Investment Analysis and Portfolio Management

T Y BMS – V SET B

A good __________ on an investment is the first and the foremost condition for effective
investment.

A. Liquidity
B. Rate of Return
C. Growth
D. None of the

ANSWER: B

___________ means a combination of financial assets and physical assets.

A. Investment
B. Saving
C. Portfolio
D. None of the

ANSWER: C

This type of risk is avoidable through proper diversification __________

A. Portfolio Risk
B. Systematic Risk
C. Unsystematic Risk
D. Total risk

ANSWER: C

A statistical measure of the degree to which two variables move together __________

A. Coefficient of variation
B. Variance
C. Covariance
D. Certainty equivalent

ANSWER: C

An aggressive common stock would have a beta __________

A. equal to zero
B. Greater than one
C. Equal to one
D. Less than one

ANSWER: B

A line that describes the relationship between an individual security’s returns and returns on
the market portfolio __________

A. Characteristics Line
B. Security Market Line
C. Capital Market Line
D. Beta

ANSWER: A

According to the capital asset pricing model (CAPM), a security expected return is equal to
the risk free rate plus a premium __________

A. Equal to the security’s beta

B. Based on the unsystematic risk of the security
C. Based total risk of the Security
D. Based on the systematic risk of the security

ANSWER: D

The risk free security has a beta equal to while the market portfolio’s beta is equal to
__________

A. One, more than one

B. One less than one
C. Zero one
D. Less than zero more than zero

ANSWER: C
Carrie has a “certainty equivalent” to a risky gamble’s expected value that is less than the
gamble’s expected value. Carrie shows __________

A. Risk aversion
B. Risk preference
C. Risk indifference
D. A strange outlook on life

ANSWER: A

Beta is the slope of __________

A. The security market line

B. The capital market line
C. A characteristic line
D. The CAPM

ANSWER: B

An ____ primary trend represents a bull market

A. Sideward
B. Positive
C. Downward
D. Upward

ANSWER: D

The graphical version of the CAPM is called _____________

A. Graphical
B. Straight
C. Security
D. Positive

ANSWER: B
__________ is sue as denominator in Sharp’s Ratio.

A. Standard Deviation
B. Beta
C. Risk free return
D. Market return

ANSWER: A

__________ Analysis is a study based on market emotions and share price movements.

A. Fundamental
B. Technical
C. Moral
D. Modern

ANSWER: B

Beta reflects the stock risk for investor which is usually ________

A. Collective
B. Individual
C. Linear
D. Weighted

ANSWER: B

Portfolio alpha is ______ of security alpha.

A. Total
B. Difference
C. Simple average
D. Weightage average

ANSWER: D
Higher ________ is associated with greater probability of higher return.

A. Danger
B. Return
C. Profit
D. Risk

ANSWER: D

The _____ is an effort to achieve a balance between the desire for the lowest possible risk
and the highest possible return.

A. Risk return
B. Risk
C. Return
D. Profit

ANSWER: A

An investor is interested only in the ________ portfolio.

A. Inefficient
B. Risk
C. Efficient
D. Profit

ANSWER: C

_________ Assist in the selection of the most efficient by analyzing various possible
portfolio of the given securities.

A. Markowitz Model
B. CAPM Model
C. Sharp Model
D. Jensen Model

ANSWER: A
In the case of the _______ law of large numbers are used for infinite or large number of
securities.

A. Sharpe Measure
B. CAPM
C. Arbitrage Pricing Theory
D. Treynor’s Measure

ANSWER: C

_______ analysts believe that history tends to repeat itself.

A. Fundamental
B. Modern
C. Technical
D. Practical

ANSWER: C

_______ Chart is the simplest form of charting.

A. Candlesticks
B. Line
C. Bar
D. Pie

ANSWER: B

In a ______ chart, a thicker bar called candle is drawn in the chart.

A. Candlesticks
B. Line
C. Bar
D. Pie

ANSWER: A
______ Level is the lower price level at which demand for shares gains momentum.

