Chapter Name : PART V Chp.

17 to 20

1 The price between the lowest price and average price of the last year is right to ____ shares
Sell
Buy
Hold
None of the above

2 After review of shares held in portfolio investors ‘weeds’ the portfolio by ____ shares.
Selling
Buying
holding
None of the above

3 Investors are advised to sell _____ of the shares held when price increases by ____ %
Ten
Fifteen
Twenty
None of the above

4 If price increases by 20%, investor is advised to sell _____ % of your holdings.

25
35
45
None of the above

5 It is wise to sell shares ________ a capital issue.

After
Immediately after
Before
None of the above

6 Wherever there is a doubt regarding a share, ___ it.

Hold
Buy
Sell
None of the above
7 In any case it is important to sell shares once the price earnings [P/E] ratio crosses
55
45
35
None of the above

8 A share should not be sold, if its price has fallen

For no major reason
Due to bad performance
Recession in the industry
None of the above

9 Shares are purchased to

Hedge against inflation
Build net worth of investor
Canalize investor savings
All of the above

10 It is general observation that over a period, prices of shares rise at a rate ____ the inflation.
Higher than
Lower than
Same as
None of the above

11 To reap full value of investment in shares, investor has to ______ his holdings
Diversify
Specialize
Minimize
None of the above

12 Investor ______ his brokerage expenses through a long term investment.

Increases
Minimizes
Optimizes
None of the above

13 Considerable time and research for decision is an attribute of ________ investment.

A long term
A short term
Speculative
None of the above
14 Possibility of instant wealth is driving force of
A long term investment
Investment in share market
Speculation
None of the above

15 If a speculator wishes to play the market he / she need _____ money.

Enough
Bare minimum
No
None of the above

16 If a speculator wishes to buy 100,000 shares of a company, he normally buys them in

A single lot
Small lots
Two lots
None of the above

17 A speculator ________ take losses.

Dare not
Plans to
Is not afraid to
None of the above

18 ______ is the significant factor in determining gains from investment decision.

Clarity
Timing
Force
None of the above

19 When to buy or sell becomes a complex decision because of _____ in prices.

Wide fluctuations
Inability to identify peak or low
Fall
None of the above

20 Jayant & Sumant selected a fundamentally sound company to invest. Sumant reaped profits, but
Jayant did not as he bought shares when price was
Rs. 141/-
Rs. 275/-
Rs. 385/-
 None of the above

Chapter 21 to 30
1 If P/E ratios in the stock market are on rise, the economy must in
Boom
Recession
Stagflation
None of the above

2 P/E of most companies is always

Climbing
Descending
Changing
None of the above

3 Vasant says his Fixed Deposit has a P/E of 8, it shows that the interest on the FD is
8
10
12.5
None of the above

4 The 60% rule is a guide to use for decision on share investment; it says a company with P/E of 10 is
expected to grow at ____ p.a.
6%
16%
26%
None of the above

5 This theory is also known as “the great fool theory”.

Dow Theory
Elliot Wave Theory
Random Theory
None of the above

6 The fact that both technical and fundamental analyses are neither accurate nor complete has
provided base to
Dow Theory
Elliot Wave Theory
Random Theory
 None of the above

7 Investors with no capability for research or analysis adopt

Dow Theory
Elliot Wave Theory
Random Theory
None of the above

8 This theory automatically achieves the objective of diversification in investment.

Dow Theory
Elliot Wave Theory
Random Theory
None of the above

9 buy low and sell high’ is the strategy of

Random Theory
Contrary Opinion
Elliot Wave Theory
None of the above

10 Evergreen strategy is all about ___ shares.

Buying & selling
Buying & holding
Selling
None of the above

11 The fundamental approach theory seeks to establish _______ of a share.

Market price
Purchase price
Intrinsic or true value
None of the above

12 Investor working on fundamental approach ____ believes that the gap between market price and
intrinsic value of share will
Vanish
Broaden
Widen
None of the above

13 Figures don’t lie” proclaim protagonists of

Random Theory
 Fundamental Approach
Evergreen Strategy
None of the above

14 The theory of fundamental approach works reasonably well

For short term gains
Intra day trading
For long term investment
None of the above

15 Prices are predicted using ____ in the technical approach

Trend analysis
Financials
P/E ratio
None of the above

16 Dow Theory can be used ___ business trends.

To identify
As a guide to
To forecast
None of the above

17 In market uptrend each successive price rally high is ______ than the previous one.
Slower
Higher
Faster
None of the above

18 A more aggressive investor would trade normally in the _____ trend of price movements.
Primary
Secondary
Tertiary
None of the above

19 When prices gap in one direction and trade away from the gap, there is
Exhaustion gap
An island reversal
Runaway gap
None of the above

20 For meaningful review of portfolio, prudent investor

 Checks all shares
Checks latest market prices
Sets a target for each share
None of the above

1 You need to pay income tax on

Gains from sale of shares within a year
Dividends
Receipt of bonus shares
All of the above

2 Companies buy back shares so that their debt equity ratio becomes
Lower
Higher
Rich
None of the above

3 _______ , from investor’s point of view, is the important part of annual reports.
Photographs
Overall image
Trends & Data
None of the above

4 Good grasp of company’s opportunities, problems and plans to overcome them are available in
Auditor’s report
Financial statements
Director’s report
None of the above

5 Unbiased observations for shareholders are provided in

Auditor’s report
Schedules to accounts
Director’s report
None of the above

6 _____ investments included in the balance sheet of a company are difficult to dispose off.
All
 Unquoted
Quoted
None of the above

7 Notes and schedules to accounts are vital for ______ of financial statements.
Interpretation
Audit
Certification
None of the above

8 Ratio analysis puts absolute financial data into

Results
Proper perspective
Further details
None of the above

9 Financial ratios are meant to

Provide answers
Correct situations
Raise questions
None of the above

10 Higher P/E ratio allows investors to recover their cost

Later
Faster
In lump sum
None of the above

11 Market to book ratio has limited value as

Earnings fluctuate
Market prices fluctuate
Assets are stated at historical costs
None of the above

12 Low dividend payout ratio indicates that the company is retaining ____ earnings for its growth.
No
Adequate
Lesser
None of the above

13 Highly leveraged companies have loans and liabilities as a ______ source of funds.
 Major
Only
Minor
None of the above

14 The owners by leveraging a company control it with _____ investment.

Huge
Limited
Periodic
None of the above

15 Highly leveraged companies find it ______ to access capital markets.

Difficult
Easy
Uneconomic
None of the above

16 Vijay Electronics has a debt coverage ratio of 0.2. That suggests it needs ____ years to repay debts
from its internally generated funds.
Two
Five
Ten
None of the above

17 Companies try to maintain their current ratio at

1:1
2:1
3:1
None of the above

18 _____ quick or acid test ratio is considered to be ideal.

1:1
2:1
3:1
None of the above

19 Good ______ indicates effective credit administration.

Stock turnover
Average Collection Period
Acid Test Ratio
None of the above
20 It is ____ to pass judgment on a company looking at one set of ratios.
Prudent
Common
Futile
None of the above