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DEPARTMENT OF COMMERCE

St. Josephs College (Autonomous)


Tiruchirappalli 620 002
CORE ELECTIVE (WS)
Paper
III
14PCO3203
Code

Course
Sem
Title of the
Paper

PORTFOLIO MANAGEMENT

Staff Name

Dr. S. IRUDAYARAJ

Units

I
V

UNIT I
1.

Basic objective of cost accounting is ________.

a) tax compliance.
c) cost ascertainment
Answer: C
2.

b)
d)

b)
d)

each unit of output.


each executive.

Costing refers to the techniques and processes of _________.

a) ascertainment of costs.
c) apportion of costs.
Answer: A
4.

profit analysis.

Direct cost incurred can be identified with _________.

a) each department.
c) each month.
Answer: B
3.

financial audit.

b)
d)

allocation of costs.
distribution of costs.

Cost accounting was developed because of the ____.

a)
c)

limitations of the financial accounting.


limitations of
accounting.

the

human

resource

b)
d)

limitations of the management accounting.


limitations of the double entry accounting.

Answer: A
5.

Multiple costing is a technique of using two or more costing methods for ascertainment of cost by
_____.

a) the same firm.


c) the same industry.
Answer: A
6.

imputed cost.

b)
d)

historical cost.

b)
d)

four types.

b)
d)

chargeable expenses.

shutdown cost.

seven types.

sundry expenses.

Indirect material used in production is classified as __________.

a) office overhead.
c) distribution overhead.
Answer: D
11.

indirect cost.

Direct expenses are also called ________.

a) major expenses.
c) overhead expenses.
Answer: B
10.

b)
d)

Elements of costs are _________.

a) three types.
c) five types.
Answer: A
9.

the several industries.

The cost which is to be incurred even when a business unit is closed is a _____.

a) imputed cost.
c) sunk cost.
Answer: D
8.

the several firms.

Wages paid to a labour who was engaged in production activities can be termed as _______.

a) direct cost.
c) sunk cost.
Answer: A
7.

b)
d)

b)
d)

selling overhead.
production overhead.

Which one of the following is not considered for preparation of cost sheet?

a) Factory cost.
c) Labour cost.
Answer: B

b)
d)

Goodwill written off.


Selling cost.

12.

Sale of defectives is reduced from ________.

a) prime cost.
c) cost of production.
Answer: C
13.

b)
d)

estimation of cost.

b)
d)

value of finished product.

b)

indirect materials and indirect labour and


indirect expenses.
direct materials, indirect wages and indirect
expenses.

cost of sales.

estimation of units.

Cost of sales plus profit is _______.

a) selling price.
c) value of goods produced I
Answer: A
15.

works cost.

Tender is an _______.

a) estimation of profit.
c) estimation of selling price.
Answer: C
14.

b)
d)

value of stocks.

Prime cost includes _______.

a)
c)

direct materials, direct wages and indirect


expenses.
direct materials, direct wages and direct
expenses.

d)

Answer: C
16.

Depreciation of plant and machinery is a part of _________.

a) factory overhead.
c) distribution overhead.
Answer: A
17.

selling overhead.
administration overhead.

Factory overhead can be charged on the basis of _______.

a) material cost.
c) prime cost.
Answer: B
18.

b)
d)

b)
d)

labour cost.
direct expenses.

Office and administrative expenses can be charged on the basis of _______.

a)

material cost.

b)

labour cost.

c) prime cost.
Answer: D
19.

marginal costing.

b)
d)

cost sheet.

b)
d)

variable cost.

b)
d)

Providing information to management

profit statement.

semi fixed cost.

Cost accounting mainly helps the management in

a) Earning profit
c) Fixing prices of the products
Answer: B
23.

budget.

Direct material is a _______.

a) fixed cost.
c) semi variable cost.
Answer: B
22.

b)
d)

A document which provides for the detailed cost centre and cost unit is _____.

a) tender.
c) invoice.
Answer: B
21.

factory cost.

