dnyan ganga education trust’s degree college of arts

Dnyan Ganga Education Trust’s

Degree College of Arts, Commerce and Science.

Kasarvadavli , G.B. Road, Thane (W) - 400615.

Department of BBI

Course Name: BBI

Class Name : TYBBI

Semester: VI

Exam Pattern Marks: 75:25

Subject: Security Analysis and Portfolio Management

Examination: Multiple Choice Questions

MODEL QUESTION PAPER

1. According to the Dow Theory, daily fluctuations and secondary movements in the

stock market are used to identify the _____ trend.

a. short term

b. long term

c. primary

d. seasonal

2. As per _____ form of efficient market hypothesis all public or private information is

reflected in the current market prices in stock markets.

a. weak

b. strong

c. semi-strong

d. market

3. Efficient market hypothesis advocates _____ investment strategy.

a. active

b. buying

c. passive

d.strong




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4. Definition of _____ differs under various forms of efficient market hypothesis.

a. efficiency

b. information

c. prices

d. returns

5. The daily high price is represented on a candlestick chart by the _____.

a. real body

b. trend-line

c. channel

d. shadow

6. A _____ average of a stock index is the average level of the index over a given interval

of time.

a. static

b. moving

c. gross

d. net

7. Triple tops and triple bottoms are indicators of _____.

a. role reversal

b. trend reversal

c. both (a) & (b)

d. high volumes

8. One of the following is not an assumption of capital structure theories :

a. These are capital structure sources of funds, i.e. debt and equity.

b. There are no corporate taxes.

c. Dividend Payout ratio varies between 0% and 100%




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d. Firm’s business risk is constant overtime

9. Ability of a firm with high gearing to meet fixed interest payment out of current

earnings.

a. Reduces

b. Remains unaffected

c. Increases

d. Does not change

10. The non-produce projects should be financed by

a. Debt and Equity

b. Debt

c. Equity

d. Retained Earnings

11. An appropriate capital structure is

a. Flexible

b. Conservator

c. Minimum risk of loss of control

d. (a), (b), (c)

12. Following is not the assumption of MM Approach

a. Investors behave rationally

b. Investors are free to buy & sell securities

c. There is a transaction cash

d. Investors can borrow without restriction

13. Current ratio is a _____ ratio.

a. activity

b. solvency




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c. profitability

d. liquidity

14. High asset turnover & high operating profit will lead to high _____.

a. debt equity

b. ROI

c. leverage

d. liquidity

15. Stock Turnover ratio is a _____ ratio.

a. activity

b. solvency

c. profitability

d. liquidity

16. Return on Net Worth is a _____ ratio.

a. unlevered

b. levered

c. solvency

d. liquidity

17. Earning before interest and tax is used as numerator for _____ profit ratio

a. net

b. gross

c. operating

d. current

18. Income statements are thoroughly analysed under _____ analysis.

a. Economy




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b. Industry

c. Company

d. Technical

19. Fundamental analysis assumes that the stock price of a company depends on _____.

a. Emotions of stock markets

b. Capacity to generate income in future

c. Tips and rumors about the company

d. (a) & (c)

20. _____ model is sectoral analysis of Gross National Product model building.

a. Barometric

b. Opportunistic

c. Econometric

d. (a) & (c)

21. _____ is/are the measures of economic activity of a country.

a. Inflation

b. Fiscal & Monetary policy

c. Monsoon & Agriculture

d. (a), (b), (c)

22. Under Barometric approach, Nifty and sensex stock price changes is an example of

_____ indicator.

a. Lagging

b. Coincidental

c. Leading

d. (a) & (b)




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23. The expected rate of return on a bond if bought at its current market price and held till

maturity is known as ______.

a. Current Yield

b. Yield to call

c. Yield to put

d. Yield to maturity

24. At a given required rate of return ______ the maturity of a bond, lower will be its

value.

a. higher

b. lower

c. constant

d.direct

25. YTM and bond values are ______ related.

a. directly

b. inversely

c. not

d.always

26. Reward to total risk ratio is also known as _____ measure.

a. Shape’s

b. Jensen’s

c. Treynor’s

d. CAPM

27. Difference between expected returns and returns as per CAPM is also known as _____

measure.

a. CAPM




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b. Shape’s

c. Jensen’s

d. Treynor’s

28. _____ is used as denominator in Treynor’s ratio.

