
► Consumer durable shocks
► Interest-sensitive stocks
► Capital goods stocks
► Defensive stocks
interest-sensitive stocks would be expected to be adversely impacted during periods of high
interest rates, aridsuch periods tend to occur at the latter stages of the business cycle.
If an investor wants to avoid transaction costs, which of the following strategy should he
select?
► Active strategy
► Defensive strategy
► Buy and hold strategy
► Sector rotation
A buy-and-hold strategy means exactly that an investor buys stocks and basically holds
them until some future time in order to meet some objective. The emphasis is on avoiding
transaction costs, additional search costs, and so forth

Technical analysts ______________ fundamental analysis.
► Always incorporate
► Does not deny the value of
► Reject the value of
► Have no connection with
Technical analysts do not deny fundamental analysis but believe that prices adjust slowly
to new information. Therefore, the key is to exploit the slow adjustment to the correct
new price when information is released.

Who was the grandfather of technical analysis?
► Harry Markowitz
► William Sharpe
► Charles Dow
► Benjamin Graham
Charles Dow, the originator of the Dow Theory, was the grandfather of technical analysis

The direct trade between large institutional investors takes place in which of the

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following market?
► Primary market
► Secondary market
► Third market
► Fourth market
Direct trades between large institutional investors comprise the fourth market

Which of the following statement is TRUE about value investors?
► They are patient
► They seek rapidly growing companies
► They are speculators
► They seek slow growing companies
Value investors are willing to wait.
In point and figure chart, what does X indicates?
► Market price is going up [page 56]
► Market price is going down
► Market price remains constant
► Market price is fluctuating


Which of the following is a characteristic of line chart?
► It is efficient in showing more details
► It is simplest and most familiar chart [page 55]
► It show the highest degree of accuracy
► It can be used for comparing three values


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Who has introduced the On Balance Volume technique of technical analysis?
► Charles Dow
► Joseph Granville
► John Bollinger
► Welles Wilder

Which of the following is calculated by dividing gross profit by net sales?
► Gross margin
► Operating margin
► Net margin
► Profit margin

When a company’s market value is divided by sales, it is known as:
► Price-to-market value ratio
► Price-to-book value ratio
► Price-to-sales ratio



A company is paying $0.60 in dividends and the required rate of return is 6%.Company is
selling the stocks at $12. Assume 2% growth rate. Figure out the current value of the
stock. By keeping in view your answer ,explain whether the stock is overvalued or
undervalued.

Leverage ratios are used to measure a company’s ability to meet its financial obligations.
Describe the various leverage ratios used for analyzing financial statements.

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MIDTERM EXAMINATION
Spring 2010
FIN630- Investment Analysis & Portfolio Management
Which of the following statement about short selling is LEAST accurate?
► The short seller must pay the lender of the stock any dividends paid by the company.
► The short seller is required to replace the borrowed securities within six months of a
short sale.
► Proceeds from the short sale cannot be withdrawn from the account.
► The short seller hoped that the securities prices would decrease in the future.

A stop buy order is MOST likely:
► Used to limit the potential losses on a short sale
► Executed if the market price is less than or equal to the specified level
► An order to purchase a security if the price decreases to a specified level
► An order that specifies only the time limit
The primary purpose of the liquidity ratios is to determine:
► The amount of earnings paid to shareholders
► The amount of working capital tied up in inventory
► The ability of a firm to pay off short-term obligations
► The relative level of short-term debt
► SuperDot
► NYSE direct
► Trading curb
► Ticker tape

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



►Prices are moving down




►Prices are moving up




►Prices are constant




►Prices are fluctuating




►Double ups




►Head and shoulders




►Triangles




►Resistance and support
Primary trend in Dow Theory is known as __________.




►Wave




►Triangle




►Tide




►Rounded bottom
► Stock brokers
► Members

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► Specialists
► Day traders
Which of the following statement is TRUE regarding earning per share?
► It represents the company’s current obligation
► It represents the ability of a company to repay its current liabilities
► It represents per share profit available for distribution to the shareholders
► It represents the percentage of earnings paid to shareholders
Which of the following industries is LEAST sensitive to changes in the business cycle?
► Manufactures of business plant and equipment
► Machine tools and special equipment, such as for pollution control
► Industries specializing in high technology
► A refrigerators manufacturing company
Which of the following is NOT a fixed income security?
► Bonds
► Preferred stock
► Saving deposits
► Options
____________ are financial intermediaries that hold a portfolio of securities on behalf of
their shareholders.
► Banking companies

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► Value companies
► Investment companies
Which of the following statement about a security is true, if its beta < 1.0?
stocks?
► Defensive industries
► Interest sensitive industries
► Growth industries
► Cyclical industries

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► Stock prices incorporate all information
► All known information be reflected in prices
► The adjustments occur very quickly
► Each adjustment be perfect
Which of the following allows you to specify the most you are willing to pay when
buying or the least you are willing to accept when selling?
► Limit order
► Market order
► Stop order
► Good till cancelled order
Which of the following is TRUE regarding the Dow Theory?
► Dow Theory is primarily a fundamental analysis tool.
► Dow Theory was developed by the publisher of Forbes magazine.
► Dow Theory identified three movements in security prices.
► Dow Theory states that computer algorithms can be used to look for patterns.
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► Growth stock
► Value stock
► Defensive stock
► Turnover
► Leverage
► Sales
► Accounts payable
► Equipment
► Supplies
► Cash
Keeping in view the business cycle, describe which industries are least sensitive to
changes in the economy? Give two examples.
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Differentiate between income stocks and penny stocks.
For investment purposes:

a) Common stock is considered a fixed income security
b) Preferred stock is considered a fixed income security
c) Both are considered fixed income securities
d) Derivatives is considered fixed income securities
Arbitrage is the presence of a:

a) Fixed profit
b) Risky profit
c) Riskless profit
d) Maximizing profit
Arbitrage is the process of buying assets in one market and selling them in another to
profit from unjustifiable price differences. “True” arbitrage is both riskless and self-
financing, which means that the investor uses someone else’s money.
Current yield is:

a) Annual income divided by current price
b) Current income divided by current price
c) Annual income multiplied by current price
d) Current income multiplied by current price
Compounding refers to the:

a) Earning of interest on prospectively earned interest
b) Earning of interest on previously earned interest
c) Earning of interest on principal amount
d) B and C
The economic function of the capital markets:

a) Facilitating the inflow of capital from savers to borrowers

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b) Facilitating the flow of capital form borrowers to savers
c) Facilitating the flow of capital from savers to borrowers
d) None of the above
The bond pricing relationship is customarily expressed in term of:
a) Annual periods.
b) Semiannual periods
c) Quarterly periods.
d) Monthly periods.
http://books.google.ae/books?id=fk-
rYsLrekAC&pg=PA335&lpg=PA335&dq=%22The+bond+pricing+relationship+is+expr
essed+in+term+of+Annual+periods+%22&source=bl&ots=MPpEC0nx7A&sig=3wOb_
W5aUhhzr1VEScMpmXa_TqU&hl=en&ei=hFzFTc_sCMSyrAf83PjLBA&sa=X&oi=bo
ok_result&ct=result&resnum=6&ved=0CDQQ6AEwBQ#v=onepage&q&f=false
The higher the coupon on the bond:
a) The lesser is its reinvestment rate risk.

b) The higher is its reinvestment rate risk.
c) The higher is its reinvestment rate of return.
d) The lesser is its reinvestment rate of return.
At falling interest rate periods, the investor cannot reinvest at the same interest rates at
which the earlier incomes were reinvested. In these situations, zero – coupon bonds are at
an advantageous position as far as investors are concerned as the incomes are reinvested
by the issuer. The higher the coupon on the bond, higher the reinvestment risk since the
investors may go in for speculative investments.
Companies usually pay dividends
a) Quarterly

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b) Semiannually
c) Annually
d) Monthly
Companies usually pay dividends every quarter, or four times per year. When the
company is about to pay a dividend, the company's board of directors makes a dividend
announcement that indicates the amount of the dividend, the date of record, and the date
of payment. The date of dividend announcement is known as the declaration date.
________________ usually expire within a few weeks of their issuance.
a) Bonds
b) Preferred stock
c) Rights
d) Derivatives
If an investor is looking for an investment opportunity that can yield profits in a shorter
period, derivatives is a good option. Unlike some stocks and bonds which have to be
invested for long periods many years, investments in derivatives can be for a few days,
weeks, or a few months. This can provide an investor with the opportunity of breaking
into the market and also mixing short and long-term investments.
Paying dividends reduces the amount in a firm’s
a) Reserves Account
b) Checking Account
c) Profit and loss Account
d) Saving Account
1. Which of the following stage should be avoided by investors who are interested in
capital gains?
a. Pioneering stage
b. Expansion stage

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c. Stabilization stage
d. Decline stage
2. Which of the following is NOT true about Expansion stage?

a. Marketplace is full of competitors
b. Firm operations more stable, dependable
c. Financial policies firmly established
d. Dividends often become payable
3. Which of the following industry is NOT sensitive to business cycle and price changes?
a. Growth industry
b. Cyclical industry
c. Defensive industry
d. Interest sensitive industry
4. Which of the following is EXCLUDED from Porter’s competitive factors?

a. Bargaining power of buyers
b. Rivalry between existing competitors
c. Substitute products or services
d. Changes in the economy [page 100]
5. Which of the following is NOT one of the components of ROA?

a. Net income margin
b. Turnover
c. Leverage
d. Sales
6. All of the following are characteristics of Earnings per share EXCEPT?

a. It is calculated by dividing Net income over number of shares outstanding
b. Earnings per share is a ratio, which is used for share price evaluation
c. Earnings per share relate income with ownership.

