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. |
%_Which of the following is / are assumption behind the realized yield approach?_% |
| A. | The yield earned by investors has been, on average, in conformity with their expectations |
| B. | The dividends will continue growing at a constant rate forever |
| C. | The market price will continue growing at a constant rate forever |
| D. | Both a and b |
| Answer» E. | |
| 2. |
%_Net income available to stockholders is Rs 125 and total assets are Rs 1,096 then return on common equity would be_% |
| A. | 0.11% |
| B. | 11.40% |
| C. | 0.12 times |
| D. | 12.00% |
| Answer» C. 0.12 times | |
| 3. |
%_International investing is________________._% |
| A. | is only practical for institutional investors |
| B. | increases the overall risk of a stock portfolio |
| C. | always leads to higher returns than a domestic portfolio |
| D. | can reduce risk due to increased diversification |
| Answer» D. can reduce risk due to increased diversification | |
| 4. |
%_Which, among the following, are common misconceptions about cost of capital?_% |
| A. | Depreciation-generated funds have no cost |
| B. | Cost of capital is low if a project is heavily debt-financed |
| C. | Cost of equity is equal to the dividend rate |
| D. | All of the above |
| Answer» E. | |
| 5. |
%________ is example of financial intermediaries._% |
| A. | Commercial banks |
| B. | Investment bank |
| C. | Insurance companies |
| D. | All of the above |
| Answer» E. | |
| 6. |
%_Investors seeking to avoid actively managing their portfolios will prefer which of the following assets?_% |
| A. | Common stock |
| B. | Commercial bank deposits |
| C. | Financial futures |
| D. | Real estate |
| Answer» C. Financial futures | |
| 7. |
%_An option which can be exercised any desired time before an expiry date is classified as_% |
| A. | Australian option |
| B. | money option |
| C. | European option |
| D. | American option |
| Answer» E. | |
| 8. |
%_Sellers of options in financial markets are classified as_% |
| A. | expiry writer |
| B. | option writer |
| C. | contract writer |
| D. | bond writer |
| Answer» C. contract writer | |
| 9. |
%_Reinvestment risk of bonds is usually higher on_% |
| A. | income bonds |
| B. | callable bonds |
| C. | premium bonds |
| D. | default free bonds |
| Answer» C. premium bonds | |
| 10. |
%_An excess of actual price of option over an exercise value of option is classified as_% |
| A. | time value options |
| B. | actual options |
| C. | estimated options |
| D. | optional pricing |
| Answer» B. actual options | |
| 11. |
%_An option that gives investors right to sell a stock at predefined price is classified as_% |
| A. | put option |
| B. | call option |
| C. | money back options |
| D. | out of money options |
| Answer» B. call option | |
| 12. |
%_Coupon payment is calculated with help of interest rate, then this rate considers as_% |
| A. | payment interest |
| B. | par interest |
| C. | coupon interest |
| D. | yearly interest rate |
| Answer» D. yearly interest rate | |
| 13. |
%_Yield on Treasury bill with a maturity is classified as a risk free rate but must be equal to an_% |
| A. | option closing price |
| B. | option beginning price |
| C. | option expiration |
| D. | option model |
| Answer» D. option model | |
| 14. |
%_In options pricing, an exercise price rises from lower to higher which leads to_% |
| A. | volatile options |
| B. | option value increases |
| C. | option value decreases |
| D. | option value stable |
| Answer» D. option value stable | |
| 15. |
%_Type of options that do not have stock in portfolio to back up options is classified as_% |
| A. | undue options |
| B. | due options |
| C. | naked options |
| D. | total options |
| Answer» D. total options | |
| 16. |
%_An investor who buys shares and writes a call option on stock is classified as_% |
| A. | put investor |
| B. | call investor |
| C. | hedger |
| D. | volatile hedge |
| Answer» D. volatile hedge | |
| 17. |
