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  1. Current
  2. Review
  3. Answered
  4. Correct
  5. Incorrect
  1. Question 1 of 110
    1. Question

    An efficient set of portfolios represented through graph is classified as an

    Correct
    Incorrect
  2. Question 2 of 110
    2. Question

    Commercial mortgages, farm mortgages and home mortgages are categories of

    Correct
    Incorrect
  3. Question 3 of 110
    3. Question

    Stock market value can deviate from its fundamental value because of strong

    Correct
    Incorrect
  4. Question 4 of 110
    4. Question

    Which of the following is the most commonly used yield measure of a bond?

    Correct
    Incorrect
  5. Question 5 of 110
    5. Question

    A liquid asset may

    Correct
    Incorrect
  6. Question 6 of 110
    6. Question

    Which of the following statements regarding risk-averse investors is correct?

    Correct
    Incorrect
  7. Question 7 of 110
    7. Question

    Securities with lower default risk and having highest credit quality are assigned the rating of

    Correct
    Incorrect
  8. Question 8 of 110
    8. Question

    Default risk is measured by large traders, managers and investors with help of

    Correct
    Incorrect
  9. Question 9 of 110
    9. Question

    A saver who is capital-risk averse is worried that interest rates in the economy might

    Correct
    Incorrect
  10. Question 10 of 110
    10. Question

    Which of the following measures the reward to volatility trade-off by dividing the average portfolio excess return by the standard deviation of returns?

    Correct
    Incorrect
  11. Question 11 of 110
    11. Question

    Difference between actual return on stock and predicted return is considered as

    Correct
    Incorrect
  12. Question 12 of 110
    12. Question

    If a portfolio manager consistently obtains a high Sharpe measure, the managers forecasting ability is

    Correct
    Incorrect
  13. Question 13 of 110
    13. Question

    What is a widely used measure of growth and is used to evaluate anything that can fluctuate in value, such as assets and investments?

    Correct
    Incorrect
  14. Question 14 of 110
    14. Question

    CAGR is used when looking at investments over any period of time, but usually for a period of at least

    Correct
    Incorrect
  15. Question 15 of 110
    15. Question

    Beta is a measure of

    Correct
    Incorrect
  16. Question 16 of 110
    16. Question

    Sum of market risk and diversifiable risk are classified as total risk which is equivalent to

    Correct
    Incorrect
  17. Question 17 of 110
    17. Question

    A model which regresses return of stock against return of market is classified as

    Correct
    Incorrect
  18. Question 18 of 110
    18. Question

    Future beta is needed to calculate in most situations is classified as

    Correct
    Incorrect
  19. Question 19 of 110
    19. Question

    What is close to 1 indicates that the security will perform roughly in line with the market?

    Correct
    Incorrect
  20. Question 20 of 110
    20. Question

    Diversification Strategy is used to gain market share in

    Correct
    Incorrect
  21. Question 21 of 110
    21. Question

    Strategies such as diversification, penetration and market development are part of

    Correct
    Incorrect
  22. Question 22 of 110
    22. Question

    Which of the following is not a typical portfolio constraint?

    Correct
    Incorrect
  23. Question 23 of 110
    23. Question

    Which of the following are boundaries that investors place on their choice of investment assets?

    Correct
    Incorrect
  24. Question 24 of 110
    24. Question

    Proper diversification among common stocks can

    Correct
    Incorrect
  25. Question 25 of 110
    25. Question

    In the context of the Capital Asset Pricing Model the relevant measure of risk is

    Correct
    Incorrect
  26. Question 26 of 110
    26. Question

    If an asset’s expected return plots above the security market line, the asset is

    Correct
    Incorrect
  27. Question 27 of 110
    27. Question

    In capital markets, major suppliers of trading instruments are

    Correct
    Incorrect
  28. Question 28 of 110
    28. Question

    Which model predicts that all investors will hold the same portfolio in equilibrium?

    Correct
    Incorrect
  29. Question 29 of 110
    29. Question

    According to the single index model, the inflation risk is an example of the

    Correct
    Incorrect
  30. Question 30 of 110
    30. Question

    Which of the following pricing model provides no guidance concerning the determination of the relevant risk factors?

    Correct
    Incorrect
  31. Question 31 of 110
    31. Question

    Research from the 1970s to the 1990s found that over 90 percent of a fund’s returns over time is explained by

    Correct
    Incorrect
  32. Question 32 of 110
    32. Question

    Which of the following is the stage when investors in their early-to-middle earning years attempt to accumulate assets to satisfy near-term needs, e.g., children’s education or down payment on a home?

