McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Master of Business Administration (MBA) .
Chapters
| 1. |
A top down analysis of a firm starts with ____________. |
| A. | the relative value of the firm |
| B. | the absolute value of the firm |
| C. | the domestic economy |
| D. | the global economy |
| Answer» D. the global economy | |
| 2. |
An example of a highly cyclical industry is ________. |
| A. | the automobile industry |
| B. | the tobacco industry |
| C. | the food industry |
| D. | A and B |
| Answer» A. the automobile industry | |
| 3. |
The most widely used monetary tool is ___________. |
| A. | altering the discount rate |
| B. | altering the reserve requirements |
| C. | open market operations |
| D. | altering marginal tax rates |
| Answer» C. open market operations | |
| 4. |
The "real", or inflation-adjusted, exchange rate, is |
| A. | the balance of trade. |
| B. | the budget deficit. |
| C. | the purchasing power ratio. |
| D. | unimportant to the U. S economy. |
| Answer» C. the purchasing power ratio. | |
| 5. |
The "normal" range of price-earnings ratios for the S&P500 Index is |
| A. | between 2 and 10. |
| B. | between 5 and 15. |
| C. | less than 8. |
| D. | between 12 and 25 |
| Answer» D. between 12 and 25 | |
| 6. |
A peak is ________. |
| A. | a transition from an expansion in the business cycle to the start of a contraction |
| B. | a transition from a contraction in the business cycle to the start of an expansion |
| C. | a depression that lasts more than three years. |
| D. | only something used by farmers to feed pigs and not an investment term |
| Answer» A. a transition from an expansion in the business cycle to the start of a contraction | |
| 7. |
Conventional theories presume that investors ____________ and behavioral finance presumes that they ____________. |
| A. | are irrational; are irrational |
| B. | are rational; may not be rational |
| C. | are rational; are rational |
| D. | may not be rational; may not be rational |
| Answer» B. are rational; may not be rational | |
| 8. |
Information processing errors consist of I. forecasting errors II. overconfidence III. conservatism IV. framing |
| A. | I and II |
| B. | I and III |
| C. | III and IV |
| D. | I, II and III |
| Answer» D. I, II and III | |
| 9. |
__________ was the grandfather of technical analysis. |
| A. | Harry Markowitz |
| B. | William Sharpe |
| C. | Charles Dow |
| D. | Benjamin Graham |
| Answer» C. Charles Dow | |
| 10. |
The goal of the Dow theory is to |
| A. | identify head and shoulder patterns. |
| B. | identify breakaway points. |
| C. | identify resistance levels. |
| D. | identify long-term trends. |
| Answer» D. identify long-term trends. | |
| 11. |
A long-term movement of prices, lasting from several months to years is called _________. |
| A. | a minor trend |
| B. | a primary trend |
| C. | an intermediate trend |
| D. | trend analysis |
| Answer» B. a primary trend | |
| 12. |
Two popular moving average periods are |
| A. | 90-day and 52 week |
| B. | 180-day and three year |
| C. | 180-day two year |
| D. | 200-day and 53 week |
| Answer» D. 200-day and 53 week | |
| 13. |
The most extreme form(s) of the Efficient Market Hypothesis (EMH) is |
| A. | Weak form |
| B. | Semi-Strong form |
| C. | Super Strong form |
| D. | Near Strong form |
| Answer» C. Super Strong form | |
| 14. |
Which of the following statements pertaining to the Efficient Market Hypothesis (EMH) is/ are true? |
| A. | Successive short run absolute price changes are independent |
| B. | Market comprises of rational investors |
| C. | Weak Form of EMH is also known as random walk model |
| D. | All of (a), (b) and (c) above |
| Answer» D. All of (a), (b) and (c) above | |
| 15. |
According to the Efficient Market Hypothesis (EMH) I. Stocks with smaller beta will be consistently overpriced. II. Stocks with higher beta will be consistently underpriced. III. Positive alphas on stocks will not remain for a longer period. |
| A. | Only (I) above |
| B. | Only (III) above |
| C. | Both (I) and (II) above |
| D. | Both (II) and (III) above |
| Answer» B. Only (III) above | |
| 16. |
Which of the following statements is false with respect to different features of an efficient market? |
| A. | Information arbitrage efficiency is said to exist, if the participants do not have any scope to reap abnormal profits using information that is of common knowledge |
| B. | Fundamental valuation efficiency is said to exist, if the price of an asset is neither undervalued nor overvalued |
