McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration in Finance (BBA Finance) .
| 301. |
‐‐‐‐‐‐‐‐‐‐‐‐‐ is a barometer for market behavior. |
| A. | Investment |
| B. | Index |
| C. | Arbitrage |
| D. | None of These |
| Answer» B. Index | |
| 302. |
Devise adopted to make profit out of the difference in prices of a security in two different markets is called‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐. |
| A. | Arbitrage |
| B. | Margin Trading |
| C. | Call Option |
| D. | None of These |
| Answer» A. Arbitrage | |
| 303. |
Which of the following bonds has the shortest duration? |
| A. | Coupon = 15%, time to maturity = 15 years, yield to maturity = 10% |
| B. | Coupon = 12%, time to maturity = 20 years, yield to maturity = 10% |
| C. | Coupon = 15%, time to maturity = 15 years, yield to maturity = 15% |
| D. | Coupon = 10%, time to maturity = 20 years, yield to maturity = 10% |
| Answer» C. Coupon = 15%, time to maturity = 15 years, yield to maturity = 15% | |
| 304. |
An investor who expects increasing interest rates should purchase a bond that has a _____ coupon and a _____term to maturity. |
| A. | high, short |
| B. | zero, long |
| C. | high, long |
| D. | low, long |
| Answer» A. high, short | |
| 305. |
A bond that makes no coupon payments (and thus is initially priced at a deep discount to par value) is called a_______ bond. |
| A. | Treasury |
| B. | municipal |
| C. | floating rate |
| D. | zero-coupon |
| Answer» D. zero-coupon | |
| 306. |
The annual coupon of a bond divided by its face value is called the bond: |
| A. | Coupon |
| B. | Face value. |
| C. | Maturity |
| D. | Yield to maturity. |
| E. | Coupon rate |
| Answer» E. Coupon rate | |
| 307. |
The rate of return required by investors in the market for owning a bond is called the: |
| A. | Coupon |
| B. | Face value. |
| C. | Maturity |
| D. | Yield to maturity. |
| Answer» D. Yield to maturity. | |
| 308. |
The Yield to Maturity of a bond is the same as_____________? |
| A. | The present value of the bond |
| B. | The bonds internal rate of return |
| C. | The future value of the bond |
| D. | None of these |
| Answer» B. The bonds internal rate of return | |
| 309. |
If a firm increases its plowback ratio, this will probably result in _______ P/E ratio. |
| A. | Higher |
| B. | Lower |
| C. | Unchanged |
| D. | Can’t be determined |
| Answer» D. Can’t be determined | |
| 310. |
The accounting measure of a firm's equity value generated by applying accounting principles to asset and liability acquisitions is called ________. |
| A. | Book Value |
| B. | Market value |
| C. | Liquidation Value |
| D. | Tobins q |
| Answer» A. Book Value | |
| 311. |
The price-to-sales ratio is probably most useful for firms in which phase of the industry life cycle?. |
| A. | Start-up phase |
| B. | Consolidation |
| C. | Maturity |
| D. | Relative decline |
| Answer» A. Start-up phase | |
| 312. |
A stock has an intrinsic value of $15 and an actual stock price of $13.50. You know that this stock |
| A. | has a Tobin's q value < 1 |
| B. | signals buy opportunity |
| C. | has an expected return less than its required return |
| D. | has a beta > 1 |
| Answer» B. signals buy opportunity | |
| 313. |
If a stock is correctly priced, then you know that ____________. |
| A. | the dividend payout ratio is optimal |
| B. | the stock's required return is equal to the growth rate in earnings and dividends |
| C. | the sum of the stock's expected capital gain and dividend yield is equal to the stock's required rate of return |
| D. | the present value of growth opportunities is equal to the value of assets in place |
| Answer» C. the sum of the stock's expected capital gain and dividend yield is equal to the stock's required rate of return | |
| 314. |
Bill, Jim, and Shelly are all interested in buying the same stock that pays dividends. Bill plans on holding the stock for 1 year. Jim plans on holding the stock for 3 years. Shelly plans on holding the stock until she retires in 10years. Which one of the following statements is correct? |
| A. | Bill will be willing to pay the most for the stock because he will get his money back in 1 year when he sells. |
| B. | Shelly should be willing to pay the most for the stock because she will hold it the longest and hence will get the most dividends. |
| C. | All three should be willing to pay the same amount for the stock regardless of their holding period. |
| D. | None of these |
| Answer» C. All three should be willing to pay the same amount for the stock regardless of their holding period. | |
| 315. |
The constant-growth dividend discount model (DDM) can be used only when the ___________. |
| A. | growth rate is equal to the required return |
| B. | growth rate is greater than or equal to the required return |
| C. | growth rate is less than the required return |
| D. | growth rate is greater than the required return |
| Answer» C. growth rate is less than the required return | |
| 316. |
You want to earn a return of 10% on each of two stocks, A and B. Each of the stocks is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of dividends is 6% for stock A and 5% for stock B. Using the constant-growth DDM, the intrinsic value of stock A _________. |
| A. | will be higher than the intrinsic value of stock B |
| B. | will be the same as the intrinsic value of stock B |
| C. | will be less than the intrinsic value of stock B |
| D. | The answer cannot be determined from the information given. |
