McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Master of Business Administration (MBA) .
Chapters
| 101. |
_______ 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 | |
| 102. |
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. | |
| 103. |
If security prices exhibits semi-strong form of efficiency, one will not gain if he |
| A. | Depicts the prices in the form of charts to identify pattern which will beat the market. |
| B. | Buys stock of a company which has declared a bonus issue or has gone for a stock split |
| C. | Refers to insiders’ advice |
| D. | Both (a) and (b) above. |
| Answer» D. Both (a) and (b) above. | |
| 104. |
Particulars Falcon International Triumph International Average Return (%) 10 8 Average Volatility (%) 12 15 For the portfolio to yield lower risk than the individual stocks, the correlation coefficient of stocks should be |
| A. | Less than 1.25 |
| B. | Less than 0.85 |
| C. | Less than 0.80 |
| D. | More than 0.83 |
| Answer» C. Less than 0.80 | |
| 105. |
Which of the following statements is/are true with respect to feasible set of portfolio? I. Feasible set is also known as opportunity set. II. It represents all the portfolios that could be formed from group of N securities. III. Feasible set is also called efficient set |
| A. | Only (I) above |
| B. | Only (II) above |
| C. | Only (III) above |
| D. | Both (I) and (II) above |
| Answer» D. Both (I) and (II) above | |
| 106. |
Fund managers generally want which of following objectives to be optimal? I. Stability of principle. II. Income. III. Growth of income. IV. Capital appreciation. |
| A. | Both (I) and (II) above |
| B. | Both (I) and (III) above |
| C. | Both (II) and (III) above |
| D. | All (I), (II), (III) and (IV) above |
| Answer» D. All (I), (II), (III) and (IV) above | |
| 107. |
Which of the following is not one of the considerations in setting investment objectives? |
| A. | Risk versus safety of principal |
| B. | Maximize wealth versus minimize expenses |
| C. | Current income versus capital appreciation |
| D. | Short versus long-term orientation |
| Answer» B. Maximize wealth versus minimize expenses | |
| 108. |
One of the reasons a short-term trader has difficulty in beating the market is because of |
| A. | Risk |
| B. | Lack of information |
| C. | Large institutional investors |
| D. | Commissions |
| Answer» D. Commissions | |
| 109. |
The holding period to qualify for a long-term capital gains is |
| A. | At least 6 months |
| B. | At least 12 months |
| C. | At least 18 months |
| D. | At most 18 months |
| Answer» B. At least 12 months | |
| 110. |
Common stock dividends are now taxed at a maximum rate of |
| A. | 10 percent |
| B. | 15 percent |
| C. | 20 percent |
| D. | 30 percent |
| Answer» B. 15 percent | |
| 111. |
Higher bond prices generally signal expectations of |
| A. | Higher inflation |
| B. | Lower inflation |
| C. | Rising stock prices |
| D. | Higher risk premiums |
| Answer» B. Lower inflation | |
| 112. |
A stock that pays low or no cash dividends is |
| A. | EBay |
| B. | Duke Power |
| C. | AT&T |
| D. | All of the above |
| Answer» A. EBay | |
| 113. |
Deposits in an IRA are |
| A. | Allowed to grow tax free until withdrawal |
| B. | Deducted from current income tax due |
| C. | Deducted from current income to reduce income tax due |
| D. | A and C |
| Answer» D. A and C | |
| 114. |
An investment requires a total return that comprises |
| A. | A real rate of return and compensation for inflation |
| B. | A real rate of return, compensation for inflation, and a risk premium |
| C. | Compensation for inflation and a risk premium |
| D. | A real rate of return, compensation for inflation, a risk premium, and compensation for time and effort devoted to researching alternative investments |
| Answer» B. A real rate of return, compensation for inflation, and a risk premium | |
| 115. |
The investor of a high-yielding utility can expect |
| A. | Slow growth in earnings |
| B. | Slow growth in the stock price |
| C. | Slow growth in the stock price with a fast growth in earnings |
| D. | Both a and b |
| Answer» D. Both a and b | |
| 116. |
Because most investors are risk averse |
| A. | The riskier the investment, the more the investor will pay for it |
| B. | The riskier the investment, the less compensation the investor requires |
| C. | Only financial institutions invest in risky assets |
| D. | They will require a higher rate of return for a riskier investment |
| Answer» D. They will require a higher rate of return for a riskier investment | |
| 117. |
An efficient market reflects: |
| A. | past, current and inferred information. |
| B. | future information. |
| C. | past and current information. |
| D. | current and inferred information. |
| Answer» A. past, current and inferred information. | |
| 118. |
In which form of the efficient market hypothesis do security prices reflect only past stock price and volume information? |
| A. | weak form. |
| B. | semistrong form. |
| C. | strong form. |
| D. | none of the above. |
| Answer» B. semistrong form. | |
| 119. |
Which of the following is not a test of semi-strong form efficiency? |
| A. | stock splits. |
| B. | accounting changes. |
| C. | dividend announcements. |
| D. | insider transactions. |
| Answer» D. insider transactions. | |