A. Resistance
B. Head and Shoulder
C. Support
D. Inverse Head and Shoulder

ANSWER: C

______ Level is the upper price level at which supply for shares gains momentum.

A. Resistance
B. Head and Shoulder
C. Support
D. Inverse Head and Shoulder

ANSWER: A

______ reflect resistance and support level in an upward moving market.

A. Resistance
B. Head and Shoulder
C. Support
D. Inverse Head and Shoulder

ANSWER: B

______ reflect resistance and support level in an downward moving market.

A. Resistance
B. Head and Shoulder
C. Support
D. Inverse Head and Shoulder

ANSWER: D
______ believed in fundamental analysis.

A. Elliot Wave
B. Charles Dow
C. CAPM
D. Arbitrage Pricing Model

ANSWER: B

______ theory attempts to develop a rationale for a long term pattern in the stock price
movement.

A. Elliot Wave
B. Charles Dow
C. CAPM
D. Arbitrage Pricing Model

ANSWER: A

______ Stage is the stage of startup of an industry.

A. Pioneering
B. Rapid
C. Decline
D. Diversification

ANSWER: A

______ Stage, poor performance start winding up their businesses.

A. Pioneering
B. Rapid
C. Decline
D. Diversification

ANSWER: C
______ Leverage helps to examine the relationship between EBIT and EPS.

A. Operating
B. Combined
C. Financial
D. Diversification

ANSWER: C

______ Leverage shows the relationship between the revenue in the account of sales and the
taxable income.

A. Operating
B. Combined
C. Financial
D. Diversification

ANSWER: B

A good __________ on an investment is the first and the foremost condition for effective
investment.

A. Liquidity
B. Rate of Return
C. Growth
D. None of the

ANSWER: B

___________ means a combination of financial assets and physical assets.

A. Investment
B. Saving
C. Portfolio
D. None of the

ANSWER: C
This type of risk is avoidable through proper diversification __________

A. Portfolio Risk
B. Systematic Risk
C. Unsystematic Risk
D. Total risk

ANSWER: C

A statistical measure of the degree to which two variables move together __________

A. Coefficient of variation
B. Variance
C. Covariance
D. Certainty equivalent

ANSWER: C

An aggressive common stock would have a beta __________

A. equal to zero
B. Greater than one
C. Equal to one

ANSWER: B

If Equity share Rs. 20, 00,000, Debenture 15,00,000, Preference Share 20,00,000, Reserve
Surplus 11,00,000, Misc. Expenses, then How much is the Total Equity fund is __________.

A. 31,00,000
B. 30,00,000
C. 50,00,000
D. 40,00,000

ANSWER: B
A ___________ is an asset or item that is purchased with the hope that it will generate
income.

A. Saving
B. Share
C. Investment
D. Gambling

ANSWER: C

A ___________ is a professionally managed income scheme.

A. Equity
B. Debenture
C. Mutual Fund
D. Gold

ANSWER: C

Section ___________ most widely used section for claiming income tax deduction.

A. 80C
B. 80D
C. 80CC
D. 80CCC

ANSWER: A

___________ means marketability of an investment.

A. Convertibility
B. Liquidity
C. Investment
D. None of the

ANSWER: B
More the _______ more is the profit.

A. Growth
B. Increase
C. Hike
D. Risk

ANSWER: D

___________ refers to the loss of principle amount of an investment.

A. Risk
B. Increase
C. Hike
D. Growth

ANSWER: A

___________ refers to protection of investor principle amount and expected rate of return.

A. Risk
B. Cover
C. Safety
D. Growth

ANSWER: C

___________ refers to an investment ready to convert into cash position.

A. Convertibility
B. Liquidity
C. Investment
D. None of the

ANSWER: B
 ___________ means transferability or sale ability of an asset.
A. Convertibility
B. Marketability
C. Liquidity
D. None of the

ANSWER: B

___________ activity includes buying and selling of the financial assets, physical assets and
marketable assets in primary and secondary markets.

A. Mutual Fund
B. Equity
C. Debenture
D. Investment

ANSWER: D
A ___________ is an asset or item that is purchased with the hope that it will generate
income.

A. Saving
B. Share
C. Investment
D. Gambling

ANSWER: C

A ___________ is a professionally managed income scheme.

A. Equity
B. Debenture
C. Mutual Fund
D. Gold

ANSWER: C

Section ___________ most widely used section for claiming income tax deduction.