One of the most important tools in cost planning is _______.

a) direct cost.
c) cost sheet.
Answer: C
20.

d)

All of the above

Cost accounting provides all of the following information except

a)
c)

Product cost
Inventory values

b)
d)

Cost of goods sold


Cash forecasts

Answer: D
24.

The total of all direct expense is known as cost

a)

Prime cost

b)

Factory cost

c)

Selling cost

d)

Cost of products

Answer: A
25.

Salary paid to factory manager is an item of

26.

27.

28.

29.

30.

a) Prime cost
b) Factory overhead
c) Selling overhead
d) Non on the above
Answer: B
NBFCs offer higher interest rate because of
a) The best management funds b) The competition among the
NBFCs
c) The risk involved
d) The credit rating
Answer: C
Index schemes
a) Returns equals to index b) Reflect the market
returns
c) Are income schemes
d) Are tax saving schemes
Answer: A
The underwriter has to take up
a) The fixed portion of the b) The agreed portion of the
issue capital
unsubscribed part
c) The agreed portion or can d) None of the above
refuse it
Answer: B
Capital index bonds are linked with
a) BSE Sensex
b) NSE Nifty
c) Consumer price index
d) BSE-100
Answer: C
The minimum numbers of shares to be applied for is
a) 100
b) 200
c) 300
d) 500

Answer: B
UNIT II
31.

32.

33.

34.

35.

36.

37.

Direct material is a _______.

a) fixed cost.
b) variable cost.
c) semi variable cost.
d) semi fixed cost.
Answer: B
The market psychology is affected by events
a) Tangible
b) Intangible
c) Fictitious
d) Both A & B
Answer: D
High leverage leads to
a) Market risk
b) Purchasing power risk
c) Finance risk
d) Interest rate risk
Answer: C
Decline in bank rate leads to
a) Market risk
b) Purchasing power risk
c) Finance risk
d) Interest rate risk
Answer: D
Inflation leads to
a) Market risk
b) Purchasing power risk
c) Finance risk
d) Interest rate risk
Answer: B
Kargil war leads to
a) Market risk
b) Purchasing power risk
c) Finance risk
d) Interest rate risk
Answer: A
Interest rate risk occurs when

38.

39.

40.

41.

42.

a) The market price of bond b) The variability in yields is due


moves inversely to the
to the market interest rate
prevailing market interest
fluctuations
rate
c) There is variability in the d) All the above
coupon interest rate
Answer: D
The financial risk considers the difference between
a) EAIT-EAI
b) EBIT-EBT
c) Revenue-EBIT
d) Revenue-EAI
Answer: B
The statistical tool used to measure a companys risk is
a) Mean
b) Mode
c) Variance
d) Co-variance
Answer: C
Marketability risk of bond is
a) The market risk which b) Variation in return caused by
affects all the bonds
difficulty in selling bonds
c) The failure to pay the agreed d) Both A and B
value of the bond by the
issuer
Answer: B
Default risk is lower in
a) Treasury bills
b) Government bonds
c) ICICI bonds
d) IDBI bonds
Answer: A
The value of the bond depends on

43.

44.

45.

46.

a) The coupon rate


b) Years to maturity
c) Expected yield to maturity
d) All the above
Answer: D
The bond yield remains constant over its life and the discount or
premium amount will decrease
a) At an decreasing rate as its b) At an decreasing rate its life
life gets shorter
gets longer
c) At an increasing rate as its d) At an increasing rate as its life
life gets shorter
gets longer
Answer: C
Yield to maturity is the single factor that makes
a) The future value of the b) The future value of the present
present cash flows from a
cash flows equal to the future
bond equal to bond value
price of the bond
c) Present value of the future d) The future value of the bond
cash flows of the bond equal
equal to the present price
to the current price of the
bond
Answer: C
The term structure of the bond is the relationship between the
a) Interest rate and bonds b) Interest rate of the bond and
maturity period
market rate of interest
c) Interest rate and the price of d) Yield and time taken to mature
bond
Answer: D
Riding the yield curve means
a) Switching over from short b) Switching from bonds to stocks
term bonds to long term

47.