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d. It is based on future forecasted data.
7. On which of the following financial statements would you expect to find assets,
a. Balance sheet
b. Income statement
c. Statement of cash flows
d. Statement of changes in equity
8. Which of the following is an intangible asset with an identifiable useful life?

a. Patent
b. Timber
c. Goodwill
d. Trademark
9. On which of the following financial statements would you expect to find operating,
investing, and financing activities?
a. Balance sheet
b. Income statement
c. Statement of cash flows
d. Statement of changes in equity
10. Mutual funds are _______________ companies.
a. Private
b. Investment
c. Insurance
d. Banking
11. Money market mutual fund is:

a. A closed-end investment company

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b. A unit investment company
c. A directly investment in Treasury Bills
d. An exchange traded fund
As the name implies, money market mutual funds invest in near-money instruments like
Treasury Bills, government securities and Commercial Paper
12. Brokerage fee charged by a stockbroker is an example of:

a. Margin profit
b. Insurance premium
c. Transaction cost
d. Capital expenditure
13. Which of the following is defined as an investment strategy that involves ongoing
buying and selling actions by the investors?
a. Active strategy
b. Passive strategy
c. Buy-and-hold strategy
d. All of the given options
An investment strategy involving ongoing buying and selling actions by the investor. Active investors
purchase investments and continuously monitor their activity in order to exploit profitable conditions
14. A form of the EMH which states that security prices fully reflect all public and
private information.
a. Strong form efficiency [page 148]
b. Weak form efficiency
c. Semi strong form efficiency
d. None of the given options
15. The computation of the Dow Jones Industrial Average is known as a __________
index.
a. Price-weighted

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b. Market value
c. Equal-weighted
d. Volume weighted
A popular price-weighted stock market index is the Dow Jones Industrial Average. It
includes a price-weighted average of 30 actively traded blue chip stocks.
1) The three broad categories of financial assets are ____________.

a) Money market securities, long-term debt and equity
b) Corporate securities, derivatives and equity
c) Debt, equity and derivatives
d) All of the given options
2) Which of the following is excluded from the fixed income securities?

a) Bonds
b) Preferred stock
c) Saving deposits
d) Options
3) Financial securities with a maturity of less than a year from their original issue date are
sold in the:
a) Money market
b) Bond market
c) Equity market
d) Derivative market
4) The price at which a security dealer sells a security is known as:

a) Bid price

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b) Offer price
c) Market price
d) Order price
5) Lahore stock exchange is a:

a) Primary market
b) Secondary market
c) Third market
d) Fourth market
6) The trading of listed securities in the NASDAQ market is known as:

a) Primary market
b) Secondary market
c) Third market
d) Fourth market
The trading of listed securities in the Nasdaq market is known as the third market.
Direct trades between large institutional investors comprise the fourth market.
7) ____________ is a professionally managed firm of collective investments that collect

money from many investors and invests in securities.
a) Share
b) Bond
c) Treasury bill
d) Mutual fund
8) Which type of order is often used by investors who have bought a security and want to
protect themselves from a falling price?
a) Market order
b) Limit order
c) Stop order
d) Good-till-canceled order

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9) The percentage of the purchase price of securities that the investor must pay with his
or her own cash or marginable securities is known as:
a) Initial margin
b) Margin call
c) Maintenance margin
d) SPAN margin
10) Which of the following represents low-priced, speculative and risky securities?
a) Income stocks
b) Penny stocks
c) Defensive stocks
d) cyclical stocks
Penny stocks are low-priced, speculative and risky securities which are traded over-the-
counter (OTC); i.e. outside of one of the major exchanges.
1) The most economic function of stock exchange is to:

a) Safeguard the interest of investors
b) Help in the capital formation in the country
c) Provides facilities for speculation
d) Provide a ready market for old securities
2) People with a high discount rate will require:

a) A higher interest rate to entice them to save
b) Investment options with longer maturities
c) A lower interest rate to entice them to save
d) A constant ROI
3) The dividend-discount model indicates that the current market price of a stock rises if:
a) The interest rate rises

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b) The growth rate of dividends rises
c) The current dividend is higher
d) All of the above are correct
4) The efficient market hypothesis suggests that ______________.

a) No investors can earn excess returns persistently over time
b) No investors can earn positive returns persistently over time
c) No investors can earn excess returns at any point in time
d) No investors can earn positive returns at any point in time
http://docs.google.com/viewer?a=v&q=cache:pDhQCVTmxakJ:faculty.etsu.edu/trainor/F
NCE%25203300/BKME5ch12.ppt+%22The+efficient+market+hypothesis+suggests+tha
t+No+investors+can+earn+excess+returns+persistently+over+time%22&hl=en&pid=bl&
srcid=ADGEESgUWmXSv0-
OTATERDgTEXTm7we8p5zphnKdFrWRj5UPMoSPJ5C3S2BCg76SxjXAsWdvaEi2Px
CFtkWgQ0b-
HWmAZCeeZ8UhPhcPsM5Nxi0jBCWXN1kB1ViL6LLGWWIyTQSDvwiU&sig=AHI
EtbQ83xKxV3ThEpy8Lt1xPmPr_e20Qg&pli=1
5) ________ is a measure of the volatility of stock prices or returns.

a) ROR
b) Beta
c) ROI
d) Risk premium
6) ______ is a basket of stocks that tracks a particular sector, investment style,

geographical area, or the market as a whole.
a) Exchange traded fund
b) Open-end fund
c) Closed-end fund
d) Unit investment trust

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7) The total market value of securities in an investment company’s portfolio

divided by the number of investing company fund shares currently out standing is known
as ________.
a) Discounted value
b) Present value
c) Future cash flow value
d) Net asset value
8) Financial assets:
a) Contribute to the country's productive capacity both directly and indirectly
b) Do not contribute to the country's productive capacity either directly or indirectly
c) Directly contribute to the country's productive capacity
d) Indirectly contribute to the country's productive capacity
9) The primary purpose of the liquidity ratios is to determine:

a) How much working capital is tied up in inventory
b) The relative level of short-term debt
c) How well a firm is able to pay off short-term obligations
d) All of the given options
10) The intrinsic value of a stock is the ______________ of future net cash flows.
a) Sum value
b) Present value
c) Investment value
d) Future value
The intrinsic value of a stock is the present value of all future cash flows, and it is a
calculation that has been used in financial circles since the first dividend discount model
was introduced in 1938.

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Which one of following statement is TRUE if intrinsic value of a security is higher then
its current market price?
• The security is being undervalued
• The security is being overvalued
• The security is correctly valued
• None of given options
Stock is under- (over-) valued if intrinsic value is larger (smaller) than current market
price
2.
• Net Profit/Net Sales
• Gross Profit/Net Sales
• Net income/Net Sales
• Gross Profit/credit Sales
3.
Which of the following is defined as a procedure for valuing the price of a stock by
using predicted dividends and discounting them back to present value?
• Dividend Discount Model
• Relative Strength Index
• On Balance Volume
• Bollinger bands
4.
Which one of the following is correct formula for calculating operating
margin?
• Net Profit/Net Sales
• Operating income/Net Sales
• Net income/Net Sales
• Operating income/credit sales
5.

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Which of the following ratios are of more concern for the shareholders?
• Liquidity and profitability
• Profitability and leverage
• Liquidity and leverage
• Profitability and activity
6.
Which of the following ratios would not be used to draw a conclusion about a
company's managerial effectiveness?
• Price-Earnings Ratio
• Net margin
• Return on equity
• Return on Investment
7.
• Growth industry
• Defensive industry
• Cyclical industry
• Interest sensitive industry
8.
• Defensive stock
• Interest sensitive stock
• Growth stock
• Value stock
9.
Which of the following is EXCLUDED from Porter’s competitive factors?
• Changes in the economy
• Bargaining power of buyers
• Rivalry between existing competitors
• Substitute products or services

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10.
What does Return on Assets (ROA) show the analyst?
• The accounting rate of return that stockholders earn on their portion of the total capital
• The ability of the company to use its assets to produce profits
• The riskiness of the company
• Book value per share
11.
• Balances of all accounts
• Net profit earned during a period
• Financial position of business
• Expense of a business
12.
• Timber
• Patent
• Goodwill
• Trademark
13.
On which of the following financial statements would you expect to find revenues
and expenses?
• Income statement
• Balance sheet
• Statement of cash flows
• Statement of changes in equity
14.
Cash flow statement comprises of which of the following activities?
• Operating activities only
• Operating, investing, and financing activities
• Investing and operating activities
• Operating and financing activities

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15.
When inflation and interest rates are high, P/E ratios tend to be.
• High
• Low
• Minimum
• Average
. When inflation levels are stable and moderate, investors have lower expectations of high market returns.
Conversely, expectations rise when inflation is high. When inflation rises, so do prices in the economy,
leading investors to require a higher rate of return to maintain their purchasing power. If investors demand
a higher rate of return, the P/E ratio has to fall. Historically, the lower the P/E, the higher the return. When
you pay a lower P/E, you're paying less for more earnings and, as earnings grow, the return you achieve is
higher. In periods of low inflation, the return demanded by investors is lower and the P/E higher. The
higher the P/E, the higher the price for earnings, which lowers your expectations of healthy returns.
16.
When PE multiples are high, future returns are:
• Low
• High
• Minimum
• Average
PE multiples tend to be high when inflation is low But when PE multiples are high future returns
are low
17.
• Marketplace is full of competitors
• Firm operations more stable, dependable
• Financial policies firmly established
• Dividends often become payable
18.
In bottom-up approach of fundamental analysis, investors begin their analysis with:
• Industry
• Company

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• Economy
• Market
The Fund’s investment adviser uses a “bottom-up” approach of fundamental analysis to
look for individual companies that the adviser believes offer significant potential for
stock price appreciation.
19.
Which of the following stage offers the highest potential returns and greatest risk?
• Pioneering stage
• Expansion stage
• Stabilization stage
• Decline stage
The pioneering stage may offer the highest potential returns, but it also poses the greatest
risk. Investors interested primarily in capital gains should avoid the maturity stage.
20.
Which of the following estimates are needed while applying fundamental analysis to
the market?
• Stream of shareholder benefits
• Earnings and dividends
• Required return or earnings multiple
• All of given options
n To apply fundamental analysis to the market, estimates are needed of
– Stream of shareholder benefits
» Earnings or dividends
– Required return or earnings multiple
n Steps in estimating earnings stream
– Estimate GDP, corporate sales, corporate earnings before taxes, and
finally corporate earnings after taxes
1.
Primary Trend in Dow theory is called as
• Tide
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• Wave
• Oscillation
• None of the given options
2.
A trend that defines the long-term direction for a security is called as:
• Primary Trend
• Secondary trend
• Tertiary trend
• All of the given options
3.
A trend that defines the short-term direction for a security is called as:
• Primary Trend
• Secondary trend
• Tertiary trend
4.
Secondary trend in Dow theory is known as
• Tide
• Wave
• Oscillation
• None of the given options
5.
Which of the following charting price pattern depicts a significant expectation of an
increase in demand for a security
• Support
• Resistance
• Trend line
• All of given options
6.
____________ believes that securities are priced according to fundamental economic
data.
• Fundamental analysts
• Ratio analysts
• Technical analysts
• Research analysts
7.
When a stock's market price breaks through its moving average line from below, a
technical analyst would suggest a ______________ signal.
• Buy
• Sell
• Hold
• Wait and see

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8.
Which of the following statement is TRUE about return or gains in a stock exchange?
• Slow or steady returns are long lasting
• Slow or steady returns are short lived
• Quick returns are long lasting
• All of the given options are true
9.
Which of the following statement is TRUE about quick returns?
• They are long lasting
• They are usually short lived
• Quick returns are long lasting
• All of the given options are true
10.
When the stock price drops below the support level, it indicates a
____________signal.
• Bearish
• Bullish
• Neither a bearish nor bullish
• Leading
In technical analysis, a situation in which the price of a security falls below a support
level. The support level is a price below which a security only rarely drops. This is a
highly bearish signal because it indicates the price likely will continue to fall until it finds
another support level.
11.
Which of the following is the reason stock prices behave the way they do at resistance
lines?
• Many investors want to buy at this price
• Market makers resist moving prices lower than this price
• Many investors want to sell at this price
• Market makers support prices at this level
When stock prices rise to level where demand decrease and owners began to lock in their
profit, this creates the "ceiling" or resistance level
12.
• It is simplest and most familiar chart
• It is efficient in showing more details
• It is an extension of a scatter graph

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• It is created by connecting a series of points.
13.
Black body candle in a candlestick chart depicts that the prices are moving.
• Up
• Down
• Constant
• Fluctuating
14.
• Black
• Red
• White
• Blue
Downward trend is represented by red
15.
Which of the following is suitable for analyzing short term investments?
• Horizontal analysis
• Fundamental analysis
• Ratio analysis
• Technical Analysis
16.
Which of the following is correct formula for calculating Short interest ratio?
•Total shares sold short / Total daily trading volume
• Average shares sold short / Average daily trading volume
•Total shares sold short / Average daily trading volume [page 72]
• None of given options
17.
Financial assets are divided in to which of the following three broad categories?
• Money market securities, long-term debt and equity
• Corporate securities, derivatives and equity

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• Debt, equity and derivatives
18.
Which of the following deals with the issuance of new securities?
• Primary market
• Secondary market
• Third market
• Fourth market
19.
Which of the following are regarded as low-priced, speculative and risky securities?
• Income stocks
• Penny stocks
• Defensive stocks
• Cyclical stocks

Companies that have capitalization amounts of more than $2 billion are known as
___________.
Small cap companies

Mid cap companies
Growth companies
Large cap companies

Cash account
Margin account
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Real account
CFA account

Pioneering stage
Stabilization stage
Declining stage
Expansion stage

Which of the following trading systems is used by the Islamabad Stock Exchange?
LOTS
PETS
ISECTS
KATS
Since the inception of automated trading system (ISECTS), the trade volume has
beenmultiplying day by day and the average daily turnover has now crossed the figure of
1million shares. Now all the listed securities are traded through the ISECTS

Which of the following take place at the stabilization stage of the industry life cycle?

