Unit – 4 – Quiz

Which of the following is least likely to affect the required rate of return on an investment?

Over the period, investors determine the compound growth rate of an investment by

____________ risk is the risk that exchange rates will change unfavorably over time. It can be hedged by using forward currency contracts.

In regression of capital asset pricing model, an intercept of excess returns is classified as

__________assumes that the risk-return profile of a portfolio can be optimized.

_____________means buying a futures contract to hedge a cash position.

CIF Ltd. is not able to meet its commitment on the interest payment to its loan portfolio. Mr. Aarya one of the many bond holder of CIF Ltd. is worried about he being able to invest his money at the same rate of interest being offered to him by CIF Ltd. due to a overall fall in the interest rates. What find of risk is being faced by him?

An average return of portfolio divided by its coefficient of beta is classified as

The Modigliani measure and the Treynor measure are

In Capital asset pricing model, characteristic line is classified as

Unlike ____,_________ is not sensitive to withdrawals or contributions.

The average inflation for last 3 years is 8.5% p.a You invested Rs. 1 lakh in a security 3 years ago which you have redeemed for Rs. 1.3 lakh. What real return you have received from the investment?

Required return is 11% and premium for risk is 8% then risk free return will be

According to Jensen’s differential return measure, what is alpha?

According to CAPM, a security’s expected requiredreturn is equal to the risk free rate plus a premium

Mr. Pandey has two stocks A and B in his portfolio. In first year stock A’s return was 11% and stock B’s return was 15% , in the next year it was 6% and 9% respectively for stock A&B. What is the Covariance of returns between stock A & B?

Risk per unit of return or stand alone risk is represented by

In regression of capital asset pricing model, an intercept of excess returns is classified as

Jensen’s measure is used to determine the excess return of a stock, security, or portfolio over the security’s required rate of return as determined by the

Jensen measure is

 A Chartered analyst buys a share of stock at time t = 0 for Rs.50. At t = 1, he purchases an extra share of the same stock for Rs. 53. The share gives a dividend of Rs. 0.50 per share for the first year and Rs. 0.60 per share for the second year. He sells the shares at the end of the second year for Rs. 55 per share. Calculate the annual time-weighted rate of return.

Suppose you buy a stock at Rs. 100 and sell it a year later at Rs. 110. Let’s assume that the stock pays an annual dividend of Rs. 1 per year. Determine the money-weighted rate of return;

If Manish invested in term deposit of bank for five years at 10.25% p.a. and after five years interest rate falls to 7%, then for the next five year term Manish will have to invest at the lower rate of return (7%). This is referred to as

Ms. Harshitha has a portfolio comprising securities A, B and C. The Standard Deviations are 0.1689, 0.0716 and 0.0345 respectively. The Correlations are: AB= 0.45, AC= 0.35, BC= 0.2 Weights are 25%, 50% and 25%respectively. Calculate Standard Deviation of Ms. Harshitha’s Portfolio.

A Steel Company had a beta of 1.5, the required rate of return on the market was 15% per year and that its risk-free rate (Rf) was 6% p.a. Calculate using the CAPM the required rate of return of the steel stock