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- Question 1 of 104
1. Question
Which of the following is not one of the assumptions of portfolio theory?
CorrectIncorrect - Question 2 of 104
2. Question
Which of the following statements regarding indifference curves is not true?
CorrectIncorrect - Question 3 of 104
3. Question
Portfolios lying on the upper right portion of the efficient frontier are likely to be chosen by
CorrectIncorrect - Question 4 of 104
4. Question
Indifference curves
CorrectIncorrect - Question 5 of 104
5. Question
Different investors will estimate the inputs to the Markowitz model differently because
CorrectIncorrect - Question 6 of 104
6. Question
The assumption in calculating annuity is that every payment is
CorrectIncorrect - Question 7 of 104
7. Question
The amount of money today which is equal to series of payments in future
CorrectIncorrect - Question 8 of 104
8. Question
The positive cash flows are classified as
CorrectIncorrect - Question 9 of 104
9. Question
In the formula S = P+iP, the S is classified as
CorrectIncorrect - Question 10 of 104
10. Question
The process of loan repayment by installment payments is classified as
CorrectIncorrect - Question 11 of 104
11. Question
The risk in average individual stock can be reduced by placing an individual stock in
CorrectIncorrect - Question 12 of 104
12. Question
According to the Capital Asset Pricing Model (CAPM), a well diversified portfolio’s rate of return is a function of
CorrectIncorrect - Question 13 of 104
13. Question
Which one of the following best describes a reverse yield gap?
CorrectIncorrect - Question 14 of 104
14. Question
Market interest rates and the prices of bonds in the secondary market
CorrectIncorrect - Question 15 of 104
15. Question
Which of the following best describes liquidation value?
CorrectIncorrect - Question 16 of 104
16. Question
Which of the following methods of project evaluation do NOT discount future cash flows?
CorrectIncorrect - Question 17 of 104
17. Question
The Jensen portfolio evaluation measure
CorrectIncorrect - Question 18 of 104
18. Question
A portfolio manager’s ranking within a comparison universe may not provide a good measure of performance because
CorrectIncorrect - Question 19 of 104
19. Question
The Modigliani M2 measure and the Treynor T2 measure
CorrectIncorrect - Question 20 of 104
20. Question
Parameter Estimation problem is about
CorrectIncorrect - Question 21 of 104
21. Question
Artificial neural network used for
CorrectIncorrect - Question 22 of 104
22. Question
Internal state of neuron is called __________, is the function of the inputs the neurons receives.
CorrectIncorrect - Question 23 of 104
23. Question
Which of the following is not the promise of artificial neural network?
CorrectIncorrect - Question 24 of 104
24. Question
Which of the following is an application of NN (Neural Network)?
CorrectIncorrect - Question 25 of 104
25. Question
In the Treynor-Black model
CorrectIncorrect - Question 26 of 104
26. Question
Which of the following is another name for the required return on a stock?
CorrectIncorrect - Question 27 of 104
27. Question
Analysts commonly consider all of the following to be indicators that the market is overvalued except
CorrectIncorrect - Question 28 of 104
28. Question
The M-squared measure
CorrectIncorrect - Question 29 of 104
29. Question
Which of the following qualities does not distinguish a futures from a forward contract?
CorrectIncorrect - Question 30 of 104
30. Question
Which of the following statements about futures contracts is wrong?
CorrectIncorrect - Question 31 of 104
31. Question
To minimize default risk, futures exchanges require all contracts to be
CorrectIncorrect - Question 32 of 104
32. Question
A futures contract is
CorrectIncorrect - Question 33 of 104
33. Question
The cash price of wheat today is 410 cents per bushel, and the three-month futures price of the same is 421 cents per bushel. The basis is
CorrectIncorrect - Question 34 of 104
34. Question
Which of the following are the components of foreign capital?
1. Grants and loans
2. External commercial borrowings
3. Foreign direct investment
4. Deposits from non-residents
Select the correct answer using the codes given below.CorrectIncorrect - Question 35 of 104
35. Question
Foreign Portfolio Investment (FPI) is investment by non-residents in Indian securities including
CorrectIncorrect - Question 36 of 104
36. Question
What refers to grouping of investment assets from international or foreign markets rather than from the domestic ones?