Rapid growth in demand and subsequent profits occur
Costs get stable rather than decreasing
Products become more, standardized and less innovative, the marketplace is full of
competitors, and costs are stable rather than decreasing through efficiency moves.


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Income Statement
Cash Flow Statement
Balance Sheet

Buying power of an investor is calculated as:
Assets – liabilities
Equity – debt balance Page 31
Short term debt – long tem debt
Current assets – current liabilities

Which of the following is correct formula for calculating P/E ratio?
Face value per share / Earnings per Share

Market value per share / Total Earnings
Market value per share / Earnings per Share
P/E = Current Market Share Price / EPS

Company ABC has used 20% of its profits for paying out dividends to its shareholders,
the remaining 80% income will be known as:
Gross income
Distributed income
Retained earning
Net income


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Android market
Capital market
Money market
Target market

income statement?
Cash items
Non-cash items
Purchases

Which of the following statements hold TRUE for Fibonacci series?
It is an eight part series that left an indelible mark in developing strategy

It ia a sequence of numbers where each successive number is the sum of the two
previous numbers
It is a sequence of numerical data points in successive order occurring in uniform
intervals
It is a series for which the ratio of each two consecutive terms is a constant function

Which one of following statement is true if intrinsic value of a security is higher then its



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Which of the following statements also takes into account some non-cash accounting
items such as depreciation?
Income Statement
Cash Flow Statement
Notes to the accounts
MIDTERM EXAMINATION
Spring 2009

Open-end investment

Which of the following is NOT a derivative security?
Option
Debenture
Swap
Future

Which of the following is an example of a financial asset?
Factories
Options
Commercial properties
Gold


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Members
Specialists
Day traders
Stock brokers
If a person gives too much weight to recent information compared to prior beliefs, he
would make ________ errors.
Framing
Selection bias
Conservatism
Forecasting

Companies that have capitalization amounts between $500 million and $2billion
are
known as _________.
Small cap companies
Mid cap companies
Growth companies
Large cap companies

Mr. A purchased a stock at Rs. 50 today that is expected to grow in future up to Rs.100,
he believes in _____________.
Growth investement
Value investement
Speculation

Resistance and support
Double ups
Head and shoulders
Triangles

4

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5
7
8
Which one of following statement is true if intrinsic value of a security is lower then its
No connection exists between security intrinsic value and market price
If Vo > Po, the asset is undervalued and should be purchased or held if already owned.
If Vo < Po, the asset is overvalued and should be avoided, sold if held, or possibly sold short.
If Vo = Po, this implies an equilibrium in that the asset is correctly valued.

If a company possess higher required rate of return, the justified P/E will be.
Lower
Higher
Both will be same

What will be the resulting figure, when gross profit is divided by net sales?
Gross margin
Operating margin
Net margin
Profit margin
Gross Profit Margin = Gross Profit / Net Sales * 100

Which of the following ratio depicts a firm’s ability to cover its short-term obligations?
Dividend yield ratio
Return on assets ratio
Debt coverage ratio
Current ratio

In top-down approach of fundamental analysis, investors begin their analysis with:
Company
Industry
Economy
Market

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An investment approach that involves looking at the "big picture" in the economy and
financial world and then breaking those components down into finer details. After
looking at the big picture conditions around the world, the different industrial sectors are
analyzed in order to select those that are forecasted to outperform the market. From this
point, the stocks of specific companies are further analyzed and those that are believed to
be successful are chosen as investments

Which of the following stage is more important for the investors?
Pioneering stage
Expansion stage
Stabilization stage
Decline stage

Which of the following stage should be avoided by investors who are interested in capital
gains?
Pioneering stage
Expansion stage
Decline stage
Stabilization stage

Growth industry
Cyclical industry
Defensive industry

Mutual funds pool the funds of savers and can be used to buy _____________.

In an efficient financial market, there would be no ____________.
Under/over priced securities
Financial intermediaries
Commissions
Taxes

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An efficient market reflects which of the following information?

If stock advances are greater than declines by a wide margin, the market is perceived as
______________.
Healthy
Stable
Stronger because of the widespread movement
Weaker because of the widespread movement


Financial securities with a maturity of less than a year from their original issue date are
sold in which of following market?
Money market
Bond market
Equity market
Derivative market

An over-the-counter market can be defined as:
A network of dealers connected electronically
An illegal secondary market for stocks used primarily by those attempting to evade taxes
A primary market for stocks
A form of centralized exchange

When current assets exceeds current liabilities it is called:
Gross capital
Working capital page 83
Net capital
Reserved capital

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The working capital means the amount that current assets exceed the current liabilities. In
simple words, it is the difference current assets and current liabilities.


Accounts payable
Equipment
Supplies
Cash

Cash flow
Contributed capital
Assets
Distributions
For which of the following value of beta, a stock is assumed to be as risky as market?
1.5
1.0
2.0
0.5
Stock prices incorporate all information
All known information be reflected in prices
The adjustments occur very quickly
Each adjustment be perfect

Derivatives are assets that include all of the following, EXCEPT:
Future
Option
Forward
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Pay order

Which of the following give pay back period of the investment made?
Future cash flows

Present cash flows
Operating cash flows
Free cash flows

economy”?
Dow Theory
Bollinger Bands
On Balance Volume

What will be the effect on intrinsic value if the risk premium and required rate of return
falls?
It will fall
It will fluctuate
It will rise
It will have no effect

Bonds
Shares
Land
Derivatives

______ means offering those shares that are already issued.

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IES
OPS
OFS
IPO



In which of the following approaches the capitalization of income is done?


ABC Furniture has worth $51 million. What is the other term used for this?
Book value
Earning per share
Market value
Cost per share

Starter
Floor
Ceiling
Simulator

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Mr. A has sold 500 shares for $600, 000 which he has bought two years ago for $590,
000. What will be capital gain in this case?
10,000
20, 000
200, 000
100, 000

56%
50%
46%
40%

Stocks
Transport vehicles
Bonds
Bank deposits

Which of the following ratios would not be used to draw a conclusion about a company's
managerial effectiveness?
Net margin
Price-Earnings Ratio
Return on equity
Return on Investment


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Protecting profits
Minimizing losses
Rapid execution

Margin accounts are mostly used by:
Traders who think their long-run returns will be greater than the cost of borrowing
Speculators who think their long-run returns will be greater than the cost of borrowing
Investors who think their long-run returns will be greater than the cost of borrowing

Which of the following is the ratio of a company’s total market value (price times
number of shares) divided by sales?

Debt coverage ratio
Leverage ratio


Standard and Poor

Target market
Historic market
Borough market
Regular market

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All of the following are the basic technical tools, EXCEPT:
Recession
Trend lines
Indicators
Cycles

market?




_____market is a part of _______ market.
Capital, money
Money, capital

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Capital, open
Money, debt

If you have to invest in the market and you are using graphs as technical analysis tool,
which of the following you will use to measure overbought / oversold level in the
market?
Simple moving average

Relative strength index
Stochastic oscillator
Relative strength index and stochastic oscillator
Reference:
Like the RSI the first way that traders use the stochastic oscillator is to identify
overbought and oversold levels in the market



The industries that are least affected by recessions and economic adversity are referred as
which of the following?
Growth industries
Cyclical industries
Interest-sensitive industries
Defensive industries

2.0 Per share

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2.5 Per share
0.13 Per share
1.3 Per share

Sale or purchase fee charged by mutual fund managers is known as_____.
Profit
Interest
No load
Load








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Bonds
Shares
Land
Derivatives

Line charts
Bar charts
Pie charts
Symbol charts



Patent
Timber
Furniture
Building

Close-ended funds

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Growth industries
Cyclical industries

Blue chip companies

Cyclical companies
Growth companies
Income companies

In the mutual fund investment if an investor has to pay fee on the sale of securities, the
fee will be known as:
Front end load

Back end load
No load fund
Purchase load

Indirect investing
Online investing
Direct investing


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On Balance Volume
Bollinger Bands

Exponential
Density
Simple
Variable

Which of the following invest in stocks of firms expected to show future rapid earnings
growth?
Growth funds
Value funds
Mutual funds
Hedge funds

On which of the following financial statements would you expect to find revenues and
expenses?
Balance sheet
Income statement

All are the tools of technical analysis EXCEPT:
Trend analysis
Support ad resistance lines
Bar chart

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Liquidity ratio

Which of the following includes fixed income securities?
Bonds
Shares
Derivatives

Close-ended funds

rises?
It will fall
It will fluctuate
It will rise

What will be the effect on intrinsic value if the riskless rate and required rate of return
falls?
It will fluctuate
It will fall
It will rise

In which situation investor may get a margin call?

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When account equity declines

When account equity increases
When account equity remains same

Which of the following highlights expense control, and the asset and debt utilization?
Trend analysis
Risk analysis
DuPont analysis
Claims analysis

White
Black
Red
Blue

undervalued
distributed



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falls?
It will fall
It will fluctuate
It will rise

Liquidity and profitability

Liquidity and leverage
Profitability and activity
Profitability and leverage

Changes in Government rules and regulation will adversely affect which of the following
industry?
Defensive industry
Cyclic industry
Growth industry

Which of the following statement is NOT true about Elliot Wave Theory?
It is based on repeating 8 waves’ cycles

It identified three movements in security prices
It was proposed by R.N. Elliot
It made extensive use of Fibonacci series


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Low points
High points
Medium points

According to Dow Theory, secondary trend is a:
Long term trend

Short term trend
Medium term trend

be sold?
Skimming price
Consumer price
Retail price
Trigger price

Future cash flows

Present cash flows
Free cash flows

Previous incomes
Current incomes
Future incomes

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SuperDot
NYSE direct
Trading curb
Ticker tape

Which of the following is known as Secondary trend in Dow Theory?
Wave
Triangle
Tide
Rounded bottom

Share
Distribution
Section
Division

In which of the following type of chart time horizon is not considered?
Point and figure

Candlestick
Bar
All of the following

Which of the following shows the relationship between two moving averages of prices?