a. Alpha

b. Beta

c. Gamma

d. Theta

29. Jensen’s measure provides _____ of a security.

a. beta

b. Alpha

c. Gamma

d. Theta

30. _____is not a principle of active portfolio strategy

a. Market timing

b. Security rotation

c. Security selection

d. Portfolio selection

31. Treynor’s measure of an overpriced security will be _____ as compared to Treynor’s

measure of market.

a. Lower

b. Higher

c. Same

d. free




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32. According to APT, returns earned by a security if there is no change in risk levels of

macro economic variables is known as _____ returns.

a. Risk premium

b. Risk free returns

c. Both (a) & (b)

d. Factor

33. As per APT, extra returns due to change in risk factor is known as _____.

a. Risk free returns

b. Risk premium

c. Both (a) & (b)

d. Direct

34. As per APT, the value of firm-specific risk factor is _____.

a. Positive

b. Negative

c. Zero

d. Theta

35. _____ theory stipulates relationship between expected return and risk.

a. CAPM

b. APT

c. Both (a) & (b)

d. Treynor’s

36. An arbitrage opportunity exists if an investor can construct a _____ investment

portfolio that will yield a guranteed profit.

a. Small

b. Large




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c. Zero

d. negative

37. Inputs required for Single Index model for a portfolio consisting of ‘n’ securities are

______.

a. 3n + 2

b. n + 2

c. 3n + 3

d. 3n + 1

38. For a portfolio consisting of 50 securities, inputs required for Single Index model

would be ______.

a. 150

b. 151

c. 152

d. 153

39. An undervalued security will have _____ alpha.

a. Zero

b. Positive

c. Negative

d. Non positive

40. Single index model is based on _____ concept.

a. Regression

b. Interpolation

c. Extrapolation.

d. Corelation




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41. Portfolio alpha is _____ of security alpha.

a. Total

b. Difference

c. Simple average

d. Weightage average

42. If the risk-free rate is 3%, the beta of APL is 1.2, and the rate of return of the market

portfolio is 12%, what is the expected return on APL as per CAPM will be _____%.

a. 12.8

b. 10.8

c. 13.8

d. 14.8

43. Mr. X is a risk-averse investor. Mr. Y is a less risk-averse investor as compared to Mr.

Y, therefore, _____.

a. for the same risk, Mr. Y requires a higher rate of return as compared to Mr. X.

b. for the same returns, Mr. X tolerates higher risk as compared to Mr. Y.

c. for the same returns, Mr. Y tolerates higher risk as compared to Mr. X.

d. for the same risk, Mr. X requires a lower rate of return as compared to Mr. Y.

44. Data for Y ltd is as follows

Particulars Amount

Equity share capital (FV = Rs 10) 200

12% Preference Shares 80




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Profit After tax 50

Proposed Dividend 35

Market price per share 100

Calculate Dividend per share

a. 1.75

b. 1.60

c. 2.02

d. 2.32

45. Data for A ltd is as follows

Particulars Amount

Equity share capital (FV = Rs 10) 250

12% Preference Shares 100

Profit After tax 70

Proposed Dividend 40

Market price per share 35

Calculate Return on equity shares

a. 20.2%

b. 86.63%




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c. 23.2%

d. 68.97%

46. Calculate Expected return for the Portfolio

Particulars Initial Price End Price Beta

P 13 19 1.25

Q 20 25 1.00

R 24 30 1.33

a. 34.78%

b. 36.36%

c. 33.65%

d. 29.82%

47. If average return is 20%, risk free rate is 9%, Standard deviation is 0.50, beta is 1.80. What is the Expected return as per CAPM.

a. 22

b. 6.11

c. 28.8

d. 29

48. Return as per Sharpers’s index is

a. (R-Rf)/ ᵝ

b. (R-Rf)/ σ

c. Expected return – Actual Return




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d. Rf + ᵝ(Rm – Rf)

49. Proprietary ratio =

a. Total Equity/ Total Assets

b. Debt/ Equity

c. Debt/ Assets

d. Total Assets/ Total Equity

50. From the following calculate Co-variance

Year Return on Security (%) Return on Market (%)

1 8 10

2 12 9

3 10 12

4 16 14

5 14 15

a. 11.5

b. 5.5

c. 9.2

d. 4.4

dnyan ganga education trust’s degree college of arts

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