CorrectIncorrect - Question 37 of 104
37. Question
The funds that combine features of both open-ended and close-ended schemes are called
CorrectIncorrect - Question 38 of 104
38. Question
For issuing IDR, a company
CorrectIncorrect - Question 39 of 104
39. Question
An instrument representing ownership interest in securities of a foreign issuer is referred to as
CorrectIncorrect - Question 40 of 104
40. Question
ADRs that do not qualify or are not intended to be listed on stock exchanges are referred to as
CorrectIncorrect - Question 41 of 104
41. Question
An American Depositary Receipt is defined as a security
CorrectIncorrect - Question 42 of 104
42. Question
Since the mid-1990s, __________ has become the largest component of external financing to developing countries.
CorrectIncorrect - Question 43 of 104
43. Question
_______________ of an investment bank.
CorrectIncorrect - Question 44 of 104
44. Question
Financial intermediaries exist because small investors cannot efficiently
CorrectIncorrect - Question 45 of 104
45. Question
Investment bankers perform the following role(s)
CorrectIncorrect - Question 46 of 104
46. Question
A fixed-income security pays
CorrectIncorrect - Question 47 of 104
47. Question
An ETF
CorrectIncorrect - Question 48 of 104
48. Question
Which of the following is not true regarding the Markowitz theory?
CorrectIncorrect - Question 49 of 104
49. Question
The single-index model implies that stocks covary together only because of their common
CorrectIncorrect - Question 50 of 104
50. Question
Asset allocation is one of the most widely used applications of
CorrectIncorrect - Question 51 of 104
51. Question
The formula written as r = (1+i/m)m – 1 is used to calculate
CorrectIncorrect - Question 52 of 104
52. Question
The portion of formula used to calculate equal payment annuity [(1+i)n-1/i(1+i)n is classified as
CorrectIncorrect - Question 53 of 104
53. Question
The process of translating cash flow into equivalent dollars at common base period is considered as
CorrectIncorrect - Question 54 of 104
54. Question
Units that do not qualify for distributions, but where the income is reinvested in the trust, increasing the value of each unit are known as
CorrectIncorrect - Question 55 of 104
55. Question
If the intrinsic value of a share of common stock is less than its market value, which of the following is the most reasonable conclusion?
CorrectIncorrect - Question 56 of 104
56. Question
In the formula ke = (D1/P0) + g, what does (D1/P0) represent?
CorrectIncorrect - Question 57 of 104
57. Question
Which of the following accurately describes the behavior of bond prices?
CorrectIncorrect - Question 58 of 104
58. Question
Suppose two portfolios have the same average return, the same standard deviation of returns, but portfolio A has a higher beta than portfolio B. According to the Sharpe measure, the performance of portfolio A
CorrectIncorrect - Question 59 of 104
59. Question
If you wanted to evaluate the Seminole Fund using the M2 measure, what percent of the adjusted portfolio would need to be invested in T-Bills?
CorrectIncorrect - Question 60 of 104
60. Question
The __________ measures the reward to volatility trade-off by dividing the average portfolio excess return by the standard deviation of returns.
CorrectIncorrect - Question 61 of 104
61. Question
Risk-adjusted mutual fund performance measures have decreased in popularity because
CorrectIncorrect - Question 62 of 104
62. Question
Fuzzy Set theory defines fuzzy operators. Choose the fuzzy operators from the following.
CorrectIncorrect - Question 63 of 104
63. Question
In making a judgment about a specific instance, people often fall to take into account how prevalent or frequent something is in general. This describes
CorrectIncorrect - Question 64 of 104
64. Question
The disposition effect
CorrectIncorrect - Question 65 of 104
65. Question
A company whose stock is selling at a P/E ratio greater than the P/E ratio of a market index is most likely to have
CorrectIncorrect - Question 66 of 104
66. Question
Merck is currently paying a dividend of £2. Its high dividend growth rate of 12% next year will drop to 7% for the foreseeable future. The discount rate of Merck is 13%. What is the stock price of Merck?
CorrectIncorrect - Question 67 of 104
67. Question
The Sharpe, Treynor, and Jensen portfolio performance measures are derived from the CAPM
CorrectIncorrect - Question 68 of 104
68. Question
A portfolio manager’s ranking within a comparison universe may not provide a good measure of performance because
CorrectIncorrect - Question 69 of 104
69. Question
What happens to the price of a futures contract as expiration draws closer?
CorrectIncorrect - Question 70 of 104
70. Question
You enter into a forward contract to take delivery of one million Deutsche marks three months from now. What happens to the price you will pay at expiration if marks depreciate during the contract?