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On Balance Volume
Bollinger Bands

Market value for shares of Company A is Rs. 500, company is paying an annul dividend
of Rs. 10 to shareholders whereas earning par share is Rs. 100. What will be its P/E ratio?
10
5.1
5
4.9

There is __________ situation in Initial Public Offerings.
Win-win
Win-loss
Loss-loss

Patent
Timber
Furniture
Building

Account payable
Bonds
Debentures

Which of the following is a non-cash item for company?

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Dividend payment
Interest payment
Depreciation
Purchase of raw material on cash





Which of the formula is TRUE for calculating retained earnings?
Retained Earnings = Net Earnings – Dividends

Retained Earnings = Net Earnings +long term debt
Retained Earnings = Net Earnings + short term debt
Retained Earnings = Net Earnings + dividend

_______ do not change the collective wealth of shareholders.
Stock splits
Bonus shares
Right shares

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In Dow Theory a market trend is confirmed and considered as a signal by the investors
when:
Industrial average is not equal to technical average

Industrial average less than technical average
Industrial average is more than technical average
Industrial average matches with technical average

Up
Constant
Down
Fluctuating

Which of the following statement can best answer the question “what kind of fixed assets
company have purchased”?
Income statement
Cost of goods sold statement
Balance sheet

The Elliott Wave Theory is based on which of the following?
A repeating 2 wave cycle




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previous numbers
intervals



Which of the following is NOT a type of bond?
Tertiary bond
Bearer bond
Fixed income bond
Euro bond

In which of the following charts days do not matter?
Line and pie charts

Bar and pie charts
Bar and line charts
Point and figure charts

Which of the following is not a requirement of margin call?

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Deposit additional funds

Sale of some security positions
Sale of a part of shares

rises?
It will fluctuate
It will fall
It will rise

Primary
Secondary
Third
Fourth

More investors are using technical analysis now than in earlier periods because:
Investors are able to know the quantitative calculations of technical analysis

More business schools are now teaching technical analysis
The Internet makes more data available to track stock prices
There is now more empirical evidence supporting technical analysis

industry?
Defensive industry
Cyclic industry
Growth industry

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Which of the following ratios measures how a company finances their assets?

Leverage ratio
Debt coverage ratio

Which of the following invest in stocks of firms expected to show future rapid earnings
growth?
Growth funds
Value funds
Mutual funds
Hedge funds

200
100
50
10


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When an investor gets margin call from broker, investor is required to:
Deposit collateral
Withdraw funds
Cancel the trade

Diversification
Liquidity
Secured returns


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If mutual funds are showing high liquidity, it means mutual funds are ________ and it is
good for investors to ___________.
Bearish, sell
Bullish, buy
Bullish, sell
Bearish, buy

the following?


Book value
Earning per share
Market value
Cost per share

Each division of the Standard Industrial Classification has several major industry groups,
designated by which of the following codes?
A uni-digit code
A bilingual code
A two-digit code
A tentative code

What does the abbreviation SIC stands for?
Standard Industrial Classification

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Symbolic Industry Consortium
Southeastern Illinois Compendium
Social Innovation Collections

Blue chip stock

Growth stock
Penny stock


Operating income

Bargaining power of buyers

Rivalry between existing competitors
Substitute products or services
Changes in the economy

Long term trend

Short term trend
Medium term trend

All of the following is required to calculate the present value figure, EXCEPT:

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The amount of future cash flows
The length of time
The discount rate
The retained earnings

When inflation and interest rates are low, P/E ratios tend to be.
High
Low
Minimum
Average

Indirect investing
Online investing
Direct investing

Which of the following take place at the pioneering stage of the industry life cycle?
Firm operations get more stable

Rapid growth in demand occur
Sales growth decline as products obsolete

Which of the following is an indirect form of investment?
Investing in stock exchange

Investing in money market
Investing in mutual funds

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On which of the following financial statements would you expect to find assets,
Balance sheet
Income statement

A place where trading of listed securities in the NASDAQ market is performed is known
as:
Primary market
Secondary market
Third market
Fourth market

All of the following are the types of orders used extensively in stock markets, EXCEPT:
Market order
Stop order
Limit order
Mitigate order

Doing nothing
Holding
Selling
Buying

The accounting rate of return that stockholders earn on their portion of the total capital

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The riskiness of the company
The ability of the company to use its assets to produce profits
Book value per share

Book value
Earning per share
Market value
Cost per share



Which of the following represents the total amount that may be distributed to its
shareholders?
Other income
Net income
Extraordinary income
Operating income

_____________ are financial intermediaries that hold a portfolio of securities on behalf
of their shareholders.
Growth companies
Value companies
Investment companies
Banking companies

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Which of the following statements strips away all of the non-cash accounting items and
tells you how much actual money the company has generated?
Income Statement
Cash Flow Statement
Balance Sheet

Capital gains
Excitement

250,000
350,000
450,000
550,000

Exchange traded fund

Open-end fund
Closed-end fund

In which of the following the investors look at the future perspective?
Value investment

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Interactive investment
Growth investment
Accredited investment

Deposit collateral
Withdraw funds
Cancel the trade

Of the following statements identify the advantage of the market measures to the
investor.


Primary market
Secondary market
Third market
Fourth market

In which of the following cases resistance occurs?
Inability to break below prior high

Inability to break below prior low
Inability to surpass prior high
Inability to repair beyond prior low


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the brokerage firm?
CFA account
Cash account
Real account
Margin account

Tertiary bond
Bearer bond
Fixed income bond
Euro bond

Which of the following is a characteristic of cyclical stock?
Their value is tied with the overall state of the national economy.
They are low-priced, speculative and risky securities.
They have stable earnings and no extensive liabilities

Cash flow statement in conjunction with which of the following statements provides
information on liquidity, viability and financial adaptability of company?
The Income Statement

The Cash Flow Statement
The Balance Sheet
The Statement of Owner’s Equity

Which of the following is good for an investor?
Upward prices with increased volume

Downward prices with decreased volume
Upward prices with decreased volume

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Downward prices with increased volume

Which of the following does not pay fix income (interest/ dividend) to investors?
Preferred stock
Government bond
Common stock
Treasury bond



Which of the following trading systems is used by the Karachi Stock Exchange?
ISECTS
LOTS
KATS
PETS




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On Balance Volume
Bollinger Bands

Support lines
Resistance lines
Tangent lines
Interval lines


Standard and Poor

IES
OPS
OFS
IPO

________ Act deals with the rules and regulations of secondary markets.
1933
1934
1935
1936

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Leverage ratio
Debt coverage ratio

Which of the following is a tangible asset with useful life of more than one year?
Land
Building
Furniture



Which of the following is necessary in order to reduce the huge number of possible
investments to a smaller number that can investigate carefully?
Securing
Screening
Saving
Discounting

Which of the following is applied on the whole market?
Cyclical curb
Personal curb
Allusive curb

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Trading curb

lines?
Many investors want to buy at this price

Market makers resist moving prices lower than this price
Many investors want to sell at this price
Market makers support prices at this level

9
11
13
15

Which of the following theories states that five waves move in the direction of the main
trend followed by three corrective waves?
Portfolio theory
Valuation theory
Elliott wave theory
Chaos theory

Which one of the following is correct formula for calculating operating margin?

Operating income/Net Sales
Operating income/credit sales

Which of the following is NOT the technical indicator?

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On Balance Volume
Quick ratio analysis


previous numbers
intervals

Which of the following ratios that shows how much a company pays out in dividends
each year relative to its share price?
Dividend per share

Dividend coverage ratio
Dividend earned ratio

Which of the following statements record performance over a period of time?
Cash flow and statement of owner’s equity

Cash flow and income statements
Balance sheet and income statement
Cash flow statement and balance sheet

Value investment
Growth investment

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Starter
Floor
Ceiling
Simulator

falls?
It will fluctuate
It will fall
It will rise



shareholders?
Other income
Net income
Operating income

What does the abbreviation SOES stands for?

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System of Organic and Effective Sciences

Small Order Execution System
Service Observation Execution Statistics
Scotland Order Education School

Current assets for the Company are Rs. 600, 000 out of which inventory is Rs. 250000,.
Current liabilities of company are Rs. 295000. What will be quick ratio for the company?
2.5:1
1:2
1:1.18
1.18:1

Cash account
Margin account
Real account
CFA account




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shareholders?
Other income
Net income
Operating income

Which of the following is TRUE about stabilization or maturity stage?

It gives you a good idea of where to think about investing

Defensive stock
Growth stock
Value stock

Which of the following is a type of hedge mechanism?

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Distance selling
Best selling
Target selling
Short selling


Third market
Primary market
Secondary market

Starter
Floor
Ceiling
Simulator


Pre-tax Income/EBIT



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Of the following who believes the body in motion tends to stay in motion?
Institutional investors
Interactive investors
Growth investors
Accredited investor

LOTS
PETS
ISECTS
KATS

Long tern directs in Dow Theory is depicted through:
Holes
Strings
Waves
Tides

On Balance Volume
Bollinger Bands


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Primary
Secondary
Third
Fourth

Previous incomes
Current incomes
Future incomes



Close-ended funds

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Value investment
Growth investment

SuperDot
NYSE direct
Trading curb
Ticker tape

A company has net earning of Rs. 500,000, out of which Company has decided to pay
dividend of Rs. 150,000 to shareholders. What will be retained earning?
500, 000
150, 000
250, 000
350, 000

Which of the following ratios indicate the ability of a company to repay its current
liabilities from it operating cash flow?

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Leverage ratio
Debt coverage ratio

falls?
It will fall
It will fluctuate
It will rise

What does the abbreviation RSI stands for?
Repetitive String Instruments

Rapid Succession Intrigues
Review of Symbolic Inquests

Low points
High points
Medium points



Which of the following has been extensively used by the Elliott Wave adherents?

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Napoleon series
Economic time series
Fibonacci series
Geometric series

industry?
Defensive industry
Cyclic industry
Growth industry

Gross income
Distributed income
Retained earning
Net income

Cash flow statement in conjunction with which of the following statements provides
information on liquidity, viability and financial adaptability of company?
The Income Statement

The Cash Flow Statement
The Balance Sheet
The Statement of Owner’s Equity

Income Statement

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Cash Flow Statement


Of the following who believe securities are priced according to fundamental economic
data?
Technical analysts
Fundamental analysts
Accredited analysts
Interactive analysts



Bonds
Shares
Land
Derivatives


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Previous incomes
Current incomes
Future incomes

the following?


