130+ Security Analysis and Portfolio Management Solved MCQs

1.

Liquidity risk is :

A. is risk investment bankers face.
B. is lower for small OTC
C. increases whenever interest rates increases
D. is risk associated with secondary market transactions
Answer» C. increases whenever interest rates increases
2.

Bond holders usually accept interest payment each.

A. 1 year
B. six months
C. 2 months
D. 2 years
Answer» B. six months
3.

Passive management is also referred to as.......?

A. index fund management
B. index folio management
C. interest free management
D. none of these
Answer» A. index fund management
4.

Multifactor asset pricing model that can be used to estimate the ......rate for the valuation of financial asset.

A. discount
B. interest
C. expense
D. risk
Answer» A. discount
5.

Arbitrate pricing theory is an ................. model.

A. asset pricing
B. risk evaluation
C. bond pricing
D. none of these
Answer» A. asset pricing
6.

CAMP stands for .

A. capital asset pricing model
B. capital assessment pricing model
C. capital asset placement model
D. none of these
Answer» A. capital asset pricing model
7.

An asset risk premium is given by :

A. the asset standard deviation
B. the assets expected returns
C. expected return per unit of standard deviation
D. the excess of the assets expected return over the riskless rates
Answer» A. the asset standard deviation
8.

Which of the following is an example of a depreciable asset?

A. land
B. cash
C. account receivable
D. equipment
Answer» D. equipment
9.

While bond prices fluctuate ,

A. yeilds are constant
B. coupon are constant
C. the spread between yeilds is constant
D. short term bond prices fluctuate even more
Answer» A. yeilds are constant
10.

To calculate historical (realised) risk and return, use;

A. ex-post data
B. mean and variance of expected return
C. probability distribution of possible states
D. ex- ante data
Answer» A. ex-post data
11.

A price weighted index is an arithmetic mean of

A. future prices
B. current prices
C. quarter prices
D. none of these
Answer» B. current prices
12.

A firm that fails to pay dividends on its preferred stock is said to be ………

A. insolvent
B. in arrears
C. in sufferable
D. delinquent
Answer» B. in arrears
13.

............... is not a money market instrument.

A. cerftificates of deposit
B. a treasury bill
C. a treasury bond
D. commercial paper
Answer» C. a treasury bond
14.

A bond that has no collateral is called ...................... .?

A. collable bond
B. a debenture
C. a junk bond
D. a mortgage
Answer» B. a debenture
15.

The process of addition of more assets in an existing portfolio is called.....?

A. portfolio revision
B. portfolio addition
C. portfolio exchanging
D. none of these
Answer» A. portfolio revision
16.

------is the amount left over after individual consumption.

A. Investment
B. Savings
C. Surplus
D. Money.
Answer» B. Savings
17.

--- include “expensive stocks” that offer big rewards but have big risk.

A. The patient portfolio
B. Conservative portfolio
C. Aggressive portfolio
D. Efficient portfolio
Answer» B. Conservative portfolio
18.

Find the odd one.

A. Risk
B. Return
C. Safety
D. Tax evasion
Answer» D. Tax evasion
19.

An investor committed money for very short period expect….

A. Return from price fluctuation
B. Dividend
C. Benefit from both price variation and dividend
D. None of these
Answer» A. Return from price fluctuation
20.

Investment in precious metals are included in ……… asset class.

A. Liquid assets
B. Financial assets
C. Real assets
D. Monetary assets
Answer» C. Real assets
21.

The investment process begins with ------

A. Investment policy
B. Security analysis
C. Portfolio construction
D. Fundamental analysis
Answer» A. Investment policy
22.

Total risk includes---------

A. Systematic risk only
B. Unsystematic risk only
C. Both a and b above
D. Only diversifiable risks
Answer» C. Both a and b above
23.

Systematic risk includes------

A. Market risk
B. Interest rate risk
C. Purchasing power risk
D. All the above
Answer» D. All the above
24.

Which among the following statements are true about unsystematic risk?

A. It is diversifiable
B. It is company specific
C. Both a and b
D. a only
Answer» C. Both a and b
25.

Which among the following is true about systematic risk?

A. It is not diversifiable
B. a only
C. Its measure is Beta
D. Both a and c
Answer» D. Both a and c
26.

According to Graham, a stock should have a current ratio of at least---

A. One
B. Two
C. Three
D. Four
Answer» B. Two
27.

--------is the process of combining together various investment assets to obtain optimum returns with minimum risk.