%_According to put call parity relationship, call option plus present value of exercise price minus stock is to calculate_% |
| A. | present value of option |
| B. | call option |
| C. | put option |
| D. | future value of option |
| Answer» D. future value of option | |
| 18. |
%_Current value of stock included in portfolio is subtracted from current option price to calculate_% |
| A. | future value of stock |
| B. | present value of portfolio |
| C. | future value of portfolio |
| D. | present value of stock |
| Answer» C. future value of portfolio | |
| 19. |
_ In retention growth model, percent of net income firms usually pay out as shareholders dividends is classified as$? |
| A. | payout ratio |
| B. | payback ratio |
| C. | growth retention ratio |
| D. | present value of ratio |
| Answer» B. payback ratio | |
| 20. |
_ If payout ratio is 0.45 then retention ratio will be$? |
| A. | 0.55 |
| B. | 1.45 |
| C. | 1.82 |
| D. | 0.45 |
| Answer» B. 1.45 | |
| 21. |
_ A type of beta which incorporates about company such as changes in capital structure is classified as$? |
| A. | industry beta |
| B. | market beta |
| C. | subtracted beta |
| D. | fundamental beta |
| Answer» E. | |
| 22. |
_ Method uses for an estimation of cost of equity is classified as$? |
| A. | market cash flow |
| B. | future cash flow method |
| C. | discounted cash flow method |
| D. | present cash flow method |
| Answer» D. present cash flow method | |
| 23. |
_ Cost of common stock is 16% and bond yield is 9% then bond risk premium would be$? |
| A. | 7.00% |
| B. | 9.00% |
| C. | 1.78% |
| D. | 25.00% |
| Answer» B. 9.00% | |
| 24. |
_ Type of stock in which dividends are tied to any particular part of a firm is classified as$? |
| A. | dividend stock |
| B. | firm part stock |
| C. | tied stock |
| D. | tracking stock |
| Answer» E. | |
| 25. |
_ Stocks in market portfolio are graphically represented with$? |
| A. | dashed line |
| B. | straight line |
| C. | market line |
| D. | risk line |
| Answer» B. straight line | |
| 26. |
_ Correct measure of risk of stock is called$? |
| A. | alpha |
| B. | beta |
| C. | variance |
| D. | market relevance |
| Answer» C. variance | |
| 27. |
_ Paid dividend is Rs 20 and current price is Rs 50 then dividend yield will be$? |
| A. | 40.00% |
| B. | 20.00% |
| C. | 30.00% |
| D. | 50.00% |
| Answer» B. 20.00% | |
| 28. |
_ In expected rate of return for constant growth, stock price must grow according to an expected rate and$? |
| A. | at same price |
| B. | at different price |
| C. | at yielded price |
| D. | at buying price |
| Answer» B. at different price | |
| 29. |
_ Markets for products such as wheat, rice, cotton, real estate and autos dealing is classified as$? |
| A. | physical asset markets |
| B. | intangible assets |
| C. | competitive markets |
| D. | easy markets |
| Answer» B. intangible assets | |
| 30. |
_ Firm's promise to pay and is backed or guaranteed by bank is classified as$? |
| A. | customer's acceptance |
| B. | banker's acceptance |
| C. | federal acceptance |
| D. | treasury acceptance |
| Answer» C. federal acceptance | |
| 31. |
_ An earning of business which is available for free distribution to all stockholders and creditors is classified as$? |
| A. | free cash flows |
| B. | free distribution |
| C. | available income |
| D. | cash income |
| Answer» B. free distribution | |
| 32. |
_ Market where market makers keep record of stock of financial instruments is classified as$? |
| A. | stock market |
| B. | dealer market |
| C. | outcry auction system |
| D. | face to face communication |
| Answer» C. outcry auction system | |
| 33. |
_ Under the P/E model, stock price is a product of_____________.$? |
| A. | EPS and DPS |
| B. | P/E ratio and EPS |
| C. | EPS and required return |
| D. | P/E ratio and required return |
| Answer» C. EPS and required return | |
| 34. |
_ The return after the pay off period is not considered in case of __________.$? |
| A. | Payback period method |
| B. | Interest rate method |
| C. | Present value method |
| D. | Discounted cash flow method |