All of the following are the sentiment indicators, EXCEPT:
Quick Asset Ratio

Odd Lot Short Ratio
Shares Sold Short
Short Interest Ratio


Economic function
Exchange function

Defensive stock
Growth stock
Value stock

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Operating income

The industries that are most affected by recessions and economic adversity are termed as
Growth industries
Cyclical industries



Technical analysis
Vertical analysis
Horizontal analysis


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Accounts payable
Equipment
Supplies
Cash



Which of the following is the source of income for members or brokers?
Copyright fee
Application fee
Fixed cost fee
Trading fee



Which of the following moves inversely to each other?
Interest rates and debt to equity ratios

Discount rates and P/E ratios
Coupon rates and leverage ratios
Interest rates and activity ratios

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Close-ended funds

On Balance Volume one of technical indicator use _______ as base.
Demand
Supply
Volume
Price


DuPont analysis

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On Balance Volume
Bollinger Bands

Stocks
Transport vehicles
Bonds
Bank deposits

Low points
High points
Medium points

Which of the following statements hold TRUE for bid price?

It is the price at which an investor can buy units from the funded company


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Operating income



_____________ are financial intermediaries that hold a portfolio of securities on behalf
of their shareholders.
Growth companies
Value companies
Investment companies
Banking companies

Blue chip companies

Cyclical companies
Growth companies
Income companies

Which of the following is the formula of expected future growth rate?
g =IRR / (1-Liquidity ratio)

g =ROE * (1- Payout ratio)
g =NPV * (1- Debt ratio)
g =ROI / (1- Leverage ratio)

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Value investment
Growth investment

Bonds
Shares
Land
Derivatives

ISECTS
LOTS
KATS
PETS

dividend of Rs. 150,000 to shareholders. What will be retained earning?
500, 000
150, 000
250, 000
350, 000

250,000

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350,000
450,000
550,000

industry?
Defensive industry
Cyclic industry
Growth industry

measure?


Recession
Trend lines
Indicators
Cycles


On Balance Volume

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56%
50%
46%
40%

Growth rate of dividends for Company ABC is 5% and currently company’s share is
selling at $110. The required rate of return of investor is 6%. The growth rate of the share
price will be:
11%
6%
5%
1%

Stocks
Transport vehicles
Bonds
Bank deposits

Which of the following indicates the low level of interest in the market?
Decreased volume
Increased volume
Constant volume

Deposit collateral

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Withdraw funds
Cancel the trade



Diversification
Liquidity
Secured returns

Which of the following ratios indicate the ability of a company to repay its current
liabilities from it operating cash flow?

Leverage ratio
Debt coverage ratio



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Book value
Earning per share
Market value
Cost per share

Pioneering stage
Expansion stage
Stabilization stage
Declining stage


Operating income

___________.
Small cap companies

Mid cap companies
Growth companies
Large cap companies (correct)

Cash account

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Margin account
Real account
CFA account

Pioneering stage
Stabilization stage
Declining stage
Expansion stage

LOTS
PETS
ISECTS (correct)
KATS


Costs get stable rather than decreasing (correct)

Income Statement
Cash Flow Statement
Balance Sheet (correct)

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Equity – debt balance (correct)


Market value per share / Earnings per Share (correct)

Gross income
Distributed income
Retained earning(correct)
Net income

Android market
Capital market
Money market (correct)
Target market

income statement?

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Cash items
Non-cash items (correct)
Purchases


previous numbers (correct)
intervals

The security is being undervalued (correct)


Measure a company's capital structure (correct)



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Income Statement (correct)
Cash Flow Statement

On Balance Volume
Bollinger Bands
http://www.investopedia.com/terms/m/macd.asp
On Balance Volume
• We will look at just a few: technical indicator
– Moving Average Convergence/Divergence (MACD)
– Relative Strength Index (RSI)
– On Balance Volume
– Bollinger Bands
Primary market
Secondary market
Third market
Fourth market
Which of the following statements identify the advantage of the market measures to the
investor?

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(reference)Market measures are useful to investors in quickly judging their overall
portfolio performance.
Which of the following is known as Secondary trend in Dow Theory?
Wave
Triangle
Tide
Rounded bottom
• Secondary Trend
– Called “the waves” by Dow, this is shorter-term
Support lines
Resistance lines
Tangent lines
Interval lines
http://stockcharts.com/help/doku.php?id=chart_school:chart_analysis:trend_lines
Growth rate of dividends for Company ABC is 5% and currently company’s share is
selling at $110. The required rate of return of investor is 6%. The growth rate of the share
price will be:
11%
6%
5%
1%
Expansion stage:
– Survivors from the pioneering stage are identifiable.
– Firm operations more stable, dependable.
– Considerable investment funds attracted.

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– Financial policies firmly established.
– Dividends often become payable.
– Attractive to a wide group of investors.
____________ focuses on the share price movements in the market.

Technical analysis
Quantitative data analysis
Empirical analysis
Up
Constant
Down
Fluctuating
• Black body candle will depicts when prices are moving down
the balance sheet?
Leverage ratio
Debt coverage ratio
• Price-to-book value ratio:
– Ratio of share price to stockholder equity as measured on the balance
sheet
Which of the following stage offers the highest potential returns and greatest risk?
Pioneering stage
Expansion stage
Stabilization stage
Decline stage
Pioneering stage offers the highest potential returns, greatest risk
Which of the following is the source of income for members or brokers?
Copyright fee
Application fee
Fixed cost fee
Trading fee
Trading fee is the income which is the source of revenue for members or brokers

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Technical analysis
Vertical analysis
Horizontal analysis
Fundamental Analysis is suitable for long term investments
Cyclical stocks are precisely the place to be, because their sales and profits are closely
tied to overall economic activity
Fundamental analysis includes the evaluation of which of the following?
Quantitative and empirical data (not sure)
Qualitative and colonial data
Qualitative and imperial data
Quantitative and imperial data
industry?
Defensive industry
Cyclic industry
Growth industry
asking price - the price at which something is offered for sale
offer price - (stock market) the price at which a broker is willing to sell a certain
security

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Value investment
Growth investment

ISECTS
LOTS
KATS
PETS
Current assets for the Company are Rs. 600, 000 out of which inventory is Rs. 250000,.
Current liabilities of company are Rs. 295000. What will be quick ratio for the company?
2.5:1
1:2
1:1.18
1.18:1
Quick ratio = Current assets – inventory / current liabilities
= 600000/250000/295000
= 1.18
All of the following steps are involved in estimating the earnings stream, EXCEPT:
Estimating corporate sales
Estimating corporate earnings before taxes
Estimating corporate liabilities and assets
Estimating corporate earnings after taxes
Napoleon series
Fibonacci series
Geometric series
R.N. Elliot formulated this idea in a series of articles in Financial World in 1939.
Elliot believed that the market has a rhythmic regularity that can be used to
predict future prices.
The Elliot Wave Principle is based on a repeating 8-wave cycle, and each cycle is
made up of similar shorter-term cycles (“Big fleas have little fleas upon their
backs to bite 'em - little fleas have smaller fleas and so on ad infinitem”).

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Elliot Wave adherents also make extensive use of the Fibonacci series
Exponential
Density
Simple
Variable
Moving average
Weighted moving average
Exponential smoothing
bid price - (stock market) the price at which a broker is willing to buy a certain
security
Holes
Strings
Waves
Tides
• Primary Trend
– Called “the tide” by Dow, this is the trend that defines the long-term
direction (up to several years). Others have called this a “secular”
bull or bear market
Which of the following is known as “Type 1" account?
CFA account
Cash account
Real account
Margin account
• Cash Account (Type 1) (lesson 5 ppt)
Which of the following is EXCLUDED from the reasons of investing?
To obtain capital gain

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To supplement their money
To experience an excitement
To gather market information
People invest to …
• supplement their income
– Dividends and Interest.
• earn capital gains
– Appreciation refers to an increase in the value of an investment.
• experience the excitement of the investment process.
On Balance Volume
Bollinger Bands
As the two trendlines diverge from the apex, the pattern resembles a reverse version
of a symmetrical triangle.
Starter
Floor
Ceiling
Simulator
http://www.investinganswers.com/term/relative-strength-index-rsi-850

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Stabilization or maturity stage:
– Growth begins to moderate.
– Marketplace is full of competitors.
– Costs are stable rather than decreasing.
Equity – debt balance
buying power =equity-debt balance

the brokerage firm?
CFA account
Cash account
Real account
Margin account
Margin Accounts (Type 2)
A portion of the share cost can be borrowed from the brokerage firm
1933
1934
1935

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1936
The securities exchange act of 1934 deals with the secondary market
Growth industries
Cyclical industries
If mutual funds are showing high liquidity, it means mutual funds are ________ and it is
good for investors to ___________.
Bearish, sell
Bullish, buy
Bullish, sell
Bearish, buy
– Low liquidity implies funds fully invested (bullish) and market is near
or at peak.
– High liquidity implies funds are bearish.
• Considered a good time to buy
10,000
20, 000
200, 000
100, 000
Procter & Gamble is not affected by the recession in the economy; we will consider
Procter & Gamble as:
Cyclic industry
Defensive industry
Tertiary bond
Bearer bond

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Fixed income bond
Euro bond
Type of bond
• Term Finance Certificates
• Bearer bonds
• Fixed Income bonds
• Euro bonds
In moving average convergence / divergence indicator _______ moving average is used
to generate a buy / sell signal.
12-days
10-days
9-days
8-days
http://www.tradingonlinemarkets.com/Articles/Technical_Analysis/MACD_Indicator.ht
m
A 9-day moving average of this difference is used to generate signals
Under Dividend Discount Model (DDM) which of the following indicates that stock is
overvalued?
Value of stock from DDM > current trading price of stock
Value of stock from DDM < current trading price of stock
Value of stock from DDM = current trading price of stock
The idea is that if the value obtained from the DDM is higher than what the shares
are currently trading at, then the stock is undervalued

9
11
13
15

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SIC codes have 11 divisions, and within each of these divisions are several major
industry groups designated by a two-digit code.
Which of the following is NOT true about technical analysis?
It requires some subjective decision-making
It requires much accounting information
Its success would mean markets are not efficient
Technical analysis is older than fundamental analysis
Which of the following is TRUE about stabilization or maturity stage?
It gives you a good idea of where to think about investing
Stabilization or maturity stage:
– Growth begins to moderate.
– Marketplace is full of competitors.
– Costs are stable rather than decreasing.
Trend analysis
Bar chart
Liquidity ratio
Elliott wave theory
Chaos theory
Portfolio theory
Valuation theory
Chaos Theory: Another popular area of research today. It is the search for patterns
in randomness
Which of the following terms refer to the recurring and fluctuating levels of economic
activity that an economy experiences over a long period of time?
Claims cycle
Reaction cycle

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Business cycle
Capital cycle
Primary
Secondary
Third
Fourth
Direct trades between large institutional investors comprise the fourth market.
Identify the stages of the business cycle.
Peaks and troughs
Straight and curved lines
Troughs and domes
Straight lines and domes
The composite indexes are used to indicate peaks and troughs in the business cycle
Growth industry
Cyclical industry
Defensive industry
when:
Which of the following is defined as a procedure for valuing the price of a stock by using
predicted dividends and discounting them back to present value?