A. Portfolio construction
B. Portfolio analysis
C. Portfolio evaluation
D. Portfolio revision
Answer» A. Portfolio construction
28.

Modern portfolio theory is a contribution by………

A. William sharp
B. Benchamin Graham
C. Stephen Rose
D. Harry Markowitz
Answer» D. Harry Markowitz
29.

MACD stands for -----

A. Managing asset classes for dividend
B. Multiple asset class deposit
C. Moving average convergence divergence
D. Main asset class deposit
Answer» C. Moving average convergence divergence
30.

The concept ’never putting all your eggs in one basket’ is explained in ---

A. Markowitz Model
B. Sharp single index Model
C. Multi Index Model
D. APT
Answer» A. Markowitz Model
31.

Who introduced mean variance analysis in portfolio theory?

A. William Sharp
B. Harry Markowitz
C. F.Amling
D. Kritzman
Answer» B. Harry Markowitz
32.

Unsystematic risk may arise due to the following reason.

A. Change in interest rate
B. Increase in population
C. Employee strike in the company
D. Exchange rate fluctuations
Answer» C. Employee strike in the company
33.

A higher standard deviation is an indicator of----

A. Greater risk and higher potential returns
B. Moderate risk and higher potential returns
C. Lower risk and higher potential returns
D. Greater risk and lower potential returns
Answer» A. Greater risk and higher potential returns
34.

If the returns of two securities are unrelated, the covariance will be---

A. Positive
B. Negative
C. Zero
D. One
Answer» C. Zero
35.

Portfolios included in the risk return space is called------

A. Feasible set
B. Efficient portfolio
C. High return portfolio
D. Risky portfolio
Answer» A. Feasible set
36.

The concept efficient frontier is a contribution by----.

A. Robert Rhea
B. E.GeorgeSchaefer
C. Charles H.Dow
D. Harry Markowitz
Answer» D. Harry Markowitz
37.

A fully diversified portfoliocontains securities which have---

A. Only unsystematic risk
B. Both systematic and unsystematic risk
C. Only systematic risk
D. No risk
Answer» C. Only systematic risk
38.

----- is the measure of risk in the case portfolio with two securities.

A. Correlation
B. Covariance
C. Standard deviation
D. Beta
Answer» C. Standard deviation
39.

Value of Beta above 1 implies---

A. Higher risk than the market average
B. Less risk than market average
C. Less risk than risk free investment
D. None of the above
Answer» A. Higher risk than the market average
40.

CML stands for.

A. Convergence Market Line
B. Critical Market Line
C. Critical Maturity Line
D. Capital Market Line
Answer» D. Capital Market Line
41.

------- is also called characteristic Lines.

A. CML
B. SML
C. Efficient Frontier
D. CAL
Answer» B. SML
42.

Efficient frontier is situated at -------- boundary of opportunity set.

A. North west
B. North east
C. South west
D. South east
Answer» A. North west
43.

Arbitrage Pricing Theory was introduced by---

A. Charles Dow
B. Benchamin Graham
C. William sharp
D. Stephen S.Rose
Answer» D. Stephen S.Rose
44.

Which pricing model provides no guidance on the determination of the risk premium factor?

A. The Multifactor APT
B. The CAPM
C. Both CAPM &Multifactor APT
D. Neither the CAPM nor Multifactor APT
Answer» A. The Multifactor APT
45.

. -------- is an example for oscillators.

A. ROC
B. RSI
C. MACD
D. All the above
Answer» D. All the above
46.

The APT differs from CAPM because the APT.

A. Places more emphasis on market risk
B. Recognizes multiple systematic risk factors
C. Recognizes multiple unsystematic risk factors
D. Minimizes the importance of diversification
Answer» B. Recognizes multiple systematic risk factors
47.

----------- focus more on past price movement of a firm’s stock than on the underlying determinants of future profitability.

A. Credit Analysis
B. Fundamental Analysis
C. Systems Analysis
D. Technical Analysis
Answer» D. Technical Analysis
48.

RAPM stands for -----

A. Risk Adjustment Performance Matrix
B. Risk Adjusted Performance Measure
C. Risk return Analysis of portfolio management
D. Risk Adjusted portfolio Measure
Answer» A. Risk Adjustment Performance Matrix
49.

