Question No: 1 ( Marks: 1 ) – Please choose one
Which of the following is EXCLUDED from the reasons of investing? To obtain capital gain
To supplement their money
To gather market information
To experience an excitement
Question No: 2 ( Marks: 1 ) – Please choose one
__________ believe that securities are priced according to fundamental economic data.
Fundamental analysts
Ratio analysts
Technical analysts Research analysts
Question No: 3 ( Marks: 1 ) – Please choose one
The idea that money available at the present time is worth more than the same amount in the future is called:
Present value
Time value of money
Future value
Annuity concept
Question No: 4 ( Marks: 1 ) – Please choose one
Which of the following statement is a characteristic of line charts?
Can be used for comparing two or more values It is efficient in showing more details
It is simplest and most familiar chart
None of the given choices
Question No: 5 ( Marks: 1 ) – Please choose one
What does gross margin represents?
The quality of a firm’s operations
The percentage of earnings paid to shareholders A company’s capital structure
The percentage of revenue remaining after cost of goods
Question No: 6 ( Marks: 1 ) – Please choose one
If ABC Furniture earned $5 million dollars of profit in a year, and the company had a market capitalization of $85 million, what is the P/E Ratio?
9
14
17
22
Question No: 7 ( Marks: 1 ) – Please choose one
Which of the following items will reduce stockholders’ equity?
Purchase of equipment
Purchase of supplies Receiving a loan
Payment of salaries
Question No: 8 ( Marks: 1 ) – Please choose one
Which of the following is the annual net income from an average investment expressed as a percentage of average amount invested?
Net asset value
Return on equity
Return on average investment (ROI)
Discounted value
Question No: 9 ( Marks: 1 ) – Please choose one
Which of the following equity market indicator is price-weighted index? NASDAQ Composite Index
Standard & Poor’s 500 Index
Nikkie 225 average
NYSE Composite Index
Question No: 10 ( Marks: 1 ) – Please choose one
Lahore stock of exchange is _____ based market indicator.
Volume
Capitalization Price weighting Profit
Question No: 11 ( Marks: 1 ) – Please choose one
Which of the following is defined as the transformation of illiquid, non-marketable risky individual loans into asset-backed securities?
Securitization
Sector rotation
Diversification
Risk aversion
Question No: 12 ( Marks: 1 ) – Please choose one
Which of the following affects the price of the bond? Market interest rate
Required rate of return Interest rate risk
All of the given options
Several things affect the value of bonds. The big one is interest rates
Question No: 13 ( Marks: 1 ) – Please choose one
Bond is a type of Direct Claim Security whose value is NOT secured
by __________.
Real assets
Intangible assets
Fixed assets
Tangible assets
Question No: 14 ( Marks: 1 ) – Please choose one
Which of the following measure that how much a bond price-yield curve deviates from a straight line?
Bond duration
Bond convexity
Bond valuation
All of the given options
Question No: 15 ( Marks: 1 ) – Please choose one
Which of the following is known as speculative bond? Government bond
Municipal bond Sovereign bond
Junk bond
Question No: 16 ( Marks: 1 ) – Please choose one
The risk inherent to the entire market or entire market segment is known as:
Systematic risk
Issuer risk
Specific risk
Nonsystematic risk
Question No: 17 ( Marks: 1 ) – Please choose one
The excess return that an individual stock or the overall stock market provides over a risk-free rate is known as _____________.
Equity risk premium
Bond horizon premium Share premium
Liquidity premium
What Does Equity Risk Premium Mean?
Question No: 18 ( Marks: 1 ) – Please choose one
The risk stemming from the lack of marketability of an investment that cannot be bought or sold quickly enough to prevent or minimize a loss is known as:
Interest rate risk
Market risk
Liquidity risk
Default risk
Question No: 19 ( Marks: 1 ) – Please choose one
Which of the following may be exchanged for common stock of the same corporation? Warrant
Exchangeable bond Debenture
Convertible bond
Question No: 20 ( Marks: 1 ) – Please choose one Which of the following statement is FALSE?
Securities move together only because of their common relationship to the market index The importance of each individual security s risk decreases as the number of securities increases
Risk and return tends to be lowest for investors who trade frequently
The importance of covariance increases with an increase in number of securities
Question No: 21 ( Marks: 1 ) – Please choose one
The average value of beta for all stocks in the market is:
0.5
1.0
1.5 2.0
Question No: 22 ( Marks: 1 ) – Please choose one
A single-index model uses __________ as a proxy for the systematic risk factor.