CorrectIncorrect - Question 71 of 104
71. Question
Which of the following is true regarding company’s hedging for risk reduction?
a) Fluctuations in commodity prices, interest rates, or exchange rates can make planning difficult and can throw companies badly off course.
b) Financial managers look for opportunities to manage these risks, and a number of specialized instruments have been invented to help them.
c) The specialized instruments which were invented to help financial managers manage risks are collectively known as derivative instruments.CorrectIncorrect - Question 72 of 104
72. Question
Consider the following statements:
1) Foreign investment may affect a country’s export performance adversely.
2) Inflow of foreign exchange may cause appreciation of local currency, leading to a rise in the prices of export commodities.
Which of the statements given above is/are correct?CorrectIncorrect - Question 73 of 104
73. Question
What is the connection, if any, between comparative advantage (CA) and foreign direct investment (FDI)?
CorrectIncorrect - Question 74 of 104
74. Question
When money market instruments and debt securities with residual maturity of up to 60 days are not traded on a particular day, they shall be valued on
CorrectIncorrect - Question 75 of 104
75. Question
The FPI license is granted by a local custodian in its capacity as a Designated Depository Participants (DDP) on behalf of
CorrectIncorrect - Question 76 of 104
76. Question
Money received for purchase of shares on Indian Company by a foreign investor will be treated as foreign direct investment if
CorrectIncorrect - Question 77 of 104
77. Question
What are the funds that flow from one economy to the other with the purpose of aid or assistance to the economy as a whole?
CorrectIncorrect - Question 78 of 104
78. Question
Construction of new plants abroad requires demand forecast. Such a demand forecast does not depend on the following
CorrectIncorrect - Question 79 of 104
79. Question
The __________ refers to the orderly relationship between spot and forward currency exchange rates and the rates of interest between countries.
CorrectIncorrect - Question 80 of 104
80. Question
A disadvantage of using stock options to compensate managers is that
CorrectIncorrect - Question 81 of 104
81. Question
In the Treynor-Black model
CorrectIncorrect - Question 82 of 104
82. Question
The Black-Litterman model is geared toward ____________ while the Treynor-Black model is geared toward ____________.
CorrectIncorrect - Question 83 of 104
83. Question
The tracking error of an optimized portfolio can be expressed in terms of the ____________ of the portfolio and thus reveal ____________.
CorrectIncorrect - Question 84 of 104
84. Question
Given the following information, calculate the expected return of Portfolio ABC. Expected return of stock A = 10%, Expected return of stock B = 15%, Expected return of stock C = 6%. 40 percent of the portfolio is invested in A, 40 percent is invested in B and 20 percent is invested in C.
CorrectIncorrect - Question 85 of 104
85. Question
The present value of cash inflows is $60,000 USD and present value of cash outflows is $55,000 USD then net present value is
CorrectIncorrect - Question 86 of 104
86. Question
The present value of cash inflows is $50,000 USD and present value of cash outflows is $55,000 USD then net present value is
CorrectIncorrect - Question 87 of 104
87. Question
You have been asked to determine the intrinsic value of a share of Quick Quilters, Inc. (QQ) common stock. The stock most recently paid a $2.00 annual dividend (D0). You expect dividends to grow at a supernormal rate of 15% for the next three years. You then expect that dividends will grow at a normal 5% rate thereafter (indefinitely). As a potential investor, you would expect to earn 10% on this investment. What is the intrinsic value of a share of QQ?
CorrectIncorrect - Question 88 of 104
88. Question
If a coupon bond sells at a large discount from par, then which of the following relationships holds true? (P0 > represents the price of a bond and YTM is the bond’s yield to maturity.)
CorrectIncorrect - Question 89 of 104
89. Question
Suppose the risk-free return is 6%. The beta of a managed portfolio is 1.5, the alpha is 3%,and the average return is 18%. Based on Jensen’s measure of portfolio performance, you would calculate the return on the market portfolio as
CorrectIncorrect - Question 90 of 104
90. Question
Suppose the risk-free return is 4%. The beta of a managed portfolio is 1.2, the alpha is 1%,and the average return is 14%. Based on Jensen’s measure of portfolio performance, you would calculate the return on the market portfolio as
CorrectIncorrect - Question 91 of 104
91. Question
You are evaluating a potential project which has uncertain future cash flows. The project will require an immediate outlay of $500. In year 1, cash flow will be $200 with probability 0.5, and $700 with probability 0.5. In year 2, cash flows will be $200 with probability 0.2, $400 with probability 0.6 and $700 with probability 0.2. In year three cash flows will be one of $200, $300, $400, $600 or $700 respectively, each with probability 0.2. What is the expected value of cash flows in year 2?