48.

49.

50.

when the latter yields better


c) Switching over from long d) Switching over to short term
term bonds to short term
bonds from long term bonds
bonds to get more yield
when yield curve is downward
sloping
Answer: A
Coupon yield of the bond is
a) The discounted value of b) Coupon payment stated as a
bond
percentage of bonds features
c) Coupon payment stated as a d) Both A &C
percentage of bonds present
price
Answer: C
The bond portfolio manager has to watch carefully
a) The shape of the yield curve b) The market interest rate
c) The shape of the yield curve d) The repaying capacity of the
and shifts that occur in the
issuers
market interest rate
Answer: C
Duration is the measure of
a) Time structure of the bond
b) Interest rate risk
c) Time structure and market d) Time structure and the interest
risk
rate risk
Answer: D
Mr. A purchase a stock in the stock market. His holding period return
depends on the
a) Purchase price of the stock b) Selling price of the stock

51.

52.

53.

54.

55.

c) Dividend paid to the stock


d) All the above
Answer: D
MR. X purchased a stock for Rs.50 and he disposed it for Rs.48.
During the holding period he received Rs.3 as dividend and his
holding period return is
a) 1 per cent
b) 2 per cent
c) 3 per cent
d) 1.5 per cent
Answer: B
Mr. Y purchased a stock for Rs.60 which will not pay any dividend
during the current year. He anticipates equal likelihood of the
following prices to prevail in the market Rs.50, Rs.65, Rs.60 and
Rs.70. The expected holding period return is
a) Rs.10
b) Rs.15
c) Rs.1.25
d) Rs.3.75
Answer: C
Mr. X expects 20 per cent return from his investment. The dividend
from the Y stock is Rs.2.0 and the present price is Rs.50. What should
be the future price of the stock?
a) Rs.58.00
b) Rs.60.00
c) Rs.55.33
d) Rs.63.33
Answer: A
A stock of Rs.10 face value has declared 35% dividend for the current
year. The stock is currently selling for Rs.40. What s its dividend
yield?
a) 35%
b) 70%
c) 8.75%
d) 8.5%
Answer: C
According to constant growth model, the next years dividend is 20%,

56.

57.

58.

59.

60.

required rate of return is 10% and the growth rate is 15 per cent. The
market price would be
a) Rs.50
b) Rs.55
c) Rs.45
d) Rs.40
Answer: D
If the current price is Rs.100, the required rate of return is 20% and
the dividend paid on a share of Rs.10 face value is Rs.3. What is the
expected growth rate?
a) 15%
b) 16%
c) 17%
d) 18%
Answer: C
Conceptual frame work of valuation through P/E ratio arises from
a) Multiple year holding model b) Constant growth model
c) Two stage growth model
d) Three stage growth model
Answer: B
Suppose a preferred stocks annual dividend is of Rs.3 and required
rate of return is 15per cent, what is its worth today?
a) Rs.20
b) Rs.25
c) Rs.30
d) Rs.15
Answer: A
When the security index moves upward haltingly for a significant
period of time, it is known as
a) Bear market
b) Risk market
c) Bull market
d) Security market
Answer: C
Systematic risk classified under
a) Two categories
b) Three categories

c) Four categories
Answer: B
61.

62.

63.

64.