A market index, such as the S&P 500
The current account deficit
The growth rate in GNP The unemployment rate
Question No: 23 ( Marks: 1 ) – Please choose one
The anomalies literature ____________. Provides a conclusive rejection of market efficiency Provides a conclusive support of market efficiency
Suggests that several strategies would have provided superior returns
Provides a conclusive acceptance of market efficiency
Question No: 24 ( Marks: 1 ) – Please choose one
The ____________ gives the number of shares for which each convertible bond can be exchanged.
Conversion ratio
Current ratio
P/E ratio
Conversion premium
Question No: 25 ( Marks: 1 ) – Please choose one
Which of the following is a financial instrument that conveys the right, but not the obligation, to engage in a future transaction on some underlying security, or in a futures contract?
Options
Futures Swaps
Forwards
Question No: 26 ( Marks: 1 ) – Please choose one
Which of the following is an agreement to exchange two currencies on one date and to reverse the transaction at a future date?
Interest rate swap
Foreign currency swap
Total return swap
Credit default swap
Question No: 27 ( Marks: 1 ) – Please choose one
Which of the following is a derivative in which one party exchanges a stream of interest payments for another party’s stream of cash flows?
Foreign currency swap
Total return swap
Credit default swap
Interest rate swap
Question No: 28 ( Marks: 1 ) – Please choose one
Which of the following is defined as a market for the immediate sale and delivery of assets?
Forward market
Laissez-faire market
Future market
Spot market
Question No: 29 ( Marks: 1 ) – Please choose one
Which of the following is defined as a trader, who trades or takes position without having exposure in the physical market, with the sole intention of earning profit? Hedger
Arbitrager
Speculator
Broker
Question No: 30 ( Marks: 1 ) – Please choose one
Which of the following refers to the simultaneous purchase and sale in two markets so that the selling price is higher than the buying price by more than the transaction cost? Hedging
Arbitrage
Speculation Brokerage
Question No: 31 ( Marks: 1 ) – Please choose one
Which of the following is defined as the difference between spot price and future or forward price?
Beta
ROI
Alpha
Basis
Question No: 32 ( Marks: 1 ) – Please choose one
Which of the following is TRUE regarding short hedge?
Price realized=S2+ (F1 F2)
Price realized= S2 (F1+F2)
Price realized= S2 (F2 F1)
Price realized= S2+ (F1F2)
Question No: 33 ( Marks: 1 ) – Please choose one
While calculating cost of asset under long hedge, what does F2 indicate? Initial asset price
Initial futures price Final asset price
Final futures price (lesson 43 slide 23) Long Hedge
Suppose that
F1 : Initial Futures Price F2 : Final Futures Price
S2 : Final Asset Price
Question No: 34 ( Marks: 1 ) – Please choose one
S & P 500 future stock index closes at $ 275 and spot price is $ 230. What is its basis?
40
45
50
55
Question No: 35 ( Marks: 1 ) – Please choose one
In which of the following situation, the writers of call options expect profit?
When the stock price declines
When the stock prices remain the same
When increase in stock price is less than premium
All of the given options
Question No: 36 ( Marks: 1 ) – Please choose one
Which of the following contributes to the smooth operation of an option market?
American Stock Exchange
Over the Counter Options
Chicago Board Options Exchange
Options Clearing Corporation
No: 37 ( Marks: 1 ) – Please choose one
Which of the following is defined as an option whose payoff depends on whether or not the underlying asset has reached or exceeded a predetermined price?
Barrier option
Forward start option
Over-the-counter options
Compound options
Question No: 38 ( Marks: 1 ) – Please choose one
Which of the following is an option which is paid for now, but will start at some prespecified date in the future?
Barrier option
Forward start option
Over-the-counter options Compound options
Forward-start Option
Question No: 39 ( Marks: 1 ) – Please choose one
The direct trade between large institutional investors takes place in which of the following market?
Primary market
Secondary market
Third market
Fourth market
Question No: 40 ( Marks: 1 ) – Please choose one
Which of the following statement is TRUE about value investors?
They are patient
They seek rapidly growing companies
They are speculators
They seek slow growing companies
Question No: 41 ( Marks: 1 ) – Please choose one
An investor will purchase shares of companies in the development stage for:
Current income
Current income and capital gains
Passive losses to offset other income
Capital gains only
Question No: 42 ( Marks: 1 ) – Please choose one
Which of the following items from the Income Statement is typically used to judge the success of a company?
Earnings from continuing operations
After-tax net income
Operating income
Diluted net income per share