    Correct
    Incorrect
  33. Question 33 of 110
    33. Question

    A portfolio that has an expected outcome of $115 is formed by

    Correct
    Incorrect
  34. Question 34 of 110
    34. Question

    A reward-to-volatility ratio is useful in

    Correct
    Incorrect
  35. Question 35 of 110
    35. Question

    An amount of company retain earnings, return on equity and inflation are factors which effect

    Correct
    Incorrect
  36. Question 36 of 110
    36. Question

    Historically, P/E ratios have tended to be

    Correct
    Incorrect
  37. Question 37 of 110
    37. Question

    What focuses on outperforming the market in comparison to a specific benchmark such as the Standard & Poor’s 500 Index?

    Correct
    Incorrect
  38. Question 38 of 110
    38. Question

    What mimics the investment holdings of a particular index in order to achieve similar results?

    Correct
    Incorrect
  39. Question 39 of 110
    39. Question

    What strive for superior returns but take greater risks and entail larger fees?

    Correct
    Incorrect
  40. Question 40 of 110
    40. Question

    When interest rates increase, the duration of a 15-year bond selling at a discount will be

    Correct
    Incorrect
  41. Question 41 of 110
    41. Question

    If a bond manager swaps a bond for another bond with a higher yield to maturity and a longer duration, the swap is

    Correct
    Incorrect
  42. Question 42 of 110
    42. Question

    Which of the following is a course objective of Portfolio Strategy?

    Correct
    Incorrect
  43. Question 43 of 110
    43. Question

    The sponsor of a defined contribution pension plan is required

    Correct
    Incorrect
  44. Question 44 of 110
    44. Question

    An investor will take as large a position as possible when an equilibrium price relationship is violated. This is an example of

    Correct
    Incorrect
  45. Question 45 of 110
    45. Question

    Which refer to strategies aimed at attaining the established rate of return requirements while meeting expressed risk tolerance and applicable constraints?

    Correct
    Incorrect
  46. Question 46 of 110
    46. Question

    The optimal portfolio on the efficient frontier for a given investor depends on

    Correct
    Incorrect
  47. Question 47 of 110
    47. Question

    The optimal portfolio on the efficient frontier for a given investor does not depend on

    Correct
    Incorrect
  48. Question 48 of 110
    48. Question

    Which of the following is NOT part of the portfolio management process, as described by Maginn, Tuttle, McLeavy, and Pinto (2007)?

    Correct
    Incorrect
  49. Question 49 of 110
    49. Question

    Which type of asset/liability management does NOT require the ability to forecast future interest rate levels?

    Correct
    Incorrect
  50. Question 50 of 110
    50. Question

    If the yield curve were upward sloping, the bank could accept some interest rate risk and earn a positive interest rate spread by

    Correct
    Incorrect
  51. Question 51 of 110
    51. Question

    An increase in cash reserve ratio will cause yield curve to

    Correct
    Incorrect
  52. Question 52 of 110
    52. Question

    VaR is not enough to assess market risk of a portfolio. Stress testing is desirable because

    Correct
    Incorrect
  53. Question 53 of 110
    53. Question

    The Treynor-Black model is a model that shows how an investment manager can use security analysis and statistics to construct

    Correct
    Incorrect
  54. Question 54 of 110
    54. Question

    What is the value of a call on the expiration date, if on that date the price of the stock is $25 and the exercise price is $26?

    Correct
    Incorrect
  55. Question 55 of 110
    55. Question

    If you were confident that the price of stock X would drop dramatically within two months, which of the following investment transactions would yield the highest return on your investment?

    Correct
    Incorrect
  56. Question 56 of 110
    56. Question

    An investor who wishes to form a portfolio that lies to the right of the optimal risky portfolio on the Capital Allocation Line must

    Correct
    Incorrect
  57. Question 57 of 110
    57. Question

    Suppose you buy a portfolio of long-dated bonds at a price of Rs.200 each. Shortly afterwards, interest rates rise by 1.5% and the market value of your bonds falls to Rs.190. This is an example of

    Correct
    Incorrect
  58. Question 58 of 110
    58. Question

    According to the Treynor-Black model, the weight of a security in the active portfolio depends on the ratio of __________ to __________.

    Correct
    Incorrect
  59. Question 59 of 110
    59. Question

    If the risk-free return is 3%. The beta of a managed portfolio is 1.75, the alpha is 0% and the average return is 16%. Based on Jensens measure of portfolio performance, Calculate the return on the market portfolio?

    Correct
    Incorrect
  60. Question 60 of 110
    60. Question

    Standard deviation of an asset is 2.5%. Market standard deviation is 2%. Risk free rate of return is 13%. Expected return on market portfolio is 15% and Correlation coefficient of portfolio with market is 0.8. Calculate the expected rate of return of the portfolio.