65.

d) Five categories

UNIT III
Gross domestic product is a logical factor to analyze the economy in
picking up a stock because it indicates
a) Inflation or deflation
b) The market value of assets
c) The status of the economy
d) The condition of the stock
market
Answer: C
The fall in the interest rate is conducive to the stock market because
a) Money may flow from the b) Corporate can borrow at easy
bond market to stock market
terms
c) Brokers can do business at d) Both B and C
borrowed funds
Answer: D
One of the following factors leads the activity of stock market
a) Money supply
b) Per capita income
c) Unemployment rate
d) Manufacturing and trade
Answer: A
The rise of dividend tax from 10% to 20 % in a broader sense affects
a) The investor
b) The corporate
c) The stock market
d) The financial institutions
Answer: C
The LIFO inventory valuation technique results in
a) Underestimation
of
the b) Minimization of firms income
firms cost of goods sold
taxes during inflation
during inflationary period

66.

67.

68.

69.

70.

c) Reflection of firms true d) All the above are true


earning during inflation
Answer: D
The price earnings ratio of a stock reflects
a) The growth of the company b) The market mood for the
companys stock
c) The earnings retained and d) The dividend paid out of the
invested in the company
companys stock
Answer: B
Dow theory was developed to explain
a) New york stock market b) The Dow jones industrial
movement
averages
c) Security
market
price d) The buy and sell strategy
movement
Answer: B
The share prices
a) Move either in declining or b) May remain flat for a period of
increasing trend
time
c) The movements of the share d) The increasing or decreasing
prices form a straight line
move may be zigzag
Answer: D
In the stock market psychology
a) Investors forge the past
b) History repeats itself
c) More
faith
in
future d) Both A and B
prediction
Answer: B
Violation of a trend line means

71.

72.

73.

74.

75.

a) Moving away from the trend b) Changing the direction


line
c) Penetration of the trend line d) Cutting the rising trend line
from above
Answer: C
In the bull market
a) The
stock
prices
are b) Each peak is higher than the
increasing
previous peak
c) Each bottom is higher them d) Both B and C
the previous bottom
Answer: D
In a bull market, a bearish signal is given when
a) Advance decline line slopes b) BSE Sensex is falling
down
c) Fall in the trade volumes
d) A/D line slopes downward
while BSE Sensex is rising
Answer: D
Mumbai stock exchange ws recognized on a permanent basis in
a) 1956
b) 1957
c) 1950
d) 1958
Answer: B
According to SEBI guidelines, _____ should be traded through NSDL
a) All the new issues
b) All the A group shares
c) All the B group shares
d) All the above are true
Answer: A
To be listed on the OTCEI, the minimum capital requirement for a
company is

76.

77.

78.

79.

80.

a) Rs.5 Crores
b) Rs.3 Crores
c) Rs.2 Crores
d) Rs.1 Crores
Answer: B
Clearing and settlement operations of the NSE is carried out by
a) National security depository b) National security clearing coLtd.
operation
c) State bank of india
d) By the exchange itself
Answer: B
The accounting period cycle of NSE is
a) Wednesday to next Tuesday b) Tuesday to next Wednesday
c) Monday to next Friday
d) Wednesday to next Wednesday
Answer: A
Inter connected stock exchange is to interlink
a) The BSE, NSE, OTCEI
b) All the stock exchanges
c) Fifteen
regional
stock d) Fourteen
regional
stock
exchanges
exchanges
Answer: C
In the indian stock market, one of the following indices is calculated
without weights
a) Economic times ordinary b) Financial times ordinary share
share index
index
c) BSE-100
d) Business line- 250
Answer: A
The Sensex has
a) 25 stocks
b) 30 Stocks
c) 33 Stocks
d) 35 stocks
Answer: B

81.

82.

83.

84.

85.

86.

