MCQOPTIONS
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MCQOPTIONS
This section includes 141 Mcqs, each offering curated multiple-choice questions to sharpen your Financial Management/Financial Markets knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
An amount invested is $4000 and the dollar return is $300 then the rate of return will be |
| A. | 4300 |
| B. | 3700 |
| C. | 0.075 |
| D. | 0.00075 |
| Answer» D. 0.00075 | |
| 2. |
The standard deviation of tighter probability distribution is |
| A. | long-termed |
| B. | short-termed |
| C. | riskier |
| D. | smaller |
| Answer» E. | |
| 3. |
In expected future returns, the tighter probability distribution shows risk on given investment which is |
| A. | smaller |
| B. | greater |
| C. | less risky |
| D. | highly riskier |
| Answer» B. greater | |
| 4. |
The risk per unit of return or the stand alone risk is represented by |
| A. | coefficient of standard |
| B. | coefficient of return |
| C. | coefficient of variation |
| D. | coefficient of deviation |
| Answer» D. coefficient of deviation | |
| 5. |
The standard deviation is divided by the expected rate of return is used to calculate |
| A. | coefficient of variation |
| B. | coefficient of deviation |
| C. | coefficient of standard |
| D. | coefficient of return |
| Answer» B. coefficient of deviation | |
| 6. |
If the stock has a great risk related to it then a required return is |
| A. | higher |
| B. | lower |
| C. | zero |
| D. | all of the above |
| Answer» B. lower | |
| 7. |
The realized and required return for individual stocks are classified as function of fundamental |
| A. | arbitrage factors |
| B. | economic factors |
| C. | portfolio factors |
| D. | realized theory factors |
| Answer» C. portfolio factors | |
| 8. |
The stock issued by company have lower rate of return because of |
| A. | high market to book ratio |
| B. | low book to market ratio |
| C. | low market to book ratio |
| D. | high book to market ratio |
| Answer» C. low market to book ratio | |
| 9. |
The relationship between total risk of stock, diversifiable risk and market risk is classified as |
| A. | total risk |
| B. | standard deviation |
| C. | standard alpha |
| D. | treynor alpha |
| Answer» B. standard deviation | |
| 10. |
The first factor in the Fama French three factor model is |
| A. | CAPM stock beta |
| B. | economic stock beta |
| C. | CAPM portfolio beta |
| D. | CAPM realized beta |
| Answer» B. economic stock beta | |
| 11. |
In investment returns, a received amount is subtracted from an invested amount which is used to calculate |
| A. | dollar received |
| B. | dollar return |
| C. | dollar invested |
| D. | return percentage |
| Answer» C. dollar invested | |
| 12. |
The required return is 11% and the premium for risk is 8% then the risk free return will be |
| A. | 0.03 |
| B. | 0.19 |
| C. | 0.0072 |
| D. | 0.01375 |
| Answer» B. 0.19 | |
| 13. |
The third factor in the Fama French three factor model is the ratio which is classified as |
| A. | book to market ratio |
| B. | market to book ratio |
| C. | company to industry ratio |
| D. | stock to portfolio ratio |
| Answer» C. company to industry ratio | |
| 14. |
An expected rate of return is denoted by |
| A. | e-bar |
| B. | r-bar |
| C. | r-hat |
| D. | e-hat |
| Answer» D. e-hat | |
| 15. |
In arbitrage pricing theory, the higher required rate of return is usually paid on the stock |
| A. | higher market risk |
| B. | higher dividend |
| C. | lower dividend |
| D. | lower market risk |
| Answer» C. lower dividend | |
| 16. |
The risk on a stock portfolio which can be reduced by placing it in diversified portfolio is classified as |
| A. | stock risk |
| B. | portfolio risk |
| C. | diversifiable risk |
| D. | market risk |
| Answer» D. market risk | |
| 17. |
In capital asset pricing model, the stock with the high standard deviation tend to have |