Reward to variability Ratio is----

A. Traynor Ratio
B. Sharp Ratio
C. Jenson Ratio
D. Book Market Ratio
Answer» B. Sharp Ratio
50.

Reward to volatility Ratio is also called as----

A. Treynor Ratio
B. Sharp Ratio
C. Jenson Ratio
D. Book market Ratio
Answer» A. Treynor Ratio
51.

Michel C. Jenson introduced;

A. Reward to variability ratio
B. Reward to volatility Ratio
C. Differential return measure
D. Price book ratio
Answer» C. Differential return measure
52.

Treynor Ratio is calculated using---

A. Standard deviation
B. Beta
C. Alpha
D. Both Alpha and Beta
Answer» B. Beta
53.

When alpha ‘p’ is positive, it shows---

A. Superior return
B. Neutral performance
C. Worst performance
D. None of the above
Answer» A. Superior return
54.

Which of the following is a defensiveshares?

A. Beta>1
B. Beta<1
C. Beta=1
D. Beta=0
Answer» B. Beta<1
55.

NSE established on---

A. 1875
B. 1785
C. 1990
D. 1992
Answer» D. 1992
56.

------- is a person who believes in lower expected return at reduced risk.

A. Hedgers
B. Arbitrageurs
C. Speculators
D. Spreaders
Answer» D. Spreaders
57.

Who is the author of the book“Security Analysis and The Intelligent Investor”

A. John Maynard Keynes
B. Kritzman
C. Benjamin Graham
D. Harry Markowitz
Answer» C. Benjamin Graham
58.

---‐--- is putting money at risk by betting on an uncertain outcome with the hope that you might win money.

A. Investment
B. Gambling
C. Financing
D. Portfolio
Answer» B. Gambling
59.

Total risk is associated with ----

A. Standard deviation
B. Beta
C. Alpha
D. Correlation
Answer» A. Standard deviation
60.

Which of the following is not related with a bond?

A. Dividend
B. Residential maturity
C. ESOP
D. Spot interest rate
Answer» D. Spot interest rate
61.

--------- is the bonds issued at a considerable discount and repaid at par.

A. Deep discount bond
B. Callable bond
C. Floating rate note
D. Junk bonds
Answer» A. Deep discount bond
62.

Which of the following is a PSU bond?

A. Cumulative Interest bonds
B. Step up bonds
C. Tax free bonds
D. Monthly return bonds
Answer» C. Tax free bonds
63.

----- are issued by a group of multinational banks.

A. Domestic bonds
B. Foreign bonds
C. Euro bonds
D. Junk bonds
Answer» C. Euro bonds
64.

YTM is the most widely used measure to know the return on-----

A. Equity
B. Derivatives
C. Bonds
D. Preference shares
Answer» C. Bonds
65.

------is the discount rate that makes present value of single cash inflow to cost of the bond.

A. Current yield
B. YTC
C. YTM
D. Spot interest rate
Answer» D. Spot interest rate
66.

YTC is used in the case of------- bonds.

A. Irredeemable
B. Callable bonds
C. Redeemed on maturity
D. Convertible
Answer» B. Callable bonds
67.

Bond price-yield relationship is referred to as -----

A. Concave
B. Convex
C. Linear
D. Rectangular hyperbola
Answer» B. Convex
68.

Bond pricing theorems was introduced by—

A. Harry Markowitz
B. Kritzman
C. F.Amling
D. Burton G.Malkiel
Answer» D. Burton G.Malkiel
69.

Bond price will move --------- to market interest changes.

A. Inversely
B. Positively
C. Constant
D. Randomly
Answer» A. Inversely
70.

------- is a measure of interest rate sensitivity of a bond.

A. YTM
B. HTC
C. Duration
D. Current yield
Answer» C. Duration
71.

The theory of bond immunisation was introduced by------

A. Redington
B. F.Amling
C. Burton G.Malkiel
D. Kritzman
Answer» A. Redington
72.

---------- is a hedging method against the risk associated with changes in interest rates.

A. Macaules duration
B. Bond convexity
C. Bond immunisation
D. Effective duration
Answer» C. Bond immunisation
73.

Which of the following relates to industry analysis?

A. Infrastructure facilities
B. Competitive forces
C. Interest rate
D. Market share
Answer» B. Competitive forces
74.

Which is the most popular multiplier for valuing shares?

A. EPS/ stock price
B. P/E Ratio
C. Constant growth mode
D. One year holding model
Answer» B. P/E Ratio
75.

--------ratio is used to estimate the value of stocks by the investors rather than adopting discounting models.

A. Price to sales ratio
B. Price to book ratio
C. Price earnings ratio
D. Dividend pay-out ratio
Answer» C. Price earnings ratio
76.

-------is the study of historical stock prices and stock market behaviour to identify recurring pattern.

