Question No: 1 ( Marks: 1 ) – Please choose one
Shares of McDonald Corporation are an example of a (n):
Standardized financial instrument
Non-standardized financial instrument since their prices can differ over time Standardized financial liability instrument
Open-end investment
Question No: 2 ( Marks: 1 ) – Please choose one
Which of the following includes fixed income securities?
Bonds
Shares
Derivatives
Options
Question No: 3 ( Marks: 1 ) – Please choose one
Companies that have capitalization amounts of less than $500 million are known as _________.
Small cap companies
Mid cap companies
Growth companies
Large cap companies
Question No: 4 ( Marks: 1 ) – Please choose one
In bar chart, which color indicates share prices are going down?
Blue
Black
White
Red
Question No: 5 ( Marks: 1 ) – Please choose one
What will be the resulting figure,when gross profit is divided by net sales?
Gross margin
Operating margin
Net margin
Profit margin
Question No: 6 ( Marks: 1 ) – Please choose one
In bottom-up approach of fundamental analysis, investors begin their analysis with:
Industry
Economy
Market
Company
Question No: 7 ( Marks: 1 ) – Please choose one
Which of the following is EXCLUDED from Porter’s competitive factors? Substitute
products or services
Changes in the economy
Bargaining power of buyers
Rivalry between existing competitors
Question No: 8 ( Marks: 1 ) – Please choose one
Which of the following is defined as the gradual loss in value of equipment and other tangible assets over the course of its useful life?
Appreciation
Depreciation
Revaluation
Amortization
Question No: 9 ( Marks: 1 ) – Please choose one
On which of the following financial statements, revenues and expenses can be found?
Balance sheet
Income statement
Statement of cash flows
Statement of changes in equity
Question No: 10 ( Marks: 1 ) – Please choose one
Which of the following is an example of brokerage fee charged by a stockbroker? Margin
profit
Insurance premium
Transaction cost
Capital expenditure
Question No: 11 ( Marks: 1 ) – Please choose one
Technical analysis is NOT applicable in which form of efficient market hypothesis?
Weak form efficiency
Semi-strong form efficiency
Strong-form efficiency
Weak and strong form of efficiency
Question No: 12 ( Marks: 1 ) – Please choose one
Which of the following suggests that people express a different degree of emotion towards gains than towards losses?
Prospect theory
Illusion of control
Anchoring
Loss aversion
Question No: 13 ( Marks: 1 ) – Please choose one
LSE 25 index was last reconstituted on_______ in line with regular review policy. 20th
December, 2002
1st July, 2006
25th July, 2007
1st July, 2008
Question No: 14 ( Marks: 1 ) – Please choose one
Which of the following is considered to be a characteristic of an equity security?
Fixed income
Debt
Price
Ownership
Question No: 15 ( Marks: 1 ) – Please choose one
Which of the following statement is TRUE about yield to maturity?
Yield to maturity is inversely related to bond price
Yield to maturity is always less than the yield to call
Yield to maturity will be less than the current yield
Yield to maturity tends to fall with a rise in duration
Question No: 16 ( Marks: 1 ) – Please choose one
The yield to maturity is equal to the realized compound return if all coupon interest payments:
Are not reinvested
Are reinvested at the market rate
Are reinvested at the bond’s coupon rate
Are reinvested at the bond’s yield to maturity
Question No: 18 ( Marks: 1 ) – Please choose one
Which of the following statement is FALSE regarding bond duration?
Duration is shorter than maturity for all bonds except zero coupon bonds Duration is equal to maturity for zero coupon bonds
Duration is directly related to coupon yield
Duration is measured in years
Question No: 19 ( Marks: 1 ) – Please choose one
Which of the following statement is TRUE about duration of a bond?
It is less than maturity for bonds paying coupon interest I
It is directly related to coupon yield
It decreases with maturity
It is greater than maturity for zero coupon bonds
Question No: 20 ( Marks: 1 ) – Please choose one
Which of the following statement is FALSE regarding bond duration?Bond duration is inversely related to coupon rate
Duration of a zero-coupon bond equals its time to maturity
Holding maturity constant, a bond s duration is higher when the coupon rate is lower
Duration is longer than maturity for all bonds except zero coupon bonds
Duration is measured in years; however, do not confuse it with a bond’s maturity.