| 120. |
An efficient market does not require that: |
| A. | stock prices incorporate all information. |
| B. | all known information be reflected in prices. |
| C. | the adjustments occur very quickly. |
| D. | each adjustment be perfect. |
| Answer» D. each adjustment be perfect. | |
| 121. |
"Filter rules" do not tend to be profitable because of: |
| A. | transaction costs. |
| B. | market volatility. |
| C. | trends in stock prices. |
| D. | the fact that no rules outperform a buy-and-hold strategy, even for short periods. |
| Answer» A. transaction costs. | |
| 122. |
The random walk hypothesis posits that: |
| A. | historical returns follow a random walk. |
| B. | historical prices follow a random walk. |
| C. | firm size follows a random walk. |
| D. | short-run investment returns are inherently unpredictable. |
| Answer» D. short-run investment returns are inherently unpredictable. | |
| 123. |
Positive abnormal returns for corporate insiders constitute a violation of: |
| A. | weak form efficiency. |
| B. | semi-strong form efficiency. |
| C. | strong-form efficiency. |
| D. | none of these. |
| Answer» C. strong-form efficiency. | |
| 124. |
On the day following big "up days," the DJIA tends to: |
| A. | rise substantially. |
| B. | fall precipitously. |
| C. | rise moderately. |
| D. | none of the above. |
| Answer» D. none of the above. | |
| 125. |
Stock market value can deviate from its fundamental value because of strong: |
| A. | earnings news. |
| B. | investor mood. |
| C. | semi-strong form efficiency. |
| D. | data-snooping. |
| Answer» B. investor mood. | |
| 126. |
Stock fraud perpetrators sometimes dupe respected community (or group) leaders and these leaders unwittingly cause community members to be victimized too. This scheme is called: |
| A. | leader-led fraud. |
| B. | a cold call. |
| C. | affinity fra |
| Answer» C. affinity fra | |
| 127. |
___________ market encompasses all securities not traded on national organized exchanges. |
| A. | Primary |
| B. | Money |
| C. | Capital |
| D. | Over the counter |
| Answer» D. Over the counter | |
| 128. |
Which of the following is not a part of systematic risk |
| A. | Economic changes |
| B. | Management capability |
| C. | Political changes |
| D. | Sociological changes |
| Answer» B. Management capability | |
| 129. |
Primarily Inflation gives rise to |
| A. | Market risk |
| B. | Purchasing power risk |
| C. | Business risk |
| D. | Financial risk |
| Answer» B. Purchasing power risk | |
| 130. |
Unsystematic risk is known as |
| A. | Non diversifiable risk |
| B. | Total risk |
| C. | Market risk |
| D. | Diversifiable risk |
| Answer» D. Diversifiable risk | |
| 131. |
characteristic line is associated with |
| A. | Standard deviation |
| B. | Beta |
| C. | Variance |
| D. | Portfolio |
| Answer» B. Beta | |
| 132. |
Graphical presentation of CAPM is known as |
| A. | Capital asset line |
| B. | Pricing line |
| C. | Assets pricing line |
| D. | Security market line |
| Answer» D. Security market line | |
| 133. |
__________ is defined as the nth root of the product resulting from multiplying a series of returns together. |
| A. | Arithmetic mean |
| B. | Geometric mean |
| C. | Harmonic mean |
| D. | None of the above |
| Answer» B. Geometric mean | |
| 134. |
An order to buy or sell at the most advantageous price obtainable after the order is represented in the trading crowd. |
| A. | Scale order |
| B. | Sell ‘plus’ order |
| C. | Market order |
| D. | Day order. |
| Answer» C. Market order | |
| 135. |
__________ refers to capitalize on downward movement in stock prices. |
| A. | Long selling |
| B. | small selling |
| C. | Large selling |
| D. | Short selling |
| Answer» D. Short selling | |
| 136. |
___________ is a device to overcome the uncertainty connected with a stop order. |
| A. | Stop limit order |
| B. | Stay limit order |
| C. | Halt limit order |
| D. | End limit order |
| Answer» A. Stop limit order | |
| 137. |
___________ is a function of the operating conditions faced by a firm and the variability these conditions inject into operating income and expected dividends. |
| A. | Market risk |
| B. | Business risk |
| C. | Interest rate risk |
| D. | Systematic risk |
| Answer» D. Systematic risk | |
| 138. |
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 | |
| 139. |
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 | |
| 140. |
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 | |
| 141. |
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. | |
| 142. |
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 | |
| 143. |
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 | |
| 144. |
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 | |
| 145. |
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 | |
| 146. |
__________ was the grandfather of technical analysis. |
| A. | Harry Markowitz |
| B. | William Sharpe |
| C. | Charles Dow |
| D. | Benjamin Graham |
| Answer» C. Charles Dow | |
| 147. |
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. | |
| 148. |
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 | |
| 149. |
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 | |
| 150. |
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 | |
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