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- Question 1 of 105
1. Question
Stock markets in which already issued stocks are resold and re-bought are classified as
CorrectIncorrect - Question 2 of 105
2. Question
As far as their value is concerned, the top priority group in company should be
CorrectIncorrect - Question 3 of 105
3. Question
Preferred stock is considered as hybrid security because it includes
CorrectIncorrect - Question 4 of 105
4. Question
Markets in which derivatives are traded, are classified as
CorrectIncorrect - Question 5 of 105
5. Question
Which of the following is not a true statement about the goal of maximizing shareholder wealth?
CorrectIncorrect - Question 6 of 105
6. Question
The efficient market hypothesis is based on which of the following assumptions?
CorrectIncorrect - Question 7 of 105
7. Question
Although derivatives can be used as speculative instruments, businesses most often use them to
CorrectIncorrect - Question 8 of 105
8. Question
Financial intermediaries differ from other businesses in that both their assets and their liabilities are mostly
CorrectIncorrect - Question 9 of 105
9. Question
The ______ is defined as the present value of all cash proceeds to the investor in the stock.
CorrectIncorrect - Question 10 of 105
10. Question
The net value of GDP after deducting depreciation from GDP is
CorrectIncorrect - Question 11 of 105
11. Question
The average income of the country is
CorrectIncorrect - Question 12 of 105
12. Question
If a market is inefficient, as new information is received about a security
CorrectIncorrect - Question 13 of 105
13. Question
Business strategy focuses on
CorrectIncorrect - Question 14 of 105
14. Question
Which of the following is not an element of Porter’s 5 Forces Model?
CorrectIncorrect - Question 15 of 105
15. Question
What is likely to happen if many new businesses enter a market?
CorrectIncorrect - Question 16 of 105
16. Question
In Product Life Cycle, Increased competition leads to price decrease, increasing public awareness, sales volume increase significantly are the characteristics of
CorrectIncorrect - Question 17 of 105
17. Question
A depreciation of the U.S. dollar relative to foreign currencies will make
CorrectIncorrect - Question 18 of 105
18. Question
In order to have a smoothed rate of growth, we use
CorrectIncorrect - Question 19 of 105
19. Question
The difference between total current assets and total current liabilities is
CorrectIncorrect - Question 20 of 105
20. Question
In relation to a Company, investors are least concerned with
CorrectIncorrect - Question 21 of 105
21. Question
Which of the following is true about the current ratio?
CorrectIncorrect - Question 22 of 105
22. Question
In the dividend discount model, which of the following are not incorporated into the discount rate?
CorrectIncorrect - Question 23 of 105
23. Question
Other things being equal, a low ________ would be most consistent with a relatively high growth rate of firm earnings and dividends.
CorrectIncorrect - Question 24 of 105
24. Question
A firm has a return on equity of 20% and a dividend payout ratio of 30%. The firm’s anticipated growth rate is
CorrectIncorrect - Question 25 of 105
25. Question
Dividend discount models and P/E ratios are used by __________ to try to find mispriced securities.
CorrectIncorrect - Question 26 of 105
26. Question
The most appropriate discount rate to use when applying a FCFE valuation model is the
CorrectIncorrect - Question 27 of 105
27. Question
Which of the following highlights traders’ opinions about the market?
CorrectIncorrect - Question 28 of 105
28. Question
The number of stocks hitting new 52-week highs is a(n)
CorrectIncorrect - Question 29 of 105
29. Question
A bar chart is used to illustrate
CorrectIncorrect - Question 30 of 105
30. Question
Which of the following is most closely associated with the terms “primary trend,” “intermediate trend,” and “short-term trend”?
CorrectIncorrect - Question 31 of 105
31. Question
Which type of chart has no time horizon?
CorrectIncorrect - Question 32 of 105
32. Question
A higher open on next trading day of hammer indicates that
CorrectIncorrect - Question 33 of 105
33. Question
What does a decline below support level indicate?
CorrectIncorrect - Question 34 of 105
34. Question
Which of the following candlestick pattern look like star falling from sky with a tail trailing it?
CorrectIncorrect - Question 35 of 105
35. Question
Day traders must have proper knowledge of
CorrectIncorrect - Question 36 of 105
36. Question
A daily fluctuation of little importance is called
CorrectIncorrect - Question 37 of 105
37. Question
Which of the following is not a Dow Theory?