| Answer» A. will be higher than the intrinsic value of stock B | |
| 317. |
You are considering acquiring a common share of Sahali Shopping Center Corporation that you would like to hold for 1 year. You expect to receive both $1.25 in dividends and $35 from the sale of the share at the end of the year. The maximum price you would pay for a share today is __________ if you wanted to earn a 12% return. |
| A. | $31.25 |
| B. | $32.37 |
| C. | $38.47 |
| D. | $41.32 |
| Answer» B. $32.37 | |
| 318. |
An efficient market is defined as one in which |
| A. | all participants have the same opportunity to make the make the same returns. |
| B. | all participants have the same legal rights and transactions costs. |
| C. | securities’ prices quickly and fully reflect all available information. |
| D. | securities’ prices are completely in line with the intrinsic value. |
| Answer» C. securities’ prices quickly and fully reflect all available information. | |
| 319. |
Weak form market efficiency |
| A. | implies that the expected return on any security is zero. |
| B. | incorporates semi-strong form efficiency. |
| C. | involves price and volume information. |
| D. | is compatible with technical analysis |
| Answer» C. involves price and volume information. | |
| 320. |
The highest level of market efficiency is |
| A. | weak form efficiency. |
| B. | semi-strong form efficiency. |
| C. | random walk efficiency. |
| D. | strong form efficiency. |
| Answer» D. strong form efficiency. | |
| 321. |
The random walk hypothesis is most related to the: |
| A. | weak-form EMH |
| B. | semistrong-form EMH |
| C. | semiweak-form EMH |
| D. | strong-form EMH |
| Answer» A. weak-form EMH | |
| 322. |
According to the semi-strong form of the EMH, investors who invest in a stock after a highly positive announcement concerning the stock can expect to earn a(n) |
| A. | normal return because the stock will be fairly priced when purchased. |
| B. | extraordinary return because the new information will not affect the price until later. |
| C. | loss because things often are not what they seem. |
| D. | zero return because the next price is expected to be the same as the last price |
| Answer» A. normal return because the stock will be fairly priced when purchased. | |
| 323. |
Which of the following is not a method employed by fundamental analysts? |
| A. | Analyzing the Fed's next interest rate move |
| B. | Relative strength analysis |
| C. | Earnings forecasting |
| D. | Estimating the economic growth rate |
| Answer» B. Relative strength analysis | |
| 324. |
Which of the following is not a method employed by followers of technical analysis? |
| A. | Charting |
| B. | Relative strength analysis |
| C. | Earnings forecasting |
| D. | Trading around support and resistance levels |
| Answer» C. Earnings forecasting | |
| 325. |
If you believe in the __________ form of the EMH, you believe that stock prices reflect all publicly available information but not information that is available only to insiders. |
| A. | Semi strong |
| B. | Strong |
| C. | Weak |
| D. | Perfect |
| Answer» A. Semi strong | |
| 326. |
Choosing stocks by searching for predictable patterns in stock prices is called ________. |
| A. | Fundamental Analysis |
| B. | Technical Analysis |
| C. | Index Management |
| D. | Random Walk Investment |
| Answer» B. Technical Analysis | |
| 327. |
Which of the following terms represents an upper price limit for a stock, based on the quantity of willing sellers? |
| A. | Support. |
| B. | Trendline. |
| C. | Channel. |
| D. | Resistance. |
| Answer» D. Resistance. | |
| 328. |
Which of the following is not a basic tenet of the Dow Theory? |
| A. | No additional information is needed for the stock market outside of data on stock indexes. |
| B. | The financial market has three distinct types of movements: the primary trend, the intermediate trend, and short-term trends. |
| C. | There is usually a positive relationship between a trend and the volume of shares traded. |
| D. | The intermediate trend has a duration of three weeks to six months. |
| E. | A bear market is established when the Dow Jones Industrial Average is moving down |
| Answer» E. A bear market is established when the Dow Jones Industrial Average is moving down | |
| 329. |
Which of the following is not part of the bar chart? |
| A. | Opening price. |
| B. | Closing price. |
| C. | High price. |
| D. | Low price. |
| Answer» A. Opening price. | |
| 330. |
Which of the following is not a part of the candlestick chart? |
| A. | Opening price. |
| B. | Shadows. |
| C. | Closing price. |
| D. | Volume of trading |
| Answer» D. Volume of trading | |
| 331. |
When technical analysts say a stock has good relative strength, they mean the: |
| A. | total return on the stock has exceeded the total return on other stocks in the same industry. |
| B. | ratio of the price of the stock to a market index has trended upwards. |
| C. | stock has performed well compared to other stocks in the same industry. |
| D. | recent trading volume in the stock has exceeded the normal trading volume. |
| Answer» B. ratio of the price of the stock to a market index has trended upwards. | |
| 332. |
Market price breaking through the moving average from below is a ……indicator. |
| A. | Bullish |
| B. | Bearish |
| C. | Flat |
| D. | None of the above |
| Answer» A. Bullish | |
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