| C. | Full insurance efficiency is said to exist, if participants can adopt hedging as an effective tool against possible risk in future |
| D. | Allocation efficiency is said to exist, if the market channelizes resources into projects where the marginal efficiency of capital adjusted for risk differences is lowest |
| Answer» D. Allocation efficiency is said to exist, if the market channelizes resources into projects where the marginal efficiency of capital adjusted for risk differences is lowest | |
| 17. |
Which one of the following is the exponential factor for a 100-day Exponential Moving Average? |
| A. | 0.01 |
| B. | 0.2 |
| C. | 0.02 |
| D. | 0.002 |
| Answer» C. 0.02 | |
| 18. |
Which of the following patterns is the most reliable and widely used for indicating trend reversal? |
| A. | Gap Analysis |
| B. | Stochastics |
| C. | Moving Averages |
| D. | Head and Shoulders |
| Answer» D. Head and Shoulders | |
| 19. |
A stock with a relative strength of 3.0 will have a relative strength index of |
| A. | 125 |
| B. | 66.67 |
| C. | 75 |
| D. | 26 |
| Answer» C. 75 | |
| 20. |
__________ would mean that no investor would be able to outperform the market with trading strategies based on publicly available information. |
| A. | Semi strong form efficiency |
| B. | Weak-form efficiency |
| C. | Strong form efficiency |
| D. | all |
| Answer» A. Semi strong form efficiency | |
| 21. |
The need to have an understanding about the ability of themarket to imbibe information into the prices has led to countless attempts to study and characterize the levels of efficiency of different segments of the financial markets. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» A. True | |
| 22. |
If the market is _______, the period after a favorable (unfavorable) event would not generate returns beyond (less than) what is suggested by an equilibrium model such as CAPM |
| A. | Semi strong form efficiency |
| B. | Weak-form efficiency |
| C. | Strong form efficiency |
| D. | all |
| Answer» A. Semi strong form efficiency | |
| 23. |
Markets are inefficient when prices of securities assimilate and reflect information about them. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» B. False | |
| 24. |
Stock returns are generally expected to be independent across weekdays, but a number of studies have found returns on Monday to be lower than in the rest of the week. This departure from market efficiency is also sometimes called the _____ effect. |
| A. | Monday-Friday |
| B. | Weekday |
| C. | Monday |
| D. | Weekend |
| Answer» D. Weekend | |
| 25. |
Fundamental analysis focuses on predicting the future price of a security and Technical analysis on estimating the intrinsic value of a security. |
| A. | False |
| B. | True |
| C. | none |
| D. | all |
| Answer» A. False | |
| 26. |
Under ________ EMH investors cannot earn abnormal/superior profits on securities on a consistent basis. |
| A. | Weak-form efficient |
| B. | Strong form efficient |
| C. | Semi-strong form efficient |
| D. | all |
| Answer» C. Semi-strong form efficient | |
| 27. |
Which are the popular types of orders placed through an online trading account? |
| A. | Limit orders |
| B. | Market orders |
| C. | Stop loss order |
| D. | All of the above |
| Answer» D. All of the above | |
| 28. |
What are the features of line charts? |
| A. | It connects closing prices from one period to the next |
| B. | It connects low prices from one period to the next |
| C. | It connects high prices from one period to the next |
| D. | None of the above |
| Answer» A. It connects closing prices from one period to the next | |
| 29. |
What is the art of technical analysis? |
| A. | To identify trend changes at an early stage and maintain investment posture till the trend has reversed |
| B. | To know the type of security to invest in. |
| C. | To know the under and over priced shares. |
| D. | None of the above |
| Answer» A. To identify trend changes at an early stage and maintain investment posture till the trend has reversed | |
| 30. |
What is Bottom-Up approach also known as? |
| A. | Company-industry-economy approach |
| B. | Economy -industry-Company approach |
| C. | Industry-economy-Company approach |
| D. | Company -economy-industry approach |
| Answer» A. Company-industry-economy approach | |
| 31. |
________ ratio is the ratio of net profit to the sales. |
| A. | Net Profit |
| B. | Gross profit |
| C. | Operating profit |
| D. | Expense |
| Answer» A. Net Profit | |
| 32. |
A security is said to be ________ if its current market price is over its intrinsic value. |