    Correct
    Incorrect
  61. Question 61 of 110
    61. Question

    A growth oriented non dividend paying share is bought for Rs.265 and sold for Rs.390 after 4 years. The compounded annual growth rate is

    Correct
    Incorrect
  62. Question 62 of 110
    62. Question

    When a portfolio consists of only a risky asset and a risk-free asset, increasing the fraction of the overall portfolio invested in the risky asset will

    Correct
    Incorrect
  63. Question 63 of 110
    63. Question

    What is a statistical measurement of dispersion around an average, which, for an investment, depicts how widely the returns varied over a certain period?

    Correct
    Incorrect
  64. Question 64 of 110
    64. Question

    When an investment opportunity set is formed with two securities that are perfectly negatively correlated, the global minimum variance portfolio has a standard deviation that is always

    Correct
    Incorrect
  65. Question 65 of 110
    65. Question

    Suppose two portfolios have the same average return, the same standard deviation of returns, but portfolio X has a higher beta than portfolio Y. According to the Sharpe measure, the performance of portfolio X

    Correct
    Incorrect
  66. Question 66 of 110
    66. Question

    Stock A has an expected return of 25% and a beta of 2.0. Stock B has an expected return of 18% and a beta of 1.5. The market risk premium is 8%. If the risk free rate is 7%, then

    Correct
    Incorrect
  67. Question 67 of 110
    67. Question

    The risk free return of security A is 7%. In addition to it, you expect that the return on market would be 12%.The expected return of security A with Beta 0.60 is

    Correct
    Incorrect
  68. Question 68 of 110
    68. Question

    Consider a graph with standard deviation on the horizontal axis and expected return on the vertical axis. The line that connects the risk-free rate and the optimal risky portfolio is called

    Correct
    Incorrect
  69. Question 69 of 110
    69. Question

    The market risk premium is 15% and the risk-free rate is 5%. The beta of Asset D is 0.2. What is Asset D’s expected return under the CAPM?

    Correct
    Incorrect
  70. Question 70 of 110
    70. Question

    The asset allocation which seeks to take advantage of short term movements and opportunities in investment markets is called

    Correct
    Incorrect
  71. Question 71 of 110
    71. Question

    Which of the following refer to strategies aimed at attaining the established rate of return requirements while meeting expressed risk tolerance and applicable constraints?

    Correct
    Incorrect
  72. Question 72 of 110
    72. Question

    What percentages of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 0.09?

    Correct
    Incorrect
  73. Question 73 of 110
    73. Question

    What percentages of your money must be invested in the risk-free asset and the risky asset, respectively, to form a portfolio with a standard deviation of 0.06?

    Correct
    Incorrect
  74. Question 74 of 110
    74. Question

    The slope of the Capital Allocation Line formed with the risky asset and the risk-free asset is equal to

    Correct
    Incorrect
  75. Question 75 of 110
    75. Question

    Security A has expected return of 10% and standard deviation of 22%. Security B has expected return of 12% and standard deviation of 29%. If the two securities have a correlation coefficient of 0.6, what is their covariance?

    Correct
    Incorrect
  76. Question 76 of 110
    76. Question

    XYZ company has an expected ROE of 10%. The dividend growth rate will be __________ if the firm follows a policy of paying 20% of earnings in the form of dividends.

    Correct
    Incorrect
  77. Question 77 of 110
    77. Question

    A passive strategy does not have a management team making investment decisions and can be structured as

    Correct
    Incorrect
  78. Question 78 of 110
    78. Question

    If a bond manager swaps a bond for one that is identical in terms of coupon rate, maturity and credit quality, but offers a higher yield to maturity, the swap is called

    Correct
    Incorrect
  79. Question 79 of 110
    79. Question

    The interest rate on a 20 year bond with face value of Rs.1000 is 8%. The expected yield to maturity is 9%. If interest received on a half yearly basis. What is the current market price of the bond?

    Correct
    Incorrect
  80. Question 80 of 110
    80. Question

    A bond Rs.1000 with coupon of 8.5%p.a. payable semi-annually with a tenure of 20 years is currently selling at Rs.1150. What is the bond’s current yield?

    Correct
    Incorrect
  81. Question 81 of 110
    81. Question

    Mr. Narayan invested in tradable bonds of a corporate paying annual coupon of 11%. The tenure of the bonds is 10 years and he desires to hold them till maturity. What would be the impact of declining interest rates on his cash flows during this tenure?