Question No: 21 ( Marks: 1 ) – Please choose one
Which of the following is known as speculative bond?
Government bond
Municipal bond
Sovereign bond
Junk bond
Question No: 22 ( Marks: 1 ) – Please choose one
Which of the following is referred to as risk-free bond?
Government bond
Municipal bond
Sovereign bond
Junk bond
Question No: 23 ( Marks: 1 ) – Please choose one
Diversification is the only way to protect investors from:
Market risk
Nonsystematic risk
Systematic risk
General risk
Question No: 24 ( 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
Question No: 25 ( Marks: 1 ) – Please choose one
Systematic risk contains all of the following components EXCEPT:
Purchasing power risk
Market risk
Business risk
Interest rate risk
Question No: 26 ( Marks: 1 ) – Please choose one
Which of the following bond redeems the principal amount at maturity and pays no periodic income?
Municipal bond
Corporate bond
Junk bond
Zero coupon bond
Question No: 27 ( Marks: 1 ) – Please choose one
Which of the following measures deviation of returns from the mean?
Variance
Standard deviation
Geometric mean
Correlation coefficient
Question No: 28 ( Marks: 1 ) – Please choose one
Which of the following statement is FALSE?
Each portfolio asset has a weight which represents the percent of the total portfolio value
Portfolio risk is not a weighted average of the risk of individual securities in the portfolio
Portfolio risk is measured by variance or standard deviation of the portfolio’s return
None of the given options
Question No: 29 ( Marks: 1 ) – Please choose one
Which of the following is defined as a line that graphs the systematic, or market risk versus return of the whole market at a certain time and shows all risky marketable
securities?
Security market line
Capital market line
Budget line
Value line
Question No: 30 ( Marks: 1 ) – Please choose one What is the other name used for optimal portfolio?
Business portfolio
Market portfolio
Mutual fund portfolio
Systematic portfolio
Question No: 31 ( Marks: 1 ) – Please choose one
Which of the following is FALSE regarding separation theorem?
The firm’s investment decision is independent of the preferences of the owner
The investment decision is dependent on financial decision
Risky portfolios are not tailored to each individual s taste
It is possible to separate investment decisions from financial decisions
Question No: 32 ( Marks: 1 ) – Please choose one
Which of the following is a measure of securities volatility or systematic risk in comparison to the market as a whole?
Beta
Return on equity
Liquidity
Rate of return
Question No: 33 ( 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: 34 ( Marks: 1 ) – Please choose one
The concept that two identical assets cannot be sold at different prices is associated with which of the following theory?
Prospect Theory
Modern Portfolio Theory
Dow Theory
Arbitrage Pricing Theory
Question No: 35 ( Marks: 1 ) – Please choose one
Which of the following is NOT an anomaly related to efficient market hypothesis?
Low PE effect
The small firm effect
The neglected firm effect
Common size effect
Question No: 36 ( Marks: 1 ) – Please choose one
Which of the following is defined as an obligatory agreement to transact in the future, based on future price expectations?
Forward contract
Futures contract
Annuity contract
Spread contract
Question No: 37 ( Marks: 1 ) – Please choose one
Which of the following is defined as a user of the market, who enters into futures
contract to manage the risk of adverse price fluctuation in respect of his existing or future asset?
Speculator
Broker
Hedger
Arbitrager
Question No: 38 ( Marks: 1 ) – Please choose one
S & P 500 future stock index closes at $ 300 and spot price is $ 325. What is its basis?
-25
-30
25
30
Question No: 39 ( 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: 40 ( 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: 41 ( Marks: 1 ) – Please choose one
An over-the-counter market can be defined as:
A network of dealers connected electronically
An illegal secondary market for stocks used primarily by those attempting to evade taxes A primary market for stocks
A form of centralized exchange