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On Balance Volume
Bollinger bands
http://campus.murraystate.edu/academic/faculty/larry.guin/FIN333/Style_Value.htm
___________.
Small cap companies
Mid cap companies
Growth companies
Large cap companies
Large-cap stocks: Capitalization more than $2 billion
• Margin call
- When account equity deteriorates too far, the investor may get a margin
call - It requires: the deposit of additional funds
or
the sale of some security positions and sell a part of shares to offset the
requirement.
Protecting profits
Minimizing losses
Rapid execution
Stop order

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- especially useful in protecting profits.
- can also be used to minimize losses.
- unfortunately investors seldom use them.

White
Black
Red
Blue
• Blue color indicates market or share price is going up.
Derivatives are assets that include all of the following, EXCEPT:
Future
Option
Forward
Pay order
http://books.google.com/books?id=DT0nnLDMYTgC&pg=PA4&dq=Derivatives+are+as
sets+that+include+all+of+the+following,+EXCEPT:+Select+correct+option:++Future++
Option++Forward++Pay+order&hl=en&ei=sIy9TZKzBI_MrQee44SKBg&sa=X&oi=bo
ok_result&ct=result&resnum=1&ved=0CCkQ6AEwAA#v=onepage&q&f=false
Primary market
Secondary market
Third market
Fourth market

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market?
In which of the following accounts the trading charges are high?
Savings account
System account
Personal account
Cash account
Which of the following includes fixed income securities?
Bonds
Shares
Derivatives
of OTC securities is known as ________.
Initial Public Offering (IPO)
Offered for Sale (OFS)
National Association of Security Dealers (NASD)

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The National Association of Security Dealers (NASD) is a self-regulatory body that
licenses brokers and generally oversees the trading practices of OTC securities.
Pre-tax Income/EBIT
Tax burden: Net Income/Pre-tax Income
measure?
 Multiple of earnings approach
– Valuation relative to a financial performance measure
– Justified P/E ratio
Exchange function
Economic function
The most important function is the economic function. This mechanism facilitates the
transfer of money from savers to borrowers
Stocks
Transport vehicles
Bonds
Bank deposits
Defensive stock
Growth stock
Value stock
Long term trend

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Short term trend
Medium term trend
• Secondary Trend
– Called “the waves” by Dow.
– This is shorter-term departures from the primary trend.
Blue chip companies
Cyclical companies
Growth companies
Income companies
In which of the following accounts do investors place funds to be borrowed by finances?
Instant access savings accounts (not 100%)
Continuous funding system account
Personal finance access accounts
International savings accounts
• Support and resistance lines indicate likely ends of trends.
• Resistance results from the inability to surpass prior highs.
• Support results from the inability to break below to prior lows.
• What was support becomes resistance, and vice-versa.
____________do not change the collective wealth of shareholders.
Stock splits
Bonus shares
Right shares
Point and figure
Candlestick
Bar
(Handout page 56)

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Which of the following terms is used synonymously for the interest coverage ratio?
Times interest earned ratio
Leverage ratio
 Present value approach
– Capitalization of expected income
– Intrinsic value based on the discounted value of the expected stream
of cash flows
Distance selling
Best selling
Target selling
Short selling
lines?
as:
Primary market
Secondary market
Third market
Fourth market

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(Handout page 32)
On Balance Volume
Bollinger Bands
http://www.investopedia.com/terms/b/broadeningformation.asp
No
Linear
Indirect
Direct
P/E ratios and interest rates are indirectly related
Portfolio theory
Valuation theory
Elliott wave theory
Chaos theory
Bonds
Shares
Land
Derivatives
A real asset does not have a corresponding liability associated with it, although one
might be created to finance the real asset.

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undervalued
distributed
If Vo > P o, the asset is undervalued and should be purchased or held if already owned.
If relative stock index indicates oversold level in the market what will be best for an
investor?
Selling
Holding
Buying
Doing nothing
Which of the following analysts think that supply and demand factors play the most
important part ?
Ratio analysts
Technical analysts
Research analysts
The technical analyst believes that prices are largely determined by investor behavior
and by supply and demand
Technical analysts think supply and demand factors play the most important role.
What does the abbreviation SOES stands for?
System of Organic and Effective Sciences
Small Order Execution System
Service Observation Execution Statistics
Scotland Order Education School
Which of the following depicts a bullish trend in stock market?
Stock price drop below support level
Stock price rises above support level
Stock price drop below resistant level
http://books.google.com/books?id=DAkt59RNso8C&pg=PA72&dq=depicts+a+bullish+t
rend+in+stock+market&hl=en&ei=JbK9TZuPEo-
Lswb_2Zn6BQ&sa=X&oi=book_result&ct=book-
thumbnail&resnum=2&ved=0CEsQ6wEwAQ#v=onepage&q=depicts%20a%20bullish%

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20trend%20in%20stock%20market&f=false
Dividends often become payable
Expansion stage:
– Survivors from the pioneering stage are identifiable.
– Firm operations more stable, dependable.
– Considerable investment funds attracted.
– Financial policies firmly established.
– Dividends often become payable.
• Attractive to a wide group of investors.
Growth investors
Accredited investor
• Growth investors believes that a body in motion tends to stay in motion.
Strong companies tend to get stronger.

What is inferred in case the share price is moving above the simple moving average line?
Share is inferior
Price is increasing
Market is positive
Company is good
The share price is above the red line than we infer that market is positive.
Slide and Video Lecture#8 (time 47:11)
Offering cash dividends

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Leverage ratio
Debt coverage ratio
• Leverage is a ratio that measures a company's capital structure.
• In other words, it measures how a company finances their assets
• Leverage is a ratio that measures a company's capital structure.
• In other words, it measures how a company finances their assets
Android market
Capital market
Money market
Target market
the following?
• Elliot believed that the market has a rhythmic regularity that can be used to
predict future prices.
Which of the following gives voting rights to shareholders?
Common stock
Preferred stock
Government bonds
Treasury bonds
Common stock typically carries voting rights

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200
100
50
10
Typical values for the short term moving average are 10, 20 and 50 day moving
average calculations, and long term are generally 100 and 200 day moving averages.
Which of the following is the formula of earning per share?
EPS=IRR / Market value per share
EPS=ROE * Net asset value per share
EPS=NPV * Retained earning value per share
EPS=ROE * Book value per share
Deposit collateral
Withdraw funds
Cancel the trade
Share
Distribution
Section
Division
Android market
Capital market
Money market
Target market
previous numbers
intervals
• Some people believe that Fibonacci series help in predicting changes in
security trading patterns.
• Example of Rabbit.
• Fibonacci numbers work in predicting future price trends.

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• Fibonacci numbers are a series where each succeeding number is the sum of
the two preceding numbers.
• The first two Fibonacci numbers are defined to be 1, and then the series
continues as follows: 1, 1, 2, 3, 5, 8, 13, 21…
• As the numbers get larger, the ratio of adjacent numbers approaches the
Golden Mean: 1:1.618.
Current assets for the Company are Rs. 600, 000. Current liabilities of company are Rs.
295000. What will be current ratio for the company?
1:2
2:1
1:2.03
2.03:1
In which of the following the investors look at the historical perspective?
Value investment
Growth investment
Growth company might not have historical perspective in background but it will find a
place in the future depending on the product or industry. Value Company has historical
perspective in background. It is under priced and pays dividends.
Support level if formed by joining _______________ with a line on the graph.

Low points
High points
Medium points
Support results from the inability to break below to prior lows
Cash account
Margin account
Real account
CFA account

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Two-stage models
Y models
H models
Three-stage models
• Various versions of the multistage model exist including the two-stage, H,

and three-stage models.
What does the abbreviation MACD stands for?

Murray Alliance of Construction Department
Montréal Association of Contraction Districts
Michigan Appliance for Counseling Development
Previous incomes
Current incomes
Future incomes
inappropriate profits
http://books.google.com/books?id=4lmDIw_4kpkC&pg=PA356&dq=dividends+are+usu
ally+paid+out+Current+incomes&hl=en&ei=jhC_Tc7YH4LovQOakam1BQ&sa=X&oi=
book_result&ct=result&resnum=1&ved=0CDAQ6AEwAA#v=onepage&q=dividends%2
0are%20usually%20paid%20out%20Current%20incomes&f=false
An account that permits an investor to borrow part of the cost of investment firm a
brokerage firm.
Dealer account
Option account
Margin account
Cash account
Decreased volume
Increased volume
Constant volume

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$150
$100
$66
$50
Quick Asset Ratio
Odd Lot Short Ratio
Shares Sold Short
(Handout lesson 10)
Blue chip stock
Growth stock
Penny stock
Penny stocks are unusually risky stocks
2.0 Per share
2.5 Per share
0.13 Per share
1.3 Per share
LOTS
PETS
ISECTS
KATS
Which of the following orders are placed prior to the execution of trade?
Market and stop orders

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Market and limit orders
Stop and limit orders
Stop and mitigate orders
Market orders are to be executed as soon as reach the ecxg flr.at the best prevailing
price
In which of the following cases support occurs?
Inability to recede prior high
Inability to surpass prior low
Capacity to surpass prior high
• Support and resistance lines indicate likely ends of trends.
• Resistance results from the inability to surpass prior highs.
• Support results from the inability to break below to prior lows.
• What was support becomes resistance, and vice-versa.
Question # 11 of 15 ( Start time: 05:17:59 AM ) Total Mar ks: 1
SuperDot
NYSE direct
Trading curb
Ticker tape
Target market
Historic market
Borough market
Regular market
• Locally short selling is not permitted in the regular market but short selling
is permitted in the future market.