    Correct
    Incorrect
  82. Question 82 of 110
    82. Question

    Which of the following strategies seeks to increase the portfolio value by reinvesting current income in addition to capital gains?

    Correct
    Incorrect
  83. Question 83 of 110
    83. Question

    A preferred stock will pay a dividend of Rs. 1.50 in the upcoming year, and every year thereafter, i.e., dividends are not expected to grow. You require a return of 12% on this stock. Use the constant growth DDM to calculate the intrinsic value of this preferred stock.

    Correct
    Incorrect
  84. Question 84 of 110
    84. Question

    Which of the following are true about the interest-rate sensitivity of bonds?
    (I) Bond prices and yields are inversely related.
    (II) Prices of long-term bonds tend to be more sensitive to interest rate changes than prices of short-term bonds.
    (III) Interest-rate risk is directly related to the bond’s coupon rate.
    (IV) The sensitivity of a bond’s price to a change in its yield to maturity is inversely related to the yield to maturity at which the bond is currently selling.

    Correct
    Incorrect
  85. Question 85 of 110
    85. Question

    If a bank has a positive dollar gap and interest rates are expected to increase in the near future, the net interest margin of the bank will

    Correct
    Incorrect
  86. Question 86 of 110
    86. Question

    If a bank has a zero gap, it is using which of the following interest rate risk management strategies?

    Correct
    Incorrect
  87. Question 87 of 110
    87. Question

    The problem of imperfect correlation of interest rates in the use of gap analysis can be dealt with by using

    Correct
    Incorrect
  88. Question 88 of 110
    88. Question

    Aggressive gap management that successfully increases the net interest income of the bank may well decrease shareholder wealth, all else the same, because

    Correct
    Incorrect
  89. Question 89 of 110
    89. Question

    What is the price of a stock estimated to pay a dividend of $.60 next year, if the dividend growth rate is 5% and the appropriate discount rate is 8%?

    Correct
    Incorrect
  90. Question 90 of 110
    90. Question

    The common stock of TESU Corporation has been trading in a narrow range around $50 per share for months, and you believe it will stay in that range for the next 3 months. A 3-month put option with an exercise price of $50 sells for $4. A call with the same expiration date and exercise price sells for $4. What simple options strategy using a put and a call will take advantage of your belief about the stock price’s future movement?

    Correct
    Incorrect
  91. Question 91 of 110
    91. Question

    During the past five years, the returns of a stock are:
    For first year 9%, second year 5%, third year-11%, fourth year 8%, fifth year 12%. Calculate Cumulative Wealth Index, Arithmetic Mean, Geometric Mean and Standard Deviation?

    Correct
    Incorrect
  92. Question 92 of 110
    92. Question

    You are evaluating the rankings based on performance ratios of three funds X,Y and Z. The average returns obtained from funds X,Y and Z have been 16%, 19% and 14% respectively against the market return of 13%. The standard returns of the fund returns have been 17,22 and 16 respectively versus the market return standard deviation of 15. If the beta reported of these funds is 1.2, 1.4 and 1.1 respectively and the risk free rate of return is 5.5%. What are your ranking in the order of best to worst with regards to Treynor ratio, Sharpe ratio and Jensen ratio?

    Correct
    Incorrect
  93. Question 93 of 110
    93. Question

    Standard deviation of an asset is 2.5%. Market standard deviation is 2%. Risk free rate of return is 13%. Expected return on market portfolio is 15% and Correlation coefficient of portfolio with market is 0.8,if portfolio beta is 0.5 and risk free return is 10%, Calculate the expected rate of return of the portfolio?

    Correct
    Incorrect
  94. Question 94 of 110
    94. Question

    What is a growth statistic that measures the compound annual return of investments over a set period of time, assuming you reinvest your profits (i.e. compounding effect)?

    Correct
    Incorrect
  95. Question 95 of 110
    95. Question

    You are evaluating the rankings based on Treynor Ratio of three funds X,Y and Z. The average returns obtained from funds X,Y and Z have been 14%, 17% and 12% respectively against the market return of 11%. The standard deviations of fund returns have been 15%, 19% and 14% respectively versus the market return standard deviation of 13%. If the beta reported of these funds is 1.1, 1.5 and 1.0 respectively. The risk free rate of return is 6%. What are your rankings in the order of best to worst?

    Correct
    Incorrect
  96. Question 96 of 110
    96. Question

    Which one of the following showed that the duration of a bond was a more appropriate measure of time characteristics than the term to maturity of the bond because duration considers both the repayment of capital at maturity and the size and timing of coupon payments prior to final maturity?