| A. | low variation |
| B. | low beta |
| C. | high beta |
| D. | high variation |
| Answer» C. high beta | |
| 18. |
The riskless rate in addition with risk premium is multiplied by standard deviation of portfolio for using to calculate expected return rate on |
| A. | efficient portfolio |
| B. | inefficient portfolio |
| C. | attributable portfolio |
| D. | non-attributable portfolio |
| Answer» B. inefficient portfolio | |
| 19. |
The past realized rate of return in period t is denoted by |
| A. | t bar r |
| B. | t hat r |
| C. | r hat t |
| D. | r bar t |
| Answer» E. | |
| 20. |
The range of probability distribution with 99.74% lies within |
| A. | ( + 3σ and -3σ) |
| B. | ( + 4σ and -4σ) |
| C. | ( + 1σ and -1σ) |
| D. | ( + 2σ and -2σ) |
| Answer» B. ( + 4σ and -4σ) | |
| 21. |
The probability distribution is classified as normal if expected return lies between |
| A. | ( + 1 and -1) |
| B. | ( + 2 and -2) |
| C. | ( + 3 and -3) |
| D. | ( + 4 and -4) |
| Answer» B. ( + 2 and -2) | |
| 22. |
The tendency of measuring correlation of two variables is classified as |
| A. | tendency coefficient |
| B. | variable coefficient |
| C. | correlation coefficient |
| D. | double coefficient |
| Answer» D. double coefficient | |
| 23. |
The market required return is subtracted from the risk free rate which is used to calculate |
| A. | quoted risk premium |
| B. | market risk premium |
| C. | portfolio risk premium |
| D. | unquoted risk premium |
| Answer» C. portfolio risk premium | |
| 24. |
Of all the stocks in a portfolio, the required rate of return is classified as |
| A. | return portfolio |
| B. | in volatile portfolio |
| C. | volatile portfolio |
| D. | market portfolio |
| Answer» E. | |
| 25. |
If the risk can be eliminated with the help of diversification, then the relevant risk is |
| A. | smaller than stand-alone risk |
| B. | larger than stand-alone risk |
| C. | smaller than diverse risk |
| D. | larger than diverse risk |
| Answer» B. larger than stand-alone risk | |
| 26. |
The risk on a stock portfolio which cannot be eliminated or reduced by placing it in diversified portfolio is classified as |
| A. | diversifiable risk |
| B. | market risk |
| C. | stock risk |
| D. | portfolio risk |
| Answer» C. stock risk | |
| 27. |
The Treasury yielded by bond is 7% and the market required return is 13% then market risk premium will be |
| A. | 0.0216 |
| B. | 0.2 |
| C. | 0.06 |
| D. | 0.0053 |
| Answer» D. 0.0053 | |
| 28. |
When the changes in patents and industry competition occur, the required rate of return |
| A. | changes |
| B. | does not change |
| C. | becomes zero |
| D. | becomes one |
| Answer» C. becomes zero | |
| 29. |
An amount invested is $2000 and the dollar return is $200 then the rate of return would be |
| A. | 0.001 |
| B. | 0.1 |
| C. | 1800 |
| D. | 2200 |
| Answer» C. 1800 | |
| 30. |
In the portfolio, the beta of individual security in portfolio represented as their weighted average is classified as |
| A. | average of portfolio |
| B. | beta of portfolio |
| C. | weighted portfolio |
| D. | collective stocks |
| Answer» C. weighted portfolio | |
| 31. |
A tighter probability distribution shows the |
| A. | higher risk |
| B. | lower risk |
| C. | expected risk |
| D. | peaked risk |
| Answer» C. expected risk | |
| 32. |
A risk which is classified as its contribution to risk of portfolio is classified as |
| A. | classified risk |
| B. | contributed risk |
| C. | irrelevant risk |
| D. | relevant risk |
| Answer» E. | |
| 33. |
According to probability distribution of rates of return, a close outcome to an expected value is shown by |
| A. | value distribution |
| B. | expected distribution |
| C. | more peaked distribution |
| D. | less peaked distribution |
| Answer» D. less peaked distribution | |
| 34. |
The coefficient of beta is used to measure stock volatility |