| A. | Under priced |
| B. | Over priced |
| C. | Rightly priced |
| D. | all |
| Answer» B. Over priced | |
| 33. |
The objective of fundamental analysis for a security in a market is to identify either it is: |
| A. | Under priced |
| B. | Over priced |
| C. | Both under priced and over priced |
| D. | None of the above |
| Answer» C. Both under priced and over priced | |
| 34. |
_______ measures the percentage of net income not paid to the shareholders in the form of dividends. |
| A. | Withholding ratio |
| B. | Retention ratio |
| C. | Preservation ratio |
| D. | Maintenance ratio |
| Answer» B. Retention ratio | |
| 35. |
Which of the following patterns is the most reliable and widely used for indicating trend reversal? |
| A. | Gap Analysis |
| B. | Stochastics |
| C. | Moving Averages |
| D. | Head and Shoulders |
| Answer» D. Head and Shoulders | |
| 36. |
Prices of stocks usually move in trends. |
| A. | False |
| B. | True |
| C. | none |
| D. | all |
| Answer» B. True | |
| 37. |
The ability of the investor to convert an investment into cash in a short period of time is called |
| A. | Short-term orientation |
| B. | Low investment risk |
| C. | Liquidity |
| D. | Capital appreciation |
| Answer» C. Liquidity | |
| 38. |
Wealthy investors may prefer the favorable tax treatment of investments such as |
| A. | Corporate bonds |
| B. | Municipal bonds |
| C. | Common stock |
| D. | Preferred stock |
| Answer» B. Municipal bonds | |
| 39. |
What is the rate of return on a share of common stock that increased in value from $40 to $50? |
| A. | 5% |
| B. | 10% |
| C. | 20% |
| D. | 25% |
| Answer» D. 25% | |
| 40. |
What would the rate of return for a stock that increased in value from $60 per share to $63 per share and paid a $3.00 dividend? |
| A. | 12% |
| B. | 11% |
| C. | 10% |
| D. | 1.5% |
| Answer» C. 10% | |
| 41. |
An investment in common stock carries a higher return than a bank certificate of deposit. The difference in returns is called |
| A. | The risk-free rate |
| B. | The real rate of return |
| C. | The risk premium |
| D. | The beta |
| Answer» C. The risk premium | |
| 42. |
What are the components in determining the real rate of return? |
| A. | The risk premium |
| B. | The inflation factor |
| C. | The required rate of return |
| D. | Neither a) nor b) |
| Answer» D. Neither a) nor b) | |
| 43. |
What is the risk-free rate in an environment where the real rate is 3% and inflation is running at 3%? Use either method found in chapter one. |
| A. | 14.5% or just 14% |
| B. | 10.21% or just 10% |
| C. | 6.09% or just 6% |
| D. | 9.09% or just 9% |
| Answer» C. 6.09% or just 6% | |
| 44. |
Which of the following investments would theoretically always carry the highest risk premium? |
| A. | U.S. treasury bill |
| B. | Common stock |
| C. | Preferred stock |
| D. | Corporate bond |
| Answer» B. Common stock | |
| 45. |
_____, because of increasing replacement value and scarcity, perform best in periods of high inflation. |
| A. | Real assets |
| B. | Common stock |
| C. | Preferred stock |
| D. | Financial assets |
| Answer» A. Real assets | |
| 46. |
The two components that make up the risk-free rate are |
| A. | Real rate of return and capital gains |
| B. | Risk-free assets and capital gains |
| C. | Real rate of return and the inflation factor |
| D. | Real assets and the inflation factor |
| Answer» C. Real rate of return and the inflation factor | |
| 47. |
Which of the following terms represents an upper price limit for a stock, based on the quantity of willing sellers? |
| A. | Support. |
| B. | Channel. |
| C. | Trendline. |
| D. | Resistance. |
| Answer» D. Resistance. | |
| 48. |
The daily high price is represented on a candlestick chart by the: |
| A. | channel. |
| B. | trendline. |
| C. | shadow. |
| D. | real body. |
| Answer» C. shadow. | |
| 49. |
The daily opening price is represented on a candlestick chart by the: |
| A. | channel. |
| B. | real body. |
| C. | trendline. |
| D. | shadow. |
| Answer» B. real body. | |
| 50. |
Which of the following do technical analysts believe is a lower bound on a stock’s price? |
| A. | Moving average. |
| B. | Shadow. |
| C. | Resistance. |
| D. | Support. |
| Answer» D. Support. | |
Done Studing? Take A Test.
Great job completing your study session! Now it's time to put your knowledge to the test. Challenge yourself, see how much you've learned, and identify areas for improvement. Don’t worry, this is all part of the journey to mastery. Ready for the next step? Take a quiz to solidify what you've just studied.