MCQOPTIONS
Saved Bookmarks
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.
| 101. |
The stocks which has high book for market ratio are considered as |
| A. | more risky |
| B. | less risky |
| C. | pessimistic |
| D. | optimistic |
| Answer» B. less risky | |
| 102. |
The positive minimum risk portfolio of any security shows that market security sold |
| A. | equal to original price |
| B. | equal to sum of stocks |
| C. | less than original price |
| D. | greater than original price |
| Answer» E. | |
| 103. |
The weighted average of the probabilities is classified as |
| A. | average rate of return |
| B. | expected rate of return |
| C. | past rate of return |
| D. | weighted rate of return |
| Answer» C. past rate of return | |
| 104. |
An individual stock required return is equal to risk free rate plus bearing risk premium is an explanation of |
| A. | security market line |
| B. | capital market line |
| C. | aggregate market line |
| D. | beta market line |
| Answer» B. capital market line | |
| 105. |
The risk which is caused by events such as strikes, unsuccessful marketing programs and other lawsuits is classified as |
| A. | stock risk |
| B. | portfolio risk |
| C. | diversifiable risk |
| D. | market risk |
| Answer» D. market risk | |
| 106. |
The relationship between risk and required return is classified as |
| A. | security market line |
| B. | required return line |
| C. | market risk line |
| D. | riskier return line |
| Answer» B. required return line | |
| 107. |
In capital asset pricing model, the assumptions must be followed including |
| A. | no taxes |
| B. | no transaction costs |
| C. | fixed quantities of assets |
| D. | all of the above |
| Answer» E. | |
| 108. |
The size of the firm and the market or book ratio are variables which are related to |
| A. | premium returns |
| B. | unquoted returns |
| C. | quoted returns |
| D. | stock returns |
| Answer» E. | |
| 109. |
According to market risk premium, an amount of risk premium depends upon the investor |
| A. | risk taking |
| B. | risk aversion |
| C. | market aversion |
| D. | portfolio aversion |
| Answer» C. market aversion | |
| 110. |
The range of probability distribution with 68.26% lies within |
| A. | ( + 3σ and -3σ) |
| B. | ( + 4σ and -4σ) |
| C. | ( + 1σ and -1σ) |
| D. | ( + 2σ and -2σ) |
| Answer» D. ( + 2σ and -2σ) | |
| 111. |
In capital asset pricing model, the covariance between stock and the market is divided by variance of market returns is used to calculate |
| A. | sales turnover of company |
| B. | risk rate of company |
| C. | beta coefficient of company |
| D. | weighted mean of company |
| Answer» D. weighted mean of company | |
| 112. |
A model which regresses the return of stock against the return of market is classified as |
| A. | regression model |
| B. | market model |
| C. | error model |
| D. | risk free model |
| Answer» C. error model | |
| 113. |
The negative minimum risk portfolio of any security shows that market security sold |
| A. | less than original price |
| B. | greater than original price |
| C. | equal to original price |
| D. | equal to sum of stocks |
| Answer» B. greater than original price | |
| 114. |
According to capital asset pricing model assumptions, the quantities of all the assets are |
| A. | given and fixed |
| B. | not given and fixed |
| C. | not given and variable |
| D. | given and variable |
| Answer» B. not given and fixed | |
| 115. |
According to Fama French Three-Factor model, the market value of company equity is used to calculate |
| A. | size of portfolio |
| B. | size of industry |
| C. | size of market |
| D. | size of company |
| Answer» E. | |
| 116. |
According to capital asset pricing model assumptions, the investors will borrow unlimited amount of capital at any given |
| A. | identical and fixed returns |
| B. | risk free rate of interest |
| C. | fixed rate of interest |
| D. | risk free expected return |
| Answer» C. fixed rate of interest | |
| 117. |
In calculation of betas, an adjusted betas are highly dependent on historical |
| A. | unadjusted betas |
| B. | adjusted historical betas |
| C. | fundamental historical betas |
| D. | fundamental varied betas |
| Answer» B. adjusted historical betas | |
| 118. |
The formula written as 0.67(Historical Beta) + 0.35(1.0) is used to calculate |
| A. | historical betas |
| B. | adjusted betas |
| C. | standard betas |
| D. | varied betas |
| Answer» C. standard betas | |
| 119. |
A curve which shows attitude towards risk just the way reflected in return trade-off function is classified as |
| A. | difference curve |
| B. | indifference curve |
| C. | efficiency curve |
| D. | affectivity curve |
| Answer» C. efficiency curve | |
| 120. |
In capital market line, the risk of efficient portfolio is measured by its |
| A. | standard deviation |
| B. | variance |
| C. | aggregate risk |
| D. | ineffective risk |
| Answer» B. variance | |
| 121. |
An average return of portfolio divided by its coefficient of beta is classified as |