The software stock included in BSE Sensex is


a) APTECH
b) Satyam computers
c) Penta softwares
d) Software Tech
Answer: D
Dollex is the dollar equivalent of
a) Nifty
b) Sensex
c) BSE-200
d) BSE-100
Answer: C
The NSE Niftys base period is
a) 1992
b) 1993
c) 1994
d) 1995
Answer: D
The selected companies in S&P CNX500 should have positive
network for a period of
a) One year
b) two years
c) Three years
d) Five years
Answer: C
SEBI would not vet offer documents seeking listing on
a) OTCEI
b) NSE
c) BSE
d) ISE
Answer: A
At present the merchant bankers
a) Are divided into four b) Are
divided
into
three
categories
categories
c) Have to segregate fund and d) Should have net worth of Rs.3
fee based activity
Cr
Answer: C

87.

88.

89.

90.

91.

Warehousing facility means


a) Storing the stocks with the b) Storing the stocks with the
merchant bankers
brokers
c) Issuing separate contract d) Issuing one contract note for a
notes for different trade
large quantity traded in parts
Answer: D
The broker shall have to furnish SEBI a copy of audited balance sheet
and profit and loss account within
a) One
month
of
each b) Two months of each accounting
accounting period
period
c) Three months of each d) Six months of each accounting
accounting period
period
Answer: D
Mutual fund can make investment
a) In any company listed or b) In privately placed securities of
unlisted
associated company
c) Up to 40 per cent of the d) Should not exceed 10 per cent
listed or unlisted securities of
of the funds in securities of a
group companies
single company
Answer: d
FIIs are permitted to invest
a) in the listed companies only b) in the listed and unlisted
companies
c) in the debentures
d) All the above
Answer: D
UNIT - IV
Put option gives the owner the right to

92.

93.

94.

95.

96.

a) buy an asset or any securities b)


to someone else
c) buy but not an obligation
d)
Answer: D
The call option price is higher when
a) The striking price is higher b)
than the stock price
c) The option period is shorter d)

sell an asset
sell but not an obligation

The striking price is lower than


the stock price
The option period is longer and
the striking price is lower

Answer: D
The option is at the money when
a) Stock price > striking price
b) Striking price > stock price
c) Stock price = Striking price d) There is a high premium
Answer: C
Which one of the following statement is true
a) The premium of the call b) Option prices are not affected
option and the stock price is
by the dividends
very inversely related
c) Stock market volatility does d) The premium of the call option
not affect the option price
is directly related to stock price
Answer: D
The put option buyer gains
a) In the bullish market
b) In the bearish market
c) In the stable market
d) When the strike price is lower
than stock price
Answer: B
The black scholes option pricing theory is based on the following

97.

98.

99.

assumption
a) The stock price movement is b) The
stock
pays
regular
taken to be random
dividends
c) There is cyclical change in d) The call option can be
interest rate
exercised any time during its
life period
Answer: A
An investor who anticipates fall in price of Telco shares after an year
could hedge his risk by
a) Buying future contracts now b) Selling the future contract now
itself
itself
c) Both of the above
d) Neither of the above
Answer: B
Margin money of the future contracts depends on
a) The nature of the buyer and b) The stock market indices
seller
movement
c) Speculative activity
d) Both A and B
Answer: D
Which of the following statement is true
a) Arbitrageurs simultaneously b) Arbitrageurs force the price of
buy and sell two different
stock index future contract to
securities
remain close to the underlying
index
c) Arbitrageurs make the price d) Arbitrageurs buy two different
stock index futures to
securities at the same price in
derivate from the underlying
different markets
index value
Answer: B

100. One of the following market index futures is different from others
a) Standard & poors 500
b) CMEs Standard and poors
Midcap-400
c) Nikkel-225
d) New york stock exchangecomposite stock index
Answer: D
101. An options is the ____ to buy or sell something on a specified date at
a specified price
a) Right
b) Obligation
c) Responsibility
d) Duty
Answer: A
102. Call option gives the particular of
a) Name of the company
b) Number of shares
c) Purchase price or exercise d) All the above
price
Answer: D
103. Put option is the right to the owner to ____ a security
a) Sell
b) Buy
c) Lease
d) None
Answer: A
104. For a given striking price, higher the stock price, the ____ will be the
call option price
a) Higher
b) Lower
c) Equal
d) None
Answer: A
105. ____ the option period, the higher will be the option price
a) Longer
b) Shorter

106.

