MCQOPTIONS
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MCQOPTIONS
This section includes 657 Mcqs, each offering curated multiple-choice questions to sharpen your Testing Subject knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
According to capital asset pricing model assumptions, variances, expected returns and covariance of all assets are |
| A. | dentical |
| B. | ot identical |
| C. | ixed |
| D. | ariable |
| Answer» B. ot identical | |
| 2. |
An average return of portfolio divided by its standard deviation is classified as |
| A. | ensen's alpha |
| B. | reynor's variance to volatility ratio |
| C. | harpe's reward to variability ratio |
| D. | reynor's reward to volatility ratio |
| Answer» D. reynor's reward to volatility ratio | |
| 3. |
A measure which is not included in Fama French Three-Factor model is |
| A. | ealized risk free rate |
| B. | ate of return on market |
| C. | andom error |
| D. | isk premium |
| Answer» E. | |
| 4. |
According to capital asset pricing model assumptions, investors will borrow unlimited amount of capital at any given |
| A. | dentical and fixed returns |
| B. | isk free rate of interest |
| C. | ixed rate of interest |
| D. | isk free expected return |
| Answer» C. ixed rate of interest | |
| 5. |
If market value is greater than book value then investors for future stock are considered as |
| A. | xperienced |
| B. | nexperienced |
| C. | essimistic |
| D. | ptimistic |
| Answer» E. | |
| 6. |
Second step in determining efficient portfolios is to consider efficient subset from set of |
| A. | ttainable portfolios |
| B. | nattainable portfolios |
| C. | ttributable portfolios |
| D. | on-attributable portfolio |
| Answer» B. nattainable portfolios | |
| 7. |
A high portfolio return is subtracted from low portfolio return to calculate |
| A. | ML portfolio |
| B. | portfolio |
| C. | ubtracted portfolio |
| D. | L portfolio |
| Answer» B. portfolio | |
| 8. |
Stocks which has high book for market ratio are considered as |
| A. | ore risky |
| B. | ess risky |
| C. | essimistic |
| D. | ptimistic |
| Answer» B. ess risky | |
| 9. |
In capital asset pricing model, covariance between stock and market is divided by variance of market returns is used to calculate |
| A. | ales turnover of company |
| B. | isk rate of company |
| C. | eta coefficient of company |
| D. | eighted mean of company |
| Answer» D. eighted mean of company | |
| 10. |
Negative minimum risk portfolio of any security shows that market security sold |
| A. | ess than original price |
| B. | reater than original price |
| C. | qual to original price |
| D. | qual to sum of stocks |
| Answer» B. reater than original price | |
| 11. |
According to Fama French Three-Factor model, market value of company equity is used to calculate |
| A. | ize of portfolio |
| B. | ize of industry |
| C. | ize of market |
| D. | ize of company |
| Answer» E. | |
| 12. |
A model which regresses return of stock against return of market is classified as |
| A. | egression model |
| B. | arket model |
| C. | rror model |
| D. | isk free model |
| Answer» C. rror model | |
| 13. |
Formula written as 0.67(Historical Beta) + 0.35(1.0) is used to calculate |
| A. | istorical betas |
| B. | djusted betas |
| C. | tandard betas |
| D. | aried betas |
| Answer» C. tandard betas | |
| 14. |
In capital market line, risk of efficient portfolio is measured by its |
| A. | tandard deviation |
| B. | ariance |
| C. | ggregate risk |
| D. | neffective risk |
| Answer» B. ariance | |
| 15. |
A curve which shows attitude towards risk just way reflected in return trade-off function is classified as |
| A. | ifference curve |
| B. | ndifference curve |
| C. | fficiency curve |
| D. | ffectivity curve |
| Answer» C. fficiency curve | |
| 16. |
Past realized rate of return in period t is denoted by |
| A. | bar r |
| B. | hat r |
| C. | hat t |
| D. | bar t |
| Answer» E. | |
| 17. |
In investment returns, a received amount is subtracted from an invested amount which is used to calculate |
| A. | ollar received |
| B. | ollar return |
| C. | ollar invested |
| D. | eturn percentage |
| Answer» C. ollar invested | |
| 18. |
Risk on a stock portfolio which cannot be eliminated or reduced by placing it in diversified portfolio is classified as |
| A. | iversifiable risk |
| B. | arket risk |
| C. | tock risk |
| D. | ortfolio risk |
| Answer» C. tock risk | |
| 19. |
Required return is 11% and premium for risk is 8% then risk free return will be |
| A. | .00% |
| B. | 9.00% |
| C. | .72% |
| D. | .38% |
| Answer» B. 9.00% | |
| 20. |
Risk which is caused by events such as strikes, unsuccessful marketing programs and other lawsuits is classified as |
| A. | tock risk |
| B. | ortfolio risk |
| C. | iversifiable risk |
| D. | arket risk |
| Answer» D. arket risk | |
| 21. |
A technique of lowering risk for multinational companies and globally designed portfolios is classified as |
| A. | ational diversification |
| B. | ehavioral diversification |
| C. | lobal diversification |
| D. | ehavioral finance |
| Answer» D. ehavioral finance | |
| 22. |
In expected future returns, tighter probability distribution shows risk on given investment which is |
| A. | maller |
| B. | reater |
| C. | ess risky |
| D. | ighly risky |
| Answer» B. reater | |
| 23. |
An expected rate of return is denoted by |
| A. | -bar |
| B. | -bar |
| C. | -hat |
| D. | -hat |
| Answer» D. -hat | |
| 24. |
Yield on bond is 7% and market required return is 14% then market risk premium would be |
| A. | .00% |
| B. | 1.00% |
| C. | .50% |
| D. | .00% |
| Answer» E. | |