CorrectIncorrect - Question 38 of 105
38. Question
What are one of the most popular and easy to use tools available to the technical analyst?
CorrectIncorrect - Question 39 of 105
39. Question
The method of moving averages is used for which of the following purposes?
CorrectIncorrect - Question 40 of 105
40. Question
Traders use the _________ due to the way it represents price, eliminates noise and shows clear trends.
CorrectIncorrect - Question 41 of 105
41. Question
For drawing the Kagi Chart, the first step is to calculate the
CorrectIncorrect - Question 42 of 105
42. Question
The thin lines at the top and bottom represent the space between the open or close and the high or low are referred to as
CorrectIncorrect - Question 43 of 105
43. Question
The Beta is a measure of the ______ of a security that cannot be avoided through diversification.
CorrectIncorrect - Question 44 of 105
44. Question
Price movements that are caused by short-term deviations of prices from the underlying trend line are called
CorrectIncorrect - Question 45 of 105
45. Question
Which of the following consist of five sub-waves that make net movement in the same direction as the trend of the next-largest degree?
CorrectIncorrect - Question 46 of 105
46. Question
A downtrend remains in place until
CorrectIncorrect - Question 47 of 105
47. Question
Which of he following is a basic assumptions of technical analysis in contrast to fundamental analysis?
CorrectIncorrect - Question 48 of 105
48. Question
The advance/decline line is typically used to
CorrectIncorrect - Question 49 of 105
49. Question
Right of stockholders of firm that new shares must be offered to existing stockholders first, rather than new stock holders is classified as
CorrectIncorrect - Question 50 of 105
50. Question
Public issue, Rights issue, Private placements and Preferential allotment are the ways for issue of shares which are not existing before can be done in
CorrectIncorrect - Question 51 of 105
51. Question
Which portfolio will mimic the performance of a price-weighted index?
CorrectIncorrect - Question 52 of 105
52. Question
Which of the following statements about the real rate of return is true?
CorrectIncorrect - Question 53 of 105
53. Question
A preferred stock will pay a dividend of Rs. 3.00 in the upcoming year, and every year thereafter, for three year. You require a return of 9% on this stock. Use the constant growth model to calculate the intrinsic value of this preferred stock?
CorrectIncorrect - Question 54 of 105
54. Question
Inflationary expectations are important because widespread changes in inflationary expectations affect
CorrectIncorrect - Question 55 of 105
55. Question
Equity analysts provides estimates of earnings and earnings growth for future, using historical data and
CorrectIncorrect - Question 56 of 105
56. Question
A lady bought 100 shares of a leading diamond mining company with an expected return of 20 percent per year. The following day the company’s president announced a major new discovery in Arkansas. The stock price immediately doubled. This scenario probably best illustrates that the
CorrectIncorrect - Question 57 of 105
57. Question
A monopolized market is in long-run equilibrium when
CorrectIncorrect - Question 58 of 105
58. Question
In which stage of the product life cycle is advertising and promotion aimed at retaining existing customers and persuading customers to switch from competitor products?
CorrectIncorrect - Question 59 of 105
59. Question
In the Boston Consulting Group matrix, unsuccessful products move around the matrix in which order?
CorrectIncorrect - Question 60 of 105
60. Question
Which of the following statements is most correct regarding the current ratio for a firm that uses industry averages and a peer benchmark as their comparison?
CorrectIncorrect - Question 61 of 105
61. Question
If a company’s share price falls, then its P/E ratio and dividend yield?
CorrectIncorrect - Question 62 of 105
62. Question
Given the following information, find return on equity (ROE)?
Net income after tax = Rs. 500,000
Preferred dividend = Rs. 20,000
Common equity = Rs. 35,08,000
Earnings per share = Rs. 4.81CorrectIncorrect - Question 63 of 105
63. Question
In conducting a common-size analysis every balance sheet item is divided by __________ and every income statement is divided by _______________.
CorrectIncorrect - Question 64 of 105
64. Question
What is the collection and interpretation of information about forces, events, and relationships that may affect the organization?