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undervalued
Where the intrinsic value is lesser than the current market price as the asset is
overvalued
Distributed
If Vo < Po, the asset is overvalued and should be avoided, sold if held, or possibly sold
short.
Third market
Primary market
Secondary market
DuPont analysis
Du Pont Analysis: Highlights expense control, asset utilization, and debt utilization
A broker wants to buy the shares of company A and he is willing to pay maximum Rs.
500 for the shares, this price will be known as:
Bid price
price
Fair price
• Bid price – highest price at which anyone is willing to buy.
• Offer (Ask) price – lowest price at which anyone is willing to sell.

market?
Stream of shareholder benefit

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Which of the following type of chart requires continuous monitoring at part of investors?
Point and figure chart
Candle & stick chart
Bar chart
Line chart
Lecture #8
IES
OPS
OFS
IPO
Offer For Sale OFS: Offer for sale means offer those shares that are already issued.
Which of the following shows the relationship between the market yields and time to
maturity?
Smart curves
Bezier curves
Yield curves
Filling curves
Reading Yield Curves: Shows relationship between market yields and time to
maturity
Pioneering stage
Stabilization stage
Declining stage
Expansion stage
Portfolio theory
Valuation theory
Elliott wave theory
Chaos theory

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High
Low
Minimum
Average
Cyclical curb
Personal curb
Allusive curb
Trading curb
The National Association of Security Dealers (NASD) is a self-regulatory body that
licenses brokers and generally oversees the trading practices of OTC securities
Market order
Stop order
Limit order
Mitigate order
Stop order: - especially useful in protecting profits
All of the following are the investment alternatives, EXCEPT:
Derivative assets
Fixed income securities
Equity securities
10

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5.1
5
4.9
P/E = Current Market Share Price / EPS
= 500/100
=5
Capital, money
Money, capital
Capital, open
Money, debt
Which of the following is the ratio of a company’s total market value (price times
number of shares) divided by sales?
Debt coverage ratio
Leverage ratio
• Price-to-sales ratio
– Ratio of a company’s total market value (price times number of
shares) divided by sales.
– Market valuation of a firm’s revenues
In which of the following conditions the price earning ratios will be low?
When conversion and exchange rates are low
When revenue and expense rates are moderate
When inflation and interest rates are high
When insurance and tax rates are equivalent
Which order will be executed automatically at the current bid or ask price?
Limit order
Market order
Stop order
Good till cancelled
Market orders are to be executed as soon as possible after reaching the exchange floor

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Upward trend
Downward trend
Trend range
Round phase
• There are three basic kinds of trends:
– An Up trend where prices are generally increasing.
– A Down trend where prices are generally decreasing.
– A side ways band and moving in a Trading Range.
EXCEPT:
• Problems:
– Need infinite stream of dividends.
– Dividend stream is uncertain.
• Must estimate future dividends.
– Dividends may be expected to grow over time.
• Must model expected growth rate of dividends and need not be
constant.
this case?
Rs. 10
Rs. 1290

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Rs. 645
Rs. 200
• Bid price – highest price at which anyone is willing to buy.
• Offer (Ask) price – lowest price at which anyone is willing to sell.
• Difference between the two prices is the spread.
Which of the following statement is NOT true about Elliot Wave Theory?
It is based on repeating 8 waves’ cycles
It identified three movements in security prices
It was proposed by R.N. Elliot
It made extensive use of Fibonacci series
Return on equity depends on the product of all of the following, EXCEPT:
Total asset turnover
Market value per share
Profit margin on sales
Financial leverage
A company is currently paying dividend of Rs. 12 to shareholders and the dividend
growth rate is 5%. What will be the amount of dividend for next year?
D1 = 12* (1+0.05) = 12.6
D1 = 12* (1-0.05) = 11.4
D1 = 12 / (1- 0.05) = 12.6
D1 = 12 / (1+0.05) = 12.63
Of the following who believe securities are priced according to fundamental economic

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data?
Technical analysts
Accredited analysts
Interactive analysts
Fundamental analysts believe securities are priced according to fundamental economic
data.
stocks?
Growth industries
Cyclical industries
Interest sensitive industries
Growth industries tend to be composed of relatively volatile and risky stocks.
10
5.1
5
4.9
undervalued
distributed
All of the following are the types of orders used extensively in stock markets, EXCEPT:

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Market order
Stop order
Limit order
Mitigate order
Which of the following take place at the declining stage of the industry life cycle?
Which of the following best describes the concept of Time value of money?
What you have in hand today is more worth than in past
What you have in hand today is less worth than in future
What you have in hand today is more worth than in future
What you will have in future is more worth than in present
Which of the following is not a real asset?
Land
Building
Futures
Furniture
What does the abbreviation OFS stands for?
Offer for sale
Overseas family sale
Output field sale
Object file sale
Bonds
Shares
Land
Derivatives
Which of the following take place at the pioneering stage of the industry life cycle?

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Firm operations get more stable
Rapid growth in demand occur
Sales growth decline as products obsolete
1. Pioneering stage:
– Rapid growth in demand.
– Opportunities may attract other firms and venture capitalists.
– Difficult identify likely survivors.
Companies’ dividends are paid usually ________.
Yearly
Quarterly
Biannually
Monthly
Which of the following is applied on the shares only?
Brick breaker
Circuit breaker
Bubble breaker
Suburb breaker
Mr. Ahmad a fundamental analyst uses technical analysis as a tool to advise his clients
(investors) but he does not admits that he is also using technical analysis tools. Mr.
Ahmad will be ______.
Reward winner
Closet
Growth trader
Value trader
Recession
Trend lines
Indicators
Cycles
Basic Technical Tools
• Trend
• Trend lines
• Moving Averages

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• Price Patterns
• Indicators
• Cycles
Growth industries
Cyclical industries
• Cyclical industries:
– Most affected by recessions and economic adversity.
Line and pie charts
Bar and pie charts
Bar and line charts
56%
50%
46%
40%
Net profit / net sales *100
600000/1500000*100

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A cyclical stock is one whose fortune is directly tied to the state of the overall national
economy.
8) When might a high return on equity not be desirable?
a) If the firm were not able to sustain the high return on equity
b) If the firm were in the rapid growth cycle of the life cycle
c) If the firm had a large amount of debt financing
d) If the firm did not have as high a return on assets
rises?
It will fall
It will fluctuate
It will rise
falls?
It will fluctuate
It will fall
It will rise
4- Apart from the balance sheet or retained earnings what else must the financial analyst

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Which of the following is NOT a source of Return on Equity (ROE)?
Return on assets
Leverage
Sales per total assets
By which of the following analyses an investor could spot the degree to which a company
is leveraged, or indebted?
Balance Sheet analysis
Technical analysis
Security analysis
http://books.google.com/books?id=IHwobv4gPCQC&pg=PA78&dq=an+investor+could
+spot+the+degree+to+which+a+company+is+leveraged,+or+indebted&hl=en&ei=m_vI
Tcv0OciKswaK4pmZAw&sa=X&oi=book_result&ct=book-
thumbnail&resnum=1&ved=0CD8Q6wEwAA#v=onepage&q=An%20investor%20also
%20can%20examine%20the%20degree%20to%20which%20a%20company%20is%20le
veraged%2C%20or%20indebted.&f=false
following?
A through K
1 through 23
i through xviii
a through h
Slow return

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Quick returns

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FIN630 Online Quiz#3 From Lecture# 1 to 27

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VU Askari Team

Long term trend

Short term trend
Medium term trend

Capitalization weighting must be adjusted for changes in all of the following, EXCEPT:
Index components
Primary stock offerings
Share repurchases
Total personal values



important part ?
Note: Solve these papers yourself

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Ratio analysts
Technical analysts
Research analysts

Which of the following bonds do not pay interest during the life of the bonds?
Municipal bonds
Callable bonds
Convertible bonds
Zero coupon bonds

A form of the EMH which states that security prices fully reflect all public and private
information.
Strong form efficiency

Weak form efficiency
Semi strong form efficiency

Equity – debt balance

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Patent
Timber
Furniture
Building

the balance sheet?

Leverage ratio
Debt coverage ratio

Sale or purchase fee charged by mutual fund managers is known as_____.
Profit
Interest
No load
Load

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Growth industries
Cyclical industries



Two-stage models
Y models
H models
Three-stage models

ISECTS

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LOTS
KATS
PETS



Primary market
Secondary market
Third market
Fourth market

Offer for sale

Output field sale
Object file sale

Which of the following tests is often used to test the weak form of market efficiency?

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Stock splits
Runs test
Insider transactions
Accounting changes

Which of the following highlights expense control, and the asset and debt utilization?
Trend analysis
Risk analysis
DuPont analysis
Claims analysis


On Balance Volume
Bollinger Bands

Current assets for company A are $ 20, 00, 000 and its current liabilities are of worth $
15, 00,000. What will be its
working capital?
$600, 000
$400, 000
$250, 000

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$500, 000

Which of the following index is price weighted?
New York Stock Exchange Composite

Dow Jones Industrial Average
Standards and Poor’s Index
Russell 3000 Index

Commercial papers are example of _________.
Equity market funds
Money market funds
Mutual funds

as:
Primary market
Secondary market
Third market
Fourth market


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Line charts
Bar charts
Pie charts
Symbol charts


Exchange function
Economic function


Which of the following is NOT a test of semi-strong form efficiency?

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Stock splits
Accounting changes
Dividend announcements

Under Dividend Discount Model (DDM) which of the following indicates that stock is
overvalued?
Value of stock from DDM > current trading price of stock
Value of stock from DDM < current trading price of stock
Value of stock from DDM = current trading price of stock



Stock splits
Runs test
Accounting changes

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undervalued
distributed

Demand
Supply
Volume
Price



Cyclical curb
Personal curb

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Allusive curb
Trading curb



Upward trend
Downward trend
Trend range
Round phase

Recession
Trend lines
Indicators
Cycles

Identify the correct formula for the Dividend Discount Model.
Value of stock = Earnings per share / Interest rate - Expected growth rate

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Value of stock = Dividend per share / Growth rate - Dividend discount rate
Value of stock = Dividend per share / Discount rate - Dividend growth rate
Value of stock = Earning per share / Expected rate - Interest growth rate

Primary
Secondary
Third
Fourth



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Which of the following is a concept in economics, finance, and psychology related to the
behavior of consumers and investors under uncertainty?
Illusion of control
Anchoring
Mental accounting
Risk Aversion

when:

High
Low
Minimum
Average

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2.0 Per share
2.5 Per share
0.13 Per share
1.3 Per share


Exchange function
Economic function

Cash account
Margin account
Real account
CFA account

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outstanding?
Discounted value
Present value
Net asset value

1933
1934
1935
1936



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Commercial papers are example of _________.
Equity market funds
Money market funds
Mutual funds

Which of the following is a current market in which all buying and selling is done on
cash or margin basis?

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Target market
Historic market
Regular market
Borough market

An efficient market reflects:


be sold?
Skimming price
Consumer price
Retail price
Trigger price

SuperDot
NYSE direct
Trading curb
Ticker tape

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All of the following are the levels of market efficiency, EXCEPT:
Weak form
Subjective form
Semi-strong form
Strong form


Leverage ratio

In which of the following accounts the trading charges are high?
Savings account
System account
Personal account
Cash account

Napoleon series
Fibonacci series
Geometric series

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market?