A. 80C
B. 80D
C. 80CC
D. 80CCC

ANSWER: A

___________ means marketability of an investment.

A. Convertibility
B. Liquidity
C. Investment
D. None of the

ANSWER: B

More the _______ more is the profit.

A. Growth
B. Increase
C. Hike
D. Risk

ANSWER: D

___________ refers to the loss of principle amount of an investment.

A. Risk
B. Increase
C. Hike
D. Growth

ANSWER: A

___________ refers to protection of investor principle amount and expected rate of return.

A. Risk
B. Cover
C. Safety
D. Growth

ANSWER: C
___________ refers to an investment ready to convert into cash position.

A. Convertibility
B. Liquidity
C. Investment
D. None of the

ANSWER: B

___________ means transferability or sale ability of an asset.

A. Convertibility
B. Marketability
C. Liquidity
D. None of the

ANSWER: B

___________ activity includes buying and selling of the financial assets, physical assets and
marketable assets in primary and secondary markets.

A. Mutual Fund
B. Equity
C. Debenture
D. Investment

ANSWER: D

A measure of “risk per unit of expected return” __________

A. Standard deviation
B. Coefficient of Variation
C. Correlation coefficient
D. beta
ANSWER: B

The greater the beta, the of the security involved __________

A. Greater the unavoidable

B. Greater the avoidable risk
C. Less the unavoidable
D. Less he avoidable risk

ANSWER: A

The fundamental analysis is a method of finding out _____________

A. Ratios
B. Value of a share
C. Tips
D. Future price of a security

ANSWER: D

______________ analysis provides a simplified picture of price behavior of a share.

A. Fundamental
B. Technical
C. Ratio
D. Fund Flows

ANSWER: B

Return on investment is determined by _____________

A. Net Profits
B. Capital employed
C. Net worth
D. Net profit and capital employed

ANSWER: D

Debt equity ratio is _____________ the better

A. Lower
B. Profitability
C. Higher
D. Liquidity

ANSWER: A

The ideas of selecting securities in a portfolio based on coefficient of correlation of their

returns were purported by ____.

A. William Sharpe
B. Harry Markowitz
C. Black and Scholes
D. Walter

ANSWER: B

The market risk refer to the variability in the _____________ caused by the market up swings
and market down swings.

A. Price
B. Profit
C. Rate of Return
D. Rate of Risk

ANSWER: C

A _______ is simply a graphical representation of a series of prices over a set time frame.

A. Diagram
B. Chart
C. Table
D. Picture

ANSWER: B
Portfolio ______ is the process of reviewing or assessing the elements of the entire portfolio
of securities or products in a business.

A. Search
B. Analysis
C. Report
D. Findings

ANSWER: B

Portfolio that lie below the _____ are sub optimal because they do not provide enough return
for the level of risk.

A. Efficient Frontier
B. Inefficient Frontier
C. Below Frontier
D. Above Frontier

ANSWER: A

_____ is an alternative to the single index model.

A. Index Model
B. Semi Index Model
C. Multi Index Model
D. Multi Profit Model

ANSWER: C

____ risk is the risk of loss because of a drop in the marker price of shares.

A. Equity
B. Bond
C. Debenture
D. Loan

ANSWER: A
________ risk applies when you own foreign investments.

A. Bond
B. Share
C. Currency
D. Debenture

ANSWER: C

The _________ is a relationship explaining how assets should be priced in the capital
markets.

A. Capital Asset Principle Model

B. Cash Asset Pricing Model
C. Current Asset Pricing Model
D. Capital Asset Pricing Model

ANSWER: D

Return and are two important characteristics of every investment.

A. Profit
B. Return
C. Risk
D. Income

ANSWER: C

_______ helps to reduce risk.

A. Concave
B. Diversification
C. Variation
D. Change

ANSWER: B
_______ calculates a required return based on a risks measurement.

A. CAPM
B. Sharpe Measure
C. Jensen’s Measure
D. Treynor’s Measure

ANSWER: A

Capital Market Line (CML) is the ______ line drawn from the point of the risk free asset to
the feasible region for risky assets.

A. Tangent
B. Straight
C. Upward
D. Lower

ANSWER: A

The _______ mix of an investment portfolio determines its overall return.