CorrectIncorrect - Question 65 of 105
65. Question
A company whose stock is selling at a P/E ratio greater than the P/E ratio of a market index most likely has
CorrectIncorrect - Question 66 of 105
66. Question
The market capitalization rate on the stock of Flex steel Company is 12%. The expected ROE is 13% and the expected EPS are Rs. 3.60. If the firm’s plowback ratio is 50%, the P/E ratio will be
CorrectIncorrect - Question 67 of 105
67. Question
The required rate of return on equity is the most appropriate discount rate to use when applying a
CorrectIncorrect - Question 68 of 105
68. Question
Low Tech Company has an expected ROE of 10%. The dividend growth rate will be ________ if the firm follows a policy of paying 40% of earnings in the form of dividends.
CorrectIncorrect - Question 69 of 105
69. Question
Which of the following is a correct statement regarding the Confidence Index?
CorrectIncorrect - Question 70 of 105
70. Question
A firm that has an ROE of 12% is considering cutting its dividend payout. The stockholders of the firm desire a dividend yield of 4% and a capital gain yield of 9%. Given this information which of the following statement(s) is/are correct?
I. All else equal the firm’s growth rate will accelerate after the payout change
II. All else equal the firm’s stock price will go up after the payout change
III. All else equal the firm’s P/E ratio will increase after the payout changeCorrectIncorrect - Question 71 of 105
71. Question
An underpriced stock provides an expected return which is ____________ the required return based on the capital asset pricing model (CAPM).
CorrectIncorrect - Question 72 of 105
72. Question
Firm A is high risk and Firm B is low risk. Everything else equal, which firm would you expect to have a higher P/E ratio?
CorrectIncorrect - Question 73 of 105
73. Question
Which of the following compares a day’s closing price to a recent range of prices to determine if a market is overbought or oversold?
CorrectIncorrect - Question 74 of 105
74. Question
Which of the following do technical analysts believe is a lower bound on a stock’s price?
CorrectIncorrect - Question 75 of 105
75. Question
Which type of chart includes daily high price, low price, opening price, and closing price?
CorrectIncorrect - Question 76 of 105
76. Question
When technical analysts say that a stock has “good relative strength,” they mean that
CorrectIncorrect - Question 77 of 105
77. Question
A Bullish Divergence represents __________ price pressure and a Bearish Divergence represents _________ price pressure.
CorrectIncorrect - Question 78 of 105
78. Question
Which of the following highlights traders’ opinions about the market?
CorrectIncorrect - Question 79 of 105
79. Question
Which of the following is not a basic tenet of the Dow Theory?
CorrectIncorrect - Question 80 of 105
80. Question
Which of the following is not an example of breadth indicators?
CorrectIncorrect - Question 81 of 105
81. Question
Which of the following measures the extent of current change in the price of securities and evaluates the oversold and overbought positions?
CorrectIncorrect - Question 82 of 105
82. Question
Which of the following is NOT related to the “support and resistance” in the context of technical stock analysis?
CorrectIncorrect - Question 83 of 105
83. Question
Consider a stock, with an expected dividend per share next period of Rs. 1, a cost of equity of 15%, and an expected growth rate of 6% forever. The value of this stock is
CorrectIncorrect - Question 84 of 105
84. Question
The ________ allows for two stages of growth – an initial phase where the growth rate is not a stable growth rate and a subsequent steady state where the growth rate is stable and is expected to remain so for the long term.
CorrectIncorrect - Question 85 of 105
85. Question
Which of the following consist of three, or a combination of three, sub-waves that make net movement in the direction opposite to the trend of the next-largest degree?
CorrectIncorrect - Question 86 of 105
86. Question
Resistance and support areas for a stock market index are viewed as technical indicators of
CorrectIncorrect - Question 87 of 105
87. Question
In discussions of financial market efficiency, which of the following is not one of the stylized forms of market efficiency?
CorrectIncorrect - Question 88 of 105
88. Question
Which of the following intraday changes in the Dow Jones Industrials Average (DJIA) will trigger a circuit breaker halting NYSE trading for one hour?
CorrectIncorrect - Question 89 of 105
89. Question
On 1st Feb 2010, Mr. AB bought 100 shares of SMB Company at SR50 per share. In March 2010, he received dividend of SR1.00 per share. On 31 July 2010, he sold his shares for SR54 per share. What is his annualized holding period return?
CorrectIncorrect - Question 90 of 105
90. Question
You want to sell some shares of company ABC only if it shows sign of declining. The current market price is SR55. You will sell the shares when it drops to SR52 per share, but you don’t want to sell if it drops further than SR50. What type of order should you place?