CorrectIncorrect - Question 92 of 104
92. Question
The standard deviation of Stock E is 30% and the standard deviation of Stock F is 50%. The covariance of Stock E with Stock F is 0.0300. Portfolio J consists of $600,000 invested in Stock E and $200,000 invested in Stock F. What is the variance of Portfolio J?
CorrectIncorrect - Question 93 of 104
93. Question
The variance of a portfolio equally divided between four uncorrelated assets with standard deviation of 5%, 15%, 20%, and 30%, respectively, is
CorrectIncorrect - Question 94 of 104
94. Question
At the end of the year, IBM will pay a £2.00 dividend per share, an increase from the current dividend of £1.50 per share. After that the dividend is expected to increase at a constant rate of 5%. If you require a 12% return on the stock, what is the value of IBM stock?
CorrectIncorrect - Question 95 of 104
95. Question
Suppose GE, which is selling at £75, will pay at the end of each year in the next two years an expected dividend of £5 per share. At the end of the second year, the stock will be either £70 or £100 with equal probability.
CorrectIncorrect - Question 96 of 104
96. Question
Corporation B is a normal-growth company that expects to earn 13% on reinvested earnings. If the company pays 30% of its earnings as dividends, what will be the stock’s dividend growth rate?
CorrectIncorrect - Question 97 of 104
97. Question
How can options, futures, and forward contracts be used to devise simple hedging strategies?
a) Options are often used by firms to limit their downside risk. For example, if you own an asset and have the option to sell it at the current price, then you have effectively insured yourself against loss.
b) Futures contracts are agreements made today to buy or sell an asset in the future. The price is fixed today, but the final payment does not occur until the delivery date. Futures contracts are highly standardized and are traded on organized exchanges. Commodity futures allow firms to fix the future price that they pay for a wide range of agricultural commodities, metals, and oil. Financial futures help firms to protect themselves against unforeseen movements in interest rates, exchange rates, and stock prices.
c) Forward contracts are equivalent to tailor-made futures contracts. For example, firms often enter into forward agreements with a bank to buy or sell foreign exchange or to fix the interest rate on a loan to be made in the future.CorrectIncorrect - Question 98 of 104
98. Question
A listed entity shall submit a statement showing holding of securities and shareholding pattern separately for each class of securities Within 10 days of any capital restructuring of the listed entity resulting in a change exceeding __________ of the total paid-up share capital.
CorrectIncorrect - Question 99 of 104
99. Question
An unlisted company intending to be listed should have a minimum average pre-tax operating profit of rupees fifteen crore, calculated on a restated and consolidated basis, during the
CorrectIncorrect - Question 100 of 104
100. Question
Under which one of the following framework, an FPI would commit to investing a specified amount in Indian bonds for a minimum retention period of three years or more, as specified by the RBI and would need to ensure that at least 67 percent of the committed amount remained invested at all times during the period?
CorrectIncorrect - Question 101 of 104
101. Question
Assume that a Big Mac hamburger is selling for £1.99 in the United Kingdom, the same hamburger is selling for $2.71 in the United States, and the actual exchange rate (to buy $1.00 with British Pounds) is 0.63. According to ____________________, the British Pound is __________________ the US Dollar.
CorrectIncorrect - Question 102 of 104
102. Question
Cross listing refers to
a). When a home country company lists its shares in a foreign stock exchange denominated in home country currency.
b). When a home country company lists its shares in a foreign stock exchange denominated in foreign country currency.
c). When a foreign company lists its shares in domestic stock exchange denominated in foreign company’s home currency
d). When a foreign company lists its shares in domestic stock exchange denominated in domestic currencyCorrectIncorrect - Question 103 of 104
103. Question
To improve future analyst forecasts using the statistical properties of past forecasts, a regression model can be fitted to past forecasts. The intercept of the regression is a __________ coefficient, and the regression beta represents a __________ coefficient.
CorrectIncorrect - Question 104 of 104
104. Question
The Treynor-Black model is a model that shows how an investment manager can use security analysis and statistics to construct
CorrectIncorrect