    Correct
    Incorrect
  97. Question 97 of 110
    97. Question

    Clive Rodney Megabucks offers your friend, Yunyoung, an interesting gamble involving giving her the choice of the contents in one of two sealed, identical-looking boxes. One box has $20,000 in cash and the second has nothing inside. There is an equal probability that the chosen box contains cash versus nothing. Yunyoung states that she would not call off the gamble if you offered her a certain $4,999 instead of her choice of box. However, she would be indifferent if $5,000 was offered in place of the risky gamble; and she would definitely take $5,001 to call off the gamble. We would describe Yunyoung as

    Correct
    Incorrect
  98. Question 98 of 110
    98. Question

    What is the variability of return on stocks or portfolios not explained by general market movements. It is avoidable through diversification?

    Correct
    Incorrect
  99. Question 99 of 110
    99. Question

    The risk-free rate for the next year is 3%, and the market risk premium is expected to be 10%. The beta of Acme’s stock is 1.5. If you believe that Acme’s stock will actually return 18.2% over the next year, then according to the CAPM you should

    Correct
    Incorrect
  100. Question 100 of 110
    100. Question

    Stock A has a beta of 1.0 and very high unique risk. If the expected return on the market is 20%, then according to the CAPM the expected return on Stock A will be

    Correct
    Incorrect
  101. Question 101 of 110
    101. Question

    The risk-free rate and the expected market rate of return are 0.06 and 0.12, respectively. According to the capital asset pricing model (CAPM), the expected rate of return on security X with a beta of 1.2 is equal to

    Correct
    Incorrect
  102. Question 102 of 110
    102. Question

    Your client started investing Rs. 12000 per month a year ago in an asset allocation of 30:70 in equity and debt to achieve a goal in 6 years from now for accumulating Rs.10,00,000. You realize that he would be requiring Rs. 15,00,000 for the same goal. You expect equity and debt to give returns of 11.75% p.a and 8.25% p.a respectively in the entire period of investment. You assess changing asset allocation to 65:35 in equity and debt by investing Rs. 2000 additional per month to see how closer he can reach to his goal.

    Correct
    Incorrect
  103. Question 103 of 110
    103. Question

    An investor invests 30 percent of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of 0.04 and 70 percent in a T-bill that pays 6 percent. His portfolio’s expected return and standard deviation are __________ and __________, respectively.

    Correct
    Incorrect
  104. Question 104 of 110
    104. Question

    Shares of a closed-end fund are trading at a 4% premium over NAV. If NAV is $10 per share, what is the current market price of the fund’s shares?

    Correct
    Incorrect
  105. Question 105 of 110
    105. Question

    A closed-end fund owns foreign securities with a market value of $95 million, has 5 million shares outstanding, owes its employees $500,000, and trades at a 5% discount. The net asset value per share is

    Correct
    Incorrect
  106. Question 106 of 110
    106. Question

    A 20 year, 10% corporate bond with face value Rs.1000 and interest payable semi annually matures after 8 years. The bond is available at a yield to maturity of 8.5%.if the record date for the last coupon has just passed, at what value 36 bonds of the corporate are likely to be quoted in the market?

    Correct
    Incorrect
  107. Question 107 of 110
    107. Question

    Your client starts investing immediately for 15 years annually Rs. 80,000 in the ratio of 70:30 in equity and debt products. You expect return from equity and debt to be 12% and 8.5% p.a. during this period. To protect the wealth, he rebalances the portfolio in 40:60 ratio of equity and debt after 15 years and invests in the same ratio annually Rs. 80,000 for the next 5 years. The return expected from equity and debt in this period is 9% p.a. and 8% p.a. What rate of return is expected on his total investments? How would this return fare when seen from average inflation of 5% during the entire period?

    Correct
    Incorrect
  108. Question 108 of 110
    108. Question

    Diversified Portfolios had year-end assets of $279,000,000 and liabilities of $43,000,000. If Diversified NAV was $42.13, how many shares must have been held in the fund?

    Correct
    Incorrect
  109. Question 109 of 110
    109. Question

    1 day VaR of a portfolio is Rs. 500,000 with 95% confidence level. In a period of six months (125 working days) how many times the loss on the portfolio may exceed Rs. 500,000?

    Correct
    Incorrect
  110. Question 110 of 110
    110. Question

    Given the following information:
    Interest Sensitive Assets = $300 30-day commercial paper
    Interest Sensitive Liabilities = $400 90-day CDs
    30-day commercial paper is 50 percent as volatile as 90-day T-bills
    90-day CDs are 120 percent as volatile as 90-day T-bills
    Calculate the standardized gap for the bank.

    Correct
    Incorrect

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