CorrectIncorrect - Question 91 of 105
91. Question
It was reported in the network news that Dow-Jones Industrial Averages (DJIA) jumped by 500 points from 10,000 to 10,500 in the month of January. This means
CorrectIncorrect - Question 92 of 105
92. Question
Felton Farm Supplies, Inc., has an 8 percent return on total assets of $300,000 and a net profit margin of 5 percent. What are its sales?
CorrectIncorrect - Question 93 of 105
93. Question
Barriers to entry affect the ability of firms outside an industry to enter and take advantage of profit opportunities. Which of the following is not an example of such a barrier?
CorrectIncorrect - Question 94 of 105
94. Question
Which of the following items is not a criticism of the five forces model?
i) The analysis is essentially static, whereas industries constantly change.
ii) No force is deemed more important than the others.
iii) In viewing all the forces as threats it does not allow for co-operation.
iv) It stresses the environment to the exclusion of internal influences on strategy.
v) The model was developed in the 1970s and is now obsolete.CorrectIncorrect - Question 95 of 105
95. Question
A company’s net income before income tax is $55,000. Income tax for the year was $5,000. Dividend requirements for preferred stock are $20,000. There are 20,000 shares of common stock outstanding. Earnings per common stock are
CorrectIncorrect - Question 96 of 105
96. Question
Versatile Company is expected to pay a dividend of Rs. 3.50 in the coming year. Dividends are expected to grow at a rate of 10% per year. The risk-free rate of return is 5% and the expected return on the market portfolio is 13%. The stock is trading in the market today at a price of Rs. 90.
What is the market capitalization rate and what is the approximate beta of Versatile Company?CorrectIncorrect - Question 97 of 105
97. Question
You wish to earn a return of 11% on each of two stocks, C and D. Stock C is expected to pay a dividend of $3 in the upcoming year while Stock D is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of dividends for both stocks is 7%. The intrinsic value of stock C
CorrectIncorrect - Question 98 of 105
98. Question
You wish to earn a return of 12% on each of two stocks, A and B. Each of the stocks is expected to pay a dividend of $2 in the upcoming year. The expected growth rate of dividends is 9% for stock A and 10% for stock B. The intrinsic value of stock A
CorrectIncorrect - Question 99 of 105
99. Question
A firm has current assets which could be sold for their book value of $10 million. The book value of its fixed assets is $60 million but they could be sold for $95 million today. The firm has total debt at a book value of $40 million but interest rate changes have increased the value of the debt to a current market value of $50 million. This firm’s market to book ratio is
CorrectIncorrect - Question 100 of 105
100. Question
Suppose that in 2009 the expected dividends of the stocks in a broad market index equaled $240 million when the discount rate was 8% and the expected growth rate of the dividends equaled 6%. Using the constant growth formula for valuation, if interest rates increase to 9% the value of the market will change by
CorrectIncorrect - Question 101 of 105
101. Question
Yashoda Corp. is expected to pay a dividend of Rs. 1.50 in the upcoming year. Dividends are expected to grow at the rate of 6% per year. The risk-free rate of return is 6% and the expected return on the market portfolio is 14%. The stock of Yashoda Corp. has a beta of 0.75. The intrinsic value of the stock is
CorrectIncorrect - Question 102 of 105
102. Question
If there are profit opportunities in the stock market, but they take a long time to realize, which stochastic process most closely reflects this behavior?
CorrectIncorrect - Question 103 of 105
103. Question
Which of the following may be considered as justifications for using fundamental stock analysis as opposed to technical analysis?
I. Fundamentalists believe that their analysis is based on sound financial theory and economic reasons.
II. The value of a security is dependent on its cash flows; if cash flows are expected to increase in the future, its present value increases, and vice-versa.
III. Due to much accounting flexibility, financial statements are not sufficiently accurate to depend on for a reliable stock analysis.
IV. Because information comes to the market in random fashion, price changes are random and there should not be a trend in the market price.CorrectIncorrect - Question 104 of 105
104. Question
Estimated EPS of ABC Ltd. for next year is Rs. 132. Assume PE multiple of 22 (Forward P/E) for the next year. Then the target price of ABC Ltd. works out to
CorrectIncorrect - Question 105 of 105
105. Question
After lengthy trial and error, you discover a trading system that would have doubled the value of your investment every six months if applied over the last three years. Which of the following problems makes it difficult to conclude that this is an example of market inefficiency?
CorrectIncorrect