| A. | coefficient of market |
| B. | relative to market |
| C. | irrelative to market |
| D. | same with market |
| Answer» C. irrelative to market | |
| 35. |
The standard deviation is 18% and the coefficient of variation is 1.5% an expected rate of return will be |
| A. | 0.27 |
| B. | 0.12 |
| C. | 0.195 |
| D. | none of the above |
| Answer» D. none of the above | |
| 36. |
An amount invested is $2500 and an amount received is $1500 then the dollar return will be |
| A. | −$4000 |
| B. | 4000 |
| C. | −$1000 |
| D. | 1000 |
| Answer» D. 1000 | |
| 37. |
An additional desired compensation by investors for assuming an additional risk on investment is classified as |
| A. | risk premium |
| B. | investor premium |
| C. | additional premium |
| D. | assumed premium |
| Answer» B. investor premium | |
| 38. |
The method and model used to analyze the relationship between rates of return and risk is classified as |
| A. | capital asset pricing model |
| B. | portfolio asset pricing model |
| C. | asset market pricing model |
| D. | portfolio pricing model |
| Answer» B. portfolio asset pricing model | |
| 39. |
The market risk premium is 8% and the risk free return is 7% then the market required return would be |
| A. | 0.15 |
| B. | 0.01 |
| C. | 56 |
| D. | 0.01142 |
| Answer» B. 0.01 | |
| 40. |
In the asset portfolio, the number of stocks are increased to |
| A. | reduce return |
| B. | reduce average |
| C. | reduce risk |
| D. | increase prices |
| Answer» D. increase prices | |
| 41. |
The standard deviation is 18% and the expected return is 15.5% then the coefficient of variation would be |
| A. | 0.00861 |
| B. | 0.01161 |
| C. | 0.025 |
| D. | −2.5% |
| Answer» C. 0.025 | |
| 42. |
The term structure premium, an inflation of bond and bond default premium are included in |
| A. | risk factors |
| B. | premium factors |
| C. | bond buying factors |
| D. | multi model |
| Answer» B. premium factors | |
| 43. |
The tendency of moving together of two variables is classified as |
| A. | correlation |
| B. | move tendency |
| C. | variables tendency |
| D. | double tendency |
| Answer» B. move tendency | |
| 44. |
A line which shows the relationship between an expected return and risk on efficient portfolio is considered as |
| A. | efficient market line |
| B. | attributable market line |
| C. | capital market line |
| D. | security market line |
| Answer» D. security market line | |
| 45. |
In capital asset pricing model, the investors assume that buying and selling activity will |
| A. | affect stock prices |
| B. | not affect stock prices |
| C. | have high taxes |
| D. | high transaction cost |
| Answer» C. have high taxes | |
| 46. |
The portfolio which consists of perfectly positive correlated assets having no effect of |
| A. | negativity |
| B. | positivity |
| C. | correlation |
| D. | diversification |
| Answer» E. | |
| 47. |
For the investors, the more steeper slope of indifference curve shows the more |
| A. | risk averse investor |
| B. | risk taker investor |
| C. | in differential investor |
| D. | ineffective investment |
| Answer» B. risk taker investor | |
| 48. |
A technique of lowering the risk for multinational companies and globally designed portfolios is classified as |
| A. | national diversification |
| B. | behavioral diversification |
| C. | global diversification |
| D. | behavioral finance |
| Answer» D. behavioral finance | |
| 49. |
The expected returns weighted average on assets in the portfolio is considered as |
| A. | weighted portfolio |
| B. | expected return on portfolio |
| C. | coefficient of portfolio |
| D. | expected assets |
| Answer» C. coefficient of portfolio | |
| 50. |
The dollar return is divided by invested amount which is used for calculating the |
| A. | rate of return |
| B. | return amount |
| C. | investment rate |
| D. | received amount |
| Answer» B. return amount | |