A. Investment
B. Capital
C. Liability
D. Asset

ANSWER: D

If Equity share Rs. 20,00,000, Debenture 15,00,000, Preference Share 20,00,000, Reserve
Surplus 11,00,000, Misc. Expenses, then How much is the Total Shareholder fund is
__________.

A. 31,00,000
B. 35,00,000
C. 50,00,000
D. 40,00,000

ANSWER: C
If Equity share Rs. 20, 00,000, Debenture 15,00,000, Preference Share 20,00,000, Reserve
Surplus 11,00,000, Misc. Expenses, then How much is the Total Equity fund is __________.

A. 31,00,000
B. 30,00,000
C. 50,00,000
D. 40,00,000

ANSWER: B

Current Asset 8,00,000, Debenture 15,00,000, Preference Share 20,00,000, Current

Liabilities, then How much is the Current Ratio is __________.

A. 3.67%
B. 2.67%
C. 1.67%
D. 1

ANSWER: B

If Shareholder’s fund Rs. 50,00,000, Debenture 15,00,000, Preference Share 20,00,000, Total
Asset 63,00,000, then How much is the Proprietary fund is __________.

A. 80.365%
B. 79.365%
C. 75.365%
D. 78.365%

ANSWER: B

If DPS 2.5, EPS 4.28, MPS 50, then Dividend Yield Ratio is _______.

A. 5%
B. 6%
C. 5.5%
D. 7%

ANSWER: A

If Equity Share Capital 8,00,000, Preference share 5,00,000, Debenture 1,00,000, Reserve
and Surplus 12,00,000 and Number of equity share, the Book Value per share is _________.
A. Rs. 25 per share
B. Rs. 26 per share
C. Rs. 25.50 per share
D. Rs. 27 per share

ANSWER: B

If Market Price 50, Book Price 55, EPS 4.28, and then P/E Ratio is _______.

A. 12 Times
B. 11 Times
C. 10 Times
D. 13 Times

ANSWER: A

If Sales 8,00,000, Contribution 4,80,000, EBIT 240000, EBT 120000, then Degree of
Operating Leverage is _______.

A. 2
B. 4
C. 3
D. 7

ANSWER: A

If Sales 8,00,000, Contribution 4,80,000, EBIT 30000, EBT 26332, then Degree of Financial
Leverage is _______.

A. 5.13
B. 3.13
C. 1.13
D. 2.13

ANSWER: C

If Sales 8, 0000, Contribution 55,000, EBIT 24000, EBT 11000, then Degree of Combined
Leverage is _______.
A. 5.1
B. 4.2
C. 3.1
D. 6.1

ANSWER: A

A good __________ on an investment is the first and the foremost condition for effective
investment.

A. Liquidity
B. Rate of Return
C. Growth
D. None of the

ANSWER: B

___________ means a combination of financial assets and physical assets.

A. Investment
B. Saving
C. Portfolio
D. None of the

ANSWER: C

This type of risk is avoidable through proper diversification __________

A. Portfolio Risk
B. Systematic Risk
C. Unsystematic Risk
D. Total risk

ANSWER: C

A statistical measure of the degree to which two variables move together __________

A. Coefficient of variation
B. Variance
C. Covariance
D. Certainty equivalent

ANSWER: C

An aggressive common stock would have a beta __________

A. equal to zero
B. Greater than one
C. Equal to one
D. Less than one

ANSWER: B

A line that describes the relationship between an individual security’s returns and returns on
the market portfolio __________

A. Characteristics Line
B. Security Market Line
C. Capital Market Line
D. Beta

ANSWER: A

According to the capital asset pricing model (CAPM), a security expected return is equal to
the risk free rate plus a premium __________

A. Equal to the security’s beta

B. Based on the unsystematic risk of the security
C. Based total risk of the Security
D. Based on the systematic risk of the security

ANSWER: D

The risk free security has a beta equal to while the market portfolio’s beta is equal to
__________

A. One, more than one

B. One less than one
C. Zero one
D. Less than zero more than zero

ANSWER: C

Carrie has a “certainty equivalent” to a risky gamble’s expected value that is less than the
gamble’s expected value. Carrie shows __________

A. Risk aversion
B. Risk preference
C. Risk indifference
D. A strange outlook on life

ANSWER: A

Beta is the slope of __________

A. The security market line

B. The capital market line
C. A characteristic line
D. The CAPM

ANSWER: B