Stocks
Transport vehicles
Bonds
Bank deposits

Which of the following ratios would not be used to draw a conclusion about a company's
managerial effectiveness?
Net margin
Price-Earnings Ratio
Return on equity
Return on Investment

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Account payable
Bonds
Debentures

Brokerage fee charged by a stockbroker is an example of:
Margin profit
Insurance premium
Transaction cost
Capital expenditure

ISECTS
LOTS
KATS
PETS

All of the following steps are involved in estimating the earnings stream, EXCEPT:
Estimating corporate sales

Estimating corporate earnings before taxes

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Estimating corporate liabilities and assets
Estimating corporate earnings after taxes





Direct income
Other income
Operating income

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important part ?
Ratio analysts
Technical analysts
Research analysts

Which of the formula is TRUE for calculating retained earnings?
Retained Earnings = Net Earnings – Dividends
Retained Earnings = Net Earnings +long term debt
Retained Earnings = Net Earnings + short term debt
Retained Earnings = Net Earnings + dividend

Which of the following level of market efficiency provides public information?
Weak form
Subjective form
Semi-strong form
Strong form

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Cyclical curb
Personal curb
Allusive curb
Trading curb


Leverage ratio


Which of the following is an example of a non-marketable security?
Treasury bill
Negotiated CD
U.S. government savings bond
Banker’s acceptance

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A degree of informational efficiency which states that future stock prices cannot be
predicted by analyzing price from the past is known as:

56%
50%
46%
40%

Which of the following is a payment to owners in stock?
Penny stock
Stock dividend
Stock flicker
Stock ticker

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A company that might not have historical perspective in background but it will find a
place in the future depending on the product or industry is a ___________.
Value company
Large cap company
Small cap company
Growth company

$150
$100
$66
$50

Which of the following index is price weighted?
New York Stock Exchange Composite

Dow Jones Industrial Average
Standards and Poor’s Index
Russell 3000 Index

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shareholders?
Other income
Net income
Operating income

Which of the following is known as “Type 1" account?
CFA account
Cash account
Real account
Margin account

Patent
Timber
Furniture
Building

when:

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undervalued
distributed

1933
1934
1935
1936



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No
Linear
Indirect
Direct



this case?
Rs. 10
Rs. 1290
Rs. 645

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Rs. 200

Upward trend
Downward trend
Trend range
Round phase

A form of the EMH which states that security prices fully reflect all public and private
information.


undervalued
distributed


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Tertiary bond
Bearer bond
Fixed income bond
Euro bond



Which of the following is the formula of earning per share?
EPS=IRR / Market value per share

EPS=ROE * Net asset value per share
EPS=NPV * Retained earning value per share
EPS=ROE * Book value per share

Napoleon series
Fibonacci series
Geometric series

Return on equity depends on the product of all of the following, EXCEPT:

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Total asset turnover
Market value per share
Profit margin on sales
Financial leverage

Required rate of return =
RF +inflation premium
RF+ risk premium
Real ROR +inflation premium
Risk premium + inflation premium

Emotional maturity
Debt maturity
Yield to maturity

10,000
20, 000
200, 000
100, 000

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Which of the following is a tangible asset with useful life of more than one year?
Land
Building
Furniture

Growth industry
Cyclical industry
Defensive industry



Which of the following depicts a bullish trend in stock market?
Stock price drop below support level

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Stock price rises above support level
Stock price drop below resistant level

economy”?
Dow Theory
Bollinger Bands
On Balance Volume





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falls?
It will fluctuate
It will fall
It will rise

lines?

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Pioneering stage
Stabilization stage
Declining stage
Expansion stage

Which of the following is not a real asset?
Land
Building
Futures
Furniture



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Which of the following is the difference between the expected return and the actual return
on an investment?
Expected return
Abnormal return
Normal return
Tax return

Which of the following is NOT included in capital market securities?
Treasury Bills
Preferred shares
Common shares

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Future cash flows

Present cash flows
Free cash flows

Stock splits
Runs test
Accounting changes

Capital, money
Money, capital
Capital, open
Money, debt


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Which of the following can lead to irrational investment decisions?
Behavioral finance
Efficient market hypothesis
Dow theory

Growth industries
Cyclical industries

If the value of Company A’s stock under dividend discount model is Rs. 600 whereas the
current trading price of stock A is Rs. 550. This stock will be considered as:
Over rated
Exact valued
Undervalued
Overvalued

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Trend analysis
Bar chart
Liquidity ratio

Demand
Supply
Volume
Price

The sensitivity of a coupon bond price to a change in its yield:
Is directly related to the bond's yield to maturity

Is inversely related to the bond's yield to maturity
Is greater for increases in yield to maturity than it is for decreases in yield to maturity
Is constant regardless of whether the yield to maturity increases or decreases

ISECTS
LOTS

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KATS
PETS

Growth investors
Accredited investor

Slow return
Quick returns

undervalued
distributed

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The interest rate stated on a bond, note or other fixed income security, expressed as a
percentage of the principal (face
value) is known as:

Interest free rate

Coupon rate
Discount rate
Bank rate

Which of the following is defined as a procedure for valuing the price of a stock by using
predicted dividends and discounting them back to present value?

On Balance Volume
Bollinger bands



Pioneering stage
Expansion stage

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Stabilization stage
Declining stage

Growth industries
Cyclical industries

Gross income
Distributed income
Retained earning
Net income

Which of the following rated bonds are not paying interest?
AAA rated
BBB rated
C rated
D rated

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Decreased volume
Increased volume
Constant volume

undervalued
distributed



Margin accounts are mostly used by:
Traders who think their long-run returns will be greater than the cost of borrowing
Speculators who think their long-run returns will be greater than the cost of borrowing
Investors who think their long-run returns will be greater than the cost of borrowing

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Low points
High points
Medium points

Exponential
Density
Simple
Variable

In moving average convergence / divergence indicator _______ moving average is used
to generate a buy / sell signal.
12-days
10-days
9-days
8-days

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Considerable empirical research supports which of the following level of market
efficiency?
Weak form
Subjective form
Semi-strong form
Strong form

Which of the following ratios that shows how much a company pays out in dividends
each year relative to its share price?
Dividend per share

Dividend coverage ratio
Dividend earned ratio

Damages from the cyclone to the building are an example of which of the following?
Other loss
Non-operating loss
Extraordinary loss
Operating loss

Distance selling
Best selling
Target selling
Short selling

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000. What will be capital gain in this
case?
10,000
20, 000
200, 000
100, 000

the balance sheet?

Leverage ratio
Debt coverage ratio

Growth industries
Cyclical industries

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Financial instrument whose return is derived from the return on another instrument is
known as a (n):
Derivative security
Fixed income security
Equity security
Money market security

One of the main objectives of the income statement is to determine:
Debt and equity ratio of the company
Profits or losses of company
Total cash outflow and inflow
Total assets of the company



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The Dow Jones Industrial Average (DJIA) is an example of which of the following
index?
Price weighting index
Capitalization weighting index
Volume based index

Target market
Historic market
Borough market
Regular market

Which of the following hypothesis states that some stocks are priced more efficiently
than others?
Financial media hypothesis

Financial instability hypothesis
Semi-efficient market hypothesis
Adaptive markets hypothesis

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When comparing bonds with other investments, which of the following should be used to
make a realistic comparison?
The effective annual yield

The dividend yield
The treasury yield
The percentage yield

Exchange traded fund
Open-end fund
Closed-end fund

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Which of the following securities have a combination of debt and equity characteristics?

Hybrid securities

Capital gains
Excitement

Which of the following is a current market in which all buying and selling is done on
cash or margin basis?
Target market
Historic market
Regular market
Borough market

All of the following are the forms of risk, EXCEPT:
Political risks
Interest rate risks
Presented risks
Economic risks

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200
100
50
10


ARS. Company’s total sales for the year 2009 are Rs. 500, 000. Sales returns are of Rs.
50,000. What will be the value of net sales for company?
550, 000
450, 000
425, 000
475, 000

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It ia a sequence of numbers where each successive number is the sum of the two previous
numbers
intervals
If you have to invest in the market and you are using graphs as technical analysis tool,
which of the following you will use to measure overbought / oversold level in the
market?
Simple moving average
Relative strength index
Stochastic oscillator
Relative strength index and stochastic oscillator
Deposit collateral
Withdraw funds
Cancel the trade

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Standard & Poor’s Composite Index is composed of how many “large” firm stocks?
250
500
750
1000


Which of the following is an indirect form of investment?

Investing in stock exchange

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Investing in money market
Investing in mutual funds

Holes
Strings
Waves
Tides

Quick Asset Ratio

Odd Lot Short Ratio
Shares Sold Short
Which of the following is EXCLUDED from the reasons of investing?

To obtain capital gain

To supplement their money
To experience an excitement
To gather market information

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Book value
Earning per share
Market value
Cost per share

On Balance Volume
Bollinger Bands

The rate of return anticipated on a bond if it is held until the maturity date is known as:
Discount rate
Interest free rate
Return on equity
Yield to maturity

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Which of the following is NOT a source of Return on Equity (ROE)?

Return on assets
Leverage
Sales per total assets
Close-ended funds

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Standard and Poor

Index fund
Reserve fund
Mutual fund
Pension fund



Protecting profits
Minimizing losses
Rapid execution

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Autocorrelation test
Dividend announcements
Accounting changes

9
11
13
15

Offer for sale

Output field sale
Object file sale

Share
Distribution
Section
Division


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Pre-tax Income/EBIT
Which of the following moves inversely to each other?

Interest rates and debt to equity ratios

Discount rates and P/E ratios
Coupon rates and leverage ratios
Interest rates and activity ratios

Relative stock index indicates oversold level in the market what will be best for an
investor?
Selling
Holding
Buying
Doing nothing
following?

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A through K
1 through 23
i through xviii
a through h


Point and figure
Candlestick
Bar
dividend of Rs. 150,000 to shareholders.
What will be retained earning?

500, 000
150, 000
250, 000
350, 000
Operating income :-s

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Each division of the Standard Industrial Classification has several major industry groups,
designated by which of the following codes?
A uni-digit code
A bilingual code
A two-digit code
A tentative code
Which of the following is similar to stock selection?

Associate rotation
Sector rotation
Audit rotation
Corporate rotation
If an investor wants to avoid transaction costs, which of the following strategy should he
opt?
Active strategy
Passive strategy
Buy and hold strategy
Sector rotation
What is inferred in case the share price is moving above the simple moving average line?
Share is inferior
Price is increasing
Market is positive
Company is good

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Fundamental analysis includes the evaluation of which of the following?

Quantitative and empirical data

Qualitative and colonial data
Qualitative and imperial data
Quantitative and imperial data
Doing nothing
Holding
Selling
Buying

Market order
Stop order
Limit order
Mitigate order
Company ABC is supplier of raw material of consumer goods, in the moth of February
Company had faced loss due to destruction of crops in flood. This will be ______ for
company.
Extraordinary loss
Investing loss
Financial loss

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Which of the following does not pay fix income (interest/ dividend) to investors?
Preferred stock
Government bond
Common stock
Treasury bond

Line and pie charts

Bar and pie charts
Bar and line charts
Which of the following affects the price of the bond?

Market interest rate
Required rate of return
Interest rate risk


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Elliott wave theory
Chaos theory
Portfolio theory
Valuation theory
Dow Jones Industrial Average is composed of how many “blue-chip” stocks?

10
30
50
70


Which of the following theory states that the news arrives randomly, and that security
prices adjust rapidly and accurately
to the arrival of news?

Valuation theory
Random walk theory
Pecking order theory
Corporate finance theory

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Question # 2 of 15 ( Start time: 02:46:17 AM ) Total Marks: 1

Finance mortgage strategies

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Debt, equity and money market securities

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Discount rate and the expected cash flows

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The firm’s ability to meet its financial obligations

Question # 15 of 15 ( Start time: 02:56:16 AM ) Total Marks: 1

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Fair pricing function

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High level of investors’ interest

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Stream of shareholder benefits

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Investment horizon changes

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Question # 13 of 15 ( Start time: 04:43:06 AM ) Total Marks: 1

A security deposit called retail margin

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Measure a company's capital structure

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Moving Average Convergence/Divergence

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Elliott wave theory

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Total risk = general risk + specific risk

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Investment Analysis & Portfolio Management - FIN630 Quiz 4

Investment Analysis & Portfolio Management - FIN630 Quiz 4