107.

108.

109.

110.

111.

c) Medium
d) None
Answer: A
Put buyer has the right to sell the shares at the _____ price even if the
price falls
a) Increased
b) Decreased
c) Prefixed
d) None
Answer: C
The gains of the put buyer are the ___ of the put writer
a) Gains
b) Losses
c) Receipts
d) None
Answer: B
Future is a financial ____ which derives its value from the
underlying assets on future dates at a stated price and quantity
a) Asset
b) Liability
c) Contract
d) None
Answer: C
Market index futures are directly related to with _______
a) Stock market
b) Commodity market
c) Forex market
d) None
Answer: A
In a forward contract, _____ parties agree to buy and sell some
underlying asset on future date
a) One
b) Two
c) Three
d) None
Answer: B
_____ is the current market price at which an asset is bought or sold
for immediate payment and delivery.

112.

113.

114.

115.

116.

a) Spot price
b) Future price
c) Market price
d) Exercise price
Answer: A
The forward market has the problem of
a) Lack of centralization of b) Liquidity
trading
c) Counterparty risk
d) All the above
Answer: D
The stock index futures was introduced in _______
a) 1982
b) 1983
c) 1992
d) 1993
Answer: A
A ______ owns the stock and his aim is to protect himself against the
risk caused by the price changes
a) Hedger
b) Speculator
c) Gambler
d) None
Answer: A
______ each trading session, each customers position is estimated
according to the new settlement price of the index
a) During
b) At the beginning of
c) At the close of
d) None
Answer: C
______ is a person who simultaneously purchases and sells the same
shares in two different markets for different prices
a) Investor
b) Arbitrageur
c) Hedger
d) None
Answer: B

117. At the time of _____, the futures price is higher than the current
market
a) Optimism
b) Pessimism
c) Problem
d) None
Answer: A
118. ____ provides the facility of borrowing and lending of shares and
funds
a) Badla
b) Hedging
c) Arbitrage
d) None
Answer: A
119. Nifty contains a well-diversified portfolio of_____ stocks and Nifty is
selected as the base for stock index futures.
a) 10
b) 25
c) 50
d) 100
Answer: C
120. The black-Scholes theory says that the option price is determined by
______
a) The market price of the stock b) The exercise price
c) The life of the option
d) All the above
Answer:
UNIT - V
121. The common practice in the traditional approach is
a) To evaluate the entire stock b) To maximize the expected
market
return for a given level of risk
c) To evaluate the entire d) To select the portfolios
financial
plan
of
the
individual

122.

123.

124.

125.

126.

127.

Answer: C
The need for constant income depends on the
a) Market risk
b) Inflation risk
c) Interest risk
d) Unique risk
Answer: B
The highly liquid security is
a) Mutual fund units
b) Treasury bills
c) Shares
d) Commercial papers
Answer: B
Investors invest more in stock during their
a) Early career period
b) Mid-career level
c) Retirement stage with huge d) All the above mentioned period
money
Answer: A
An investor is having a portfolio with the combination of stock and
bonds in the ratio of 75:25, he is
a) Risk averse
b) Risk neutral
c) A risk taker
d) Active in portfolio management
Answer: C
In the active approach the investor continuously studies
a) Group related risk
b) Market related risk
c) Security specific risk
d) All the above
Answer: D
Diversification reduces
a) Interest rate risk
b) Market rate risk
c) Unique risk
d) Inflation risk
Answer: C