| Answer» B. Interest rate method | |
| 35. |
_ Portfolios lying on the upper right portion of the efficient frontier are likely to be chosen by_______________.$? |
| A. | aggressive investors |
| B. | conservative investors |
| C. | risk-averse investors |
| D. | defensive investors |
| Answer» B. conservative investors | |
| 36. |
_ A higher accounts receivable turnover ratio means__________.$? |
| A. | lower debt collection period |
| B. | higher debt collection period |
| C. | lower sales |
| D. | higher sales |
| Answer» C. lower sales | |
| 37. |
_ ______________ is the distribution of the profits of a company among its shareholders.$? |
| A. | Shares |
| B. | Interest |
| C. | Dividend |
| D. | Commission |
| Answer» D. Commission | |
| 38. |
_ The value of a derivative security _______.$? |
| A. | depends on the value of the related primitive security |
| B. | can only cause increased risk |
| C. | is unrelated to the value of the related primitive security |
| D. | is worthless today |
| Answer» B. can only cause increased risk | |
| 39. |
_ The highest level of market efficiency is_____________.$? |
| A. | weak form efficiency |
| B. | semi-strong form efficiency |
| C. | random walk efficiency |
| D. | strong form efficiency |
| Answer» E. | |
| 40. |
_ One way to obtain earnings forecasts is the mechanical procedure known as___________.$? |
| A. | cross-reference analysis |
| B. | exponential trending |
| C. | time series analysis |
| D. | data mining |
| Answer» D. data mining | |
| 41. |
_ Risk lover's utility curves have __________.$? |
| A. | Positive slope |
| B. | Negative slope |
| C. | Convex to the origin |
| D. | Negative slope and convex to the origin |
| Answer» D. Negative slope and convex to the origin | |
| 42. |
_ The difference between the cash price and the futures price on the same asset or commodity is known as the________________.$? |
| A. | basis |
| B. | spread |
| C. | yield spread |
| D. | premium |
| Answer» B. spread | |
| 43. |
_ Earnings Per Share (EPS) is equal to __________.$? |
| A. | Profit before tax/No of outstanding shares |
| B. | Profit after tax/No of outstanding shares |
| C. | Profit after tax/Amount of equity share capital |
| D. | Profit after tax less equity dividends/No of outstanding shares |
| Answer» C. Profit after tax/Amount of equity share capital | |
| 44. |
_ Future value of annuity FVA(ordinary) is, if deposited value is Rs 100 and earn 5% every year of total three years will be$? |
| A. | Rs 315.25 |
| B. | Rs 331.01 |
| C. | Rs 99.49 |
| D. | Rs 318.25 |
| Answer» B. Rs 331.01 | |
| 45. |
_ Claim against assets are represented by$? |
| A. | saved earning |
| B. | retained earnings |
| C. | maintained earnings |
| D. | saving account earning |
| Answer» C. maintained earnings | |
| 46. |
_ Net worth is also called$? |
| A. | asset net of liabilities |
| B. | liabilities net of assets |
| C. | earnings net on assets |
| D. | liabilities net of earnings |
| Answer» B. liabilities net of assets | |
| 47. |
_ Periodic rate if it is multiplied with per year number of compounding periods is called$? |
| A. | extrinsic rate of return |
| B. | intrinsic rate of return |
| C. | annual rate of return |
| D. | nominal annual rate |
| Answer» E. | |
| 48. |
_ Paid dividends to common stockholders Rs 67,600,000 and common shares outstanding 55,000,000 then dividend per share will be$? |
| A. | Rs 1.23 |
| B. | Rs 0.81 |
| C. | Rs 2.12 |
| D. | Rs 2.78 |
| Answer» B. Rs 0.81 | |
| 49. |
_ An earning before interest, taxes, depreciation and amortization are calculated by$? |
| A. | subtracting operating cost from net sales |
| B. | subtracting net sales from operating costs |
| C. | adding operating cost and net sales |
| D. | adding interest and taxes |
| Answer» B. subtracting net sales from operating costs | |
| 50. |
_ rate which is divided by compounding periods to calculate periodic rate must be$? |
| A. | annuity return |
| B. | deferred annuity return |
| C. | nominal rate |
| D. | semi-annual discount rate |
| Answer» D. semi-annual discount rate | |