| 25. |
Two alternative expected returns are compared with help of |
| A. | oefficient of variation |
| B. | oefficient of deviation |
| C. | oefficient of standard |
| D. | oefficient of return |
| Answer» B. oefficient of deviation | |
| 26. |
In capital asset pricing model, assumptions must be followed including |
| A. | o taxes |
| B. | o transaction costs |
| C. | ixed quantities of assets |
| D. | ll of above |
| Answer» E. | |
| 27. |
Third factor in Fama French three factor model is ratio which is classified as |
| A. | ook to market ratio |
| B. | arket to book ratio |
| C. | ompany to industry ratio |
| D. | tock to portfolio ratio |
| Answer» C. ompany to industry ratio | |
| 28. |
Beta coefficient is used to measure market risk which is an index of |
| A. | oefficient risk volatility |
| B. | arket risk volatility |
| C. | tock market volatility |
| D. | ortfolio market portfolio |
| Answer» D. ortfolio market portfolio | |
| 29. |
A portfolio consists of all stocks in a market is classified as |
| A. | arket portfolio |
| B. | eturn portfolio |
| C. | orrelated portfolio |
| D. | iversified portfolio |
| Answer» B. eturn portfolio | |
| 30. |
Type of risk in which beta is equal to one is classified as |
| A. | ultiple risk stock |
| B. | aried risk stock |
| C. | otal risk stock |
| D. | verage risk stock |
| Answer» E. | |
| 31. |
Rational traders immediately buy stock when price is |
| A. | oo low |
| B. | oo high |
| C. | onditional |
| D. | nefficient portfolio |
| Answer» B. oo high | |
| 32. |
An efficient set of portfolios represented through graph is classified as an |
| A. | ttained frontier |
| B. | fficient frontier |
| C. | nefficient frontier |
| D. | nattained frontier |
| Answer» C. nefficient frontier | |
| 33. |
Future beta is needed to calculate in most situations is classified as |
| A. | istorical betas |
| B. | djusted betas |
| C. | tandard betas |
| D. | aried betas |
| Answer» B. djusted betas | |
| 34. |
In option pricing, an increasing in option price due to |
| A. | ime of expiry increases |
| B. | ime of expiry decreases |
| C. | xchange time increases |
| D. | xchange time decreases |
| Answer» B. ime of expiry decreases | |
| 35. |
Sellers of options in financial markets are classified as |
| A. | xpiry writer |
| B. | ption writer |
| C. | ontract writer |
| D. | ond writer |
| Answer» C. ontract writer | |
| 36. |
According to Black Scholes model, call option is well exercised on its |
| A. | id buying date |
| B. | xpiry date |
| C. | uying date |
| D. | id selling date |
| Answer» C. uying date | |
| 37. |
Stock option is more worthwhile if it is |
| A. | xtremely volatile |
| B. | ess volatile |
| C. | table stock |
| D. | nstable price stock |
| Answer» B. ess volatile | |
| 38. |
Market value of option which is out-of-money is |
| A. | reater than zero |
| B. | qual to zero |
| C. | esser than zero |
| D. | qual to one |
| Answer» B. qual to zero | |
| 39. |
Type of options that do not have stock in portfolio to back up options is classified as |
| A. | ndue options |
| B. | ue options |
| C. | aked options |
| D. | otal options |
| Answer» D. otal options | |
| 40. |
In binomial approach of option pricing model, last step for finding an option is |
| A. | rice hike |
| B. | rice value |
| C. | ut price |
| D. | all price |
| Answer» E. | |
| 41. |
According to Black Scholes model, trading of securities and stock prices moves respectively |
| A. | onstant and randomly |
| B. | andomly and constant |
| C. | andomly and continuously |
| D. | ontinuously and randomly |
| Answer» E. | |
| 42. |
In financial planning, a higher strike price leads to call option |
| A. | rice is higher |
| B. | ate is lower |
| C. | rice is lower |
| D. | ate is higher |
| Answer» D. ate is higher | |
| 43. |
An option which can be exercised any desired time before an expiry date is classified as |
| A. | ustralian option |
| B. | oney option |
| C. | uropean option |
| D. | merican option |
| Answer» E. | |
| 44. |
Pricing model approach in which it is assumed that stock price can have one of two values of stock is classified as |
| A. | alued approach |
| B. | arketability approach |
| C. | tock approach |
| D. | inomial approach |
| Answer» E. | |
| 45. |
Stock option is considered more valuable in situation when stock have |
| A. | rice hike in market |
| B. | arket stability |
| C. | ot volatile |
| D. | ighly volatile |
| Answer» E. | |
| 46. |
In stock option, a little chance exists for large gain on stock when price of stock |
| A. | ave volatile movement |
| B. | oves freely |
| C. | arely moves |
| D. | tays same |
| Answer» D. tays same | |
| 47. |
In options pricing, an exercise price rises from lower to higher which leads to |
| A. | olatile options |
| B. | ption value increases |
| C. | ption value decreases |
| D. | ption value stable |
| Answer» D. ption value stable | |
| 48. |
Current option price is added to present value of portfolio for calculating |
| A. | uture value of portfolio |
| B. | urrent value of stock |
| C. | uture value of stock |
| D. | resent value of portfolio |
| Answer» C. uture value of stock | |
| 49. |
Price at which European and American options can be exercised is classified as |
| A. | xercise price |
| B. | trike price |
| C. | orizon price |
| D. | oth A and B |
| Answer» E. | |
| 50. |
When two portfolios have identical values and payoffs then it is classified as |
| A. | inomial parity relationship |
| B. | ut parity relationship |
| C. | ut option parity relationship |
| D. | ut call parity relationship |
| Answer» E. | |