| A. | Sharpe's reward to variability ratio |
| B. | treynor's reward to volatility ratio |
| C. | Jensen's alpha |
| D. | treynor's variance to volatility ratio |
| Answer» C. Jensen's alpha | |
| 122. |
If the book value is greater than market value comparison with the investors for future stock are considered as |
| A. | pessimistic |
| B. | optimistic |
| C. | experienced |
| D. | inexperienced |
| Answer» B. optimistic | |
| 123. |
The slope coefficient of beta is classified statistically significant if its probability is |
| A. | greater than 5% |
| B. | equal to 5% |
| C. | less than 5% |
| D. | less than 2% |
| Answer» D. less than 2% | |
| 124. |
In arbitrage pricing theory, the required returns are functioned of two factors which have |
| A. | dividend policy |
| B. | market risk |
| C. | historical policy |
| D. | both a and b |
| Answer» E. | |
| 125. |
The second factor in the Fama French three factor model is the |
| A. | size of industry |
| B. | size of market |
| C. | size of company |
| D. | size of portfolio |
| Answer» D. size of portfolio | |
| 126. |
The stock portfolio with the highest book to market ratios is considered as |
| A. | H portfolio |
| B. | L portfolio |
| C. | S portfolio |
| D. | B to M portfolio |
| Answer» B. L portfolio | |
| 127. |
The first step in determining an efficient portfolio is to consider |
| A. | set of attainable portfolios |
| B. | set of unattainable portfolios |
| C. | set of attributable portfolios |
| D. | set of attributable portfolios |
| Answer» B. set of unattainable portfolios | |
| 128. |
The tendency of people to blame failure on bad luck but given tribute of success to themselves is classified as |
| A. | self attribution bias |
| B. | self success bias |
| C. | self failure bias |
| D. | self condition bias |
| Answer» B. self success bias | |
| 129. |
The difference between actual return on stock and the predicted return is considered as |
| A. | probability error |
| B. | actual error |
| C. | prediction error |
| D. | random error |
| Answer» E. | |
| 130. |
The complex statistical and mathematical theory is an approach, which is classified as |
| A. | arbitrage pricing theory |
| B. | arbitrage risk theory |
| C. | arbitrage dividend theory |
| D. | arbitrage market theory |
| Answer» B. arbitrage risk theory | |
| 131. |
In capital asset pricing model, the characteristic line is classified as |
| A. | regression line |
| B. | probability line |
| C. | scattered points |
| D. | weighted line |
| Answer» B. probability line | |
| 132. |
All the assets are perfectly divisible and liquid in |
| A. | tax free pricing model |
| B. | cost free pricing model |
| C. | capital asset pricing model |
| D. | stock pricing model |
| Answer» D. stock pricing model | |
| 133. |
The capital market line reflects an attitude of investors towards risk which is considered as an/a |
| A. | non-aggregate |
| B. | effective |
| C. | ineffective |
| D. | aggregate |
| Answer» E. | |
| 134. |
The relationship between risk free asset and a single risky asset are always |
| A. | linear |
| B. | non-linear |
| C. | efficient |
| D. | effective |
| Answer» B. non-linear | |
| 135. |
A theory which states that the assets are traded at the price equal to its intrinsic value is classified as |
| A. | efficient money hypothesis |
| B. | efficient market hypothesis |
| C. | inefficient market hypothesis |
| D. | inefficient money hypothesis |
| Answer» C. inefficient market hypothesis | |
| 136. |
The stock with large amount of contribution of risk in a diversified portfolio is represented by |
| A. | high beta and standard deviation |
| B. | high beta, low standard deviation |
| C. | low beta, low standard deviation |
| D. | low beta, low variance |
| Answer» B. high beta, low standard deviation | |
| 137. |
An indication in a way that variance of y-variable is explained by x-variable which is shown as |
| A. | degree of dispersion is one |
| B. | degree of dispersion is two |
| C. | degree of dispersion is three |
| D. | degree of dispersion is four |
| Answer» B. degree of dispersion is two | |
| 138. |
For any or lower degree of risk, the highest or any expected return are the concepts use in |
| A. | riskier portfolios |
| B. | behavior portfolios |
| C. | inefficient portfolios |
| D. | efficient portfolios |
| Answer» E. | |
| 139. |
An unsystematic risk which can be eliminated but the market risk is the |
| A. | aggregate risk |
| B. | remaining risk |
| C. | effective risk |
| D. | ineffective risk |
| Answer» C. effective risk | |
| 140. |
In regression of capital asset pricing model, an intercept of excess returns is classified as |
| A. | Sharpe's reward to variability ratio |
| B. | tenor's reward to volatility ratio |
| C. | Jensen's alpha |
| D. | tenor's variance to volatility ratio |
| Answer» D. tenor's variance to volatility ratio | |
| 141. |
The beta reflects the stock risk for investors which is usually |
| A. | individual |
| B. | collective |
| C. | weighted |
| D. | linear |
| Answer» B. collective | |