A. Fundamental Analysis
B. Technical Analysis
C. Economy Analysis
D. Industry Analysis
Answer» B. Technical Analysis
77.

Dow Theory relates to---

A. Primary trend
B. Short term trend
C. Seasonal pattern
D. Intermediate trend
Answer» A. Primary trend
78.

Find the odd one.

A. Head and shoulder
B. Flags
C. Triangles
D. Candle sticks
Answer» D. Candle sticks
79.

Price movements inzigzagfashion with any rise or fall interrupted by counter movements are known as--------

A. Trend Reversal
B. Consolidation
C. Reactions
D. Penetration
Answer» C. Reactions
80.

Which among the following is a market indicator?

A. Oscillators
B. MACD
C. Odd-lot-index
D. Moving average
Answer» C. Odd-lot-index
81.

Random Walk Theory was popularised by----

A. Burton Malkiel
B. Redington
C. Charles Dow
D. F.Amling
Answer» A. Burton Malkiel
82.

Elliot Wave Theory was introduced in the year----

A. 1949
B. 1934
C. 1926
D. 1926
Answer» B. 1934
83.

The oldest approach to common stock selection is-----

A. Fundamental Analysis
B. Technical Analysis
C. Random walk Analysis
D. Value Analysis
Answer» B. Technical Analysis
84.

Technical Analysis reflects the idea that stock prices------------

A. Move upward over time
B. Move inversely over time
C. Move in trends
D. Move randomly
Answer» C. Move in trends
85.

Which of the following is a tool in technical analysis to determine whether a security is a good for investment?

A. The Price earnings ratio
B. Balance sheet
C. Income statement
D. Trend lines
Answer» D. Trend lines
86.

Line charts are formed by connecting------- of each time frame.

A. Average price
B. Highest of the day
C. Closing price
D. Lowest of the day
Answer» C. Closing price
87.

Triangles are ------ patterns.

A. Continuation
B. Reversal
C. Support and resistance
D. None of the above
Answer» A. Continuation
88.

--------movements are typically referred to as bullish and bearish.

A. Secondary
B. Daily
C. Major
D. Primary
Answer» D. Primary
89.

Process of selling of shares that is not owned by a person is termed as…

A. Hedging
B. Short-selling
C. Broking
D. Quoting
Answer» B. Short-selling
90.

At resistance level a technical analysis expect the -----

A. Demand of a stock to decrease substantially
B. Demand of a stock increase substantially
C. Supply of a stock to Increase substantially
D. Supply of a stock decrease substantially
Answer» A. Demand of a stock to decrease substantially
91.

Which of the following represents an upper price limit for a stock, based on the quantity of willing sellers?

A. Candle
B. Trend line
C. Support
D. Resistance
Answer» D. Resistance
92.

Which of the following do a technical analysis believe is a lower bound on a stock’s price?

A. Candle
B. Support
C. Trend line
D. Resistance
Answer» B. Support
93.

Barometric approach is used for-----

A. Economic forecasting
B. Trend prediction
C. Price estimation
D. Dividend forecasting
Answer» A. Economic forecasting
94.

Opportunistic model building is also known as-----

A. Econometric model building
B. Mathematical model building
C. Sectorial analysis
D. Anticipatory surveys
Answer» C. Sectorial analysis
95.

The last step in fundamental analysis is

A. Economic Analysis
B. Industry Analysis
C. Company Analysis
D. Technical Analysis
Answer» C. Company Analysis
96.

Which of the following is a financial investment?

A. Share
B. Farm house
C. Car
D. T. V. Set
Answer» A. Share
97.

Which of the following is tax saving investment?

A. Fixed deposit
B. Shares
C. PPF
D. Post office saving
Answer» C. PPF
98.

All personal investing is designed to achieve certain …..

A. Objective
B. Investment
C. Risk
D. Returns
Answer» A. Objective
99.

The object of portfolio is to reduce ……by diversification

A. Return
B. Risk
C. Uncertainty
D. Percentage
Answer» B. Risk
100.

The fundamental analysis approach has been associated with …..

A. Uncertainties
B. Certainties
C. Ratios
D. Balance sheet
Answer» A. Uncertainties
Tags
Question and answers in Security Analysis and Portfolio Management, Security Analysis and Portfolio Management multiple choice questions and answers, Security Analysis and Portfolio Management Important MCQs, Solved MCQs for Security Analysis and Portfolio Management, Security Analysis and Portfolio Management MCQs with answers PDF download