128. Simple diversification means


a) Purchase of more than 15 b) Purchase of treasury bills
stocks
c) Purchase of less than 15 d) Purchase of large varieties of
stocks at random
assets
Answer: C
129. Markowitz approach has roots in
a) Good portfolio management b) Proper entry and exit in the
market
c) Estimation of stock return
d) Analyzing the risk and return
related to stocks
Answer: D
130. The risk involved in the purchase of infotech and satyam computers
shares are measured with the help of
a) Average return of stocks of b) Co-variance
between
two
companies individually
companies scrip return
c) Variance of each companys d) All the above
stock
Answer: C
131. Risk lovers utility curves have
a) Positive slope
b) Negative slope
c) Convex to the origin
d) Negative slope and convex to
the origin
Answer: C
132. The risk explained by the index is equal to
a) Beta value of the stock
b) Variances of the security return
c) 2 x variance of market index d) 2 x variance of security return

return
Answer: C
133. The unsystematic risk is explained by
a) Variance of the index
b) Unexplained variance of the
index
c) Explained variance of the d) None of the above
index
Answer: B
134. The relationship between potential unsystematic risk and reward is
given by
a) Excess return to beta ratio
b) Excess return to securitys
Standard deviation ratio
c) Excess return to securitys d) Excess return to beta square
variance ratio
ratio
Answer: A
135. Corner portfolio are calculated where a
a) Security enters
b) Security leaves
c) Security enters or leaves
d) Security with high extreme
value enters
Answer: C
136. The efficient frontier becomes a straight line through out because of
the
a) Introduction of risk free b) Introduction of lending
assets
c) Introduction of lending and d) Introduction of borrowing
borrowing
Answer: C
137. The security market line describes the expected return for

a) The efficient portfolio


c) All portfolios and assets

138.

139.

140.

141.

142.

b) The inefficient portfolio


d) The efficient and inefficient
portfolios

Answer: C
The stock above the security market line is
a) Overpriced
b) Underpriced
c) Appropriately
d) Of high risk
Answer: B
Market imperfections may lead to
a) Lower SML
b) Higher SML
c) Band of SML
d) Non-linear SML
Answer: C
The buying and selling activities of the arbitrageur
a) Increased the profit
b) Brings equilibrium level
c) Creates disequilibrium
d) Reduces the profit margin
Answer: B
According to APT theory, an investor would try to increase returns
from his portfolio
a) By increasing the risk
b) By increasing the portfolio
funds
c) By reducing the risk
d) Without increasing the portfolio
funds
Answer: D
In an arbitrage portfolio, the change in the proportions of different
securities will add up to
a) Zero
b) Greater than one
c) Less than one
d) Equal to one

143.

144.

145.

146.

147.

148.

Answer: A
The mutual funds that are listed in the stock exchanges are
a) Closed-end funds
b) Stock indexed funds
c) Open-end funds
d) Growth schemes
Answer: A
The investors by investing in the mutual funds get
a) Professional management
b) Diversification
c) Return potential
d) All the above
Answer: D
The Sharpe index assigns the high value to funds that have
a) Low standard deviations
b) Higher returns
c) Higher risk adjusted returns d) Higher risk premium
Answer: C
According to Treynor index, a steep slope would indicate
a) The fund is yielding higher b) The funds volatile return
returns
c) The fund is sensitive to the d) The fund is not sensitive to the
market
market
Answer: C
In the Treynor index, the performance of the fund depends on
a) The riskless rate of return
b) The risk premium and standard
deviation of funds return
c) The risk premium and beta d) The risk premium and the
coefficient
standard deviation
Answer: C
Jensens performance index gives importance
a) To the asset combination
b) Professional management

c) The market condition

d) The predictive ability of the


manager

Answer: D
149. The NSE Nifty index fund consists of
a) The stocks of high market b)
capitalization in NSE
c) All the stocks of the Nifty d)
index

Blue chip companies stocks of


the index
Consists 90% of the stocks of
the index leaving stocks of
lesser importance

Answer: C
150. The market timer is a
a) Professional
portfolio b) Active portfolio manager
manager
c) Passive portfolio manager
d) None of the above
Answer: B
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