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MCQOPTIONS
This section includes 2331 Mcqs, each offering curated multiple-choice questions to sharpen your UGC-NET knowledge and support exam preparation. Choose a topic below to get started.
| 1051. |
Equity does NOT include |
| A. | Cash and paid-in capital |
| B. | Common stock and paid-in capital |
| C. | Paid-in capital and retained earnings |
| D. | Common stock, paid-in capital and retained earnings |
| Answer» B. Common stock and paid-in capital | |
| 1052. |
While bond prices fluctuate, |
| A. | Yields are constant |
| B. | Coupons are constant |
| C. | The spread between yields is constant |
| D. | Short-term bond prices fluctuate even more |
| Answer» C. The spread between yields is constant | |
| 1053. |
You want to earn a return of 10% on each of two stocks, A and B. Each of the stocks is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of dividends is 6% for stock A and 5% for stock B. Using the constant-growth DDM, the intrinsic value of stockA _________. |
| A. | will be higher than the intrinsic value of stock B |
| B. | will be the same as the intrinsic value of stock B |
| C. | will be less than the intrinsic value of stock B |
| D. | The answer cannot be determined from the information given. |
| Answer» B. will be the same as the intrinsic value of stock B | |
| 1054. |
Which of the following provides income that is fully exempt from taxation for the individual investor? |
| A. | Preferred stocks. |
| B. | Municipal bonds. |
| C. | Treasury bills. |
| D. | Treasury notes. |
| Answer» C. Treasury bills. | |
| 1055. |
You are considering acquiring a common share of Sahali Shopping Center Corporation that you would like to hold for 1 year. You expect to receive both $1.25 in dividends and $35 from the sale of the share at the end of the year. The maximum price you would pay for a share today is __________ if you wanted to earn a 12% return. |
| A. | $31.25 |
| B. | $32.37 |
| C. | $38.47 |
| D. | $41.32 |
| Answer» C. $38.47 | |
| 1056. |
Which of the following statements is false with respect to different features of an efficient market? |
| A. | Information arbitrage efficiency is said to exist, if the participants do not have any scope to reap abnormal profits using information that is of common knowledge |
| B. | Fundamental valuation efficiency is said to exist, if the price of an asset is neither undervalued nor overvalued |
| C. | Full insurance efficiency is said to exist, if participants can adopt hedging as an effective tool against possible risk in future |
| D. | Allocation efficiency is said to exist, if the market channelizes resources into projects where the marginal efficiency of capital adjusted for risk differences is lowest |
| Answer» E. | |
| 1057. |
A ____________________ represents part ownership in a public firm. |
| A. | cumulative preferred stock |
| B. | preference share |
| C. | call option |
| D. | common stock |
| Answer» E. | |
| 1058. |
Buying low and selling high, making a large capital gain is associated with ________ |
| A. | Investment |
| B. | Speculation |
| C. | Gambling |
| D. | Arbitrage |
| Answer» C. Gambling | |
| 1059. |
Weak form market efficiency |
| A. | implies that the expected return on any security is zero. |
| B. | incorporates semi-strong form efficiency. |
| C. | involves price and volume information. |
| D. | is compatible with technical analysis |
| Answer» D. is compatible with technical analysis | |
| 1060. |
The risk-free security has a beta equal to , while the market portfolio's beta is equal to |
| A. | one; more than one. |
| B. | one; less than one. |
| C. | zero; one. |
| D. | less than zero; more than zero. |
| Answer» D. less than zero; more than zero. | |
| 1061. |
The goal of the Dow theory is to |
| A. | identify head and shoulder patterns. |
| B. | identify breakaway points. |
| C. | identify resistance levels. |
| D. | identify long-term trends. |
| Answer» E. | |
| 1062. |
An "aggressive" common stock would have a "beta" |
| A. | equal to zero. |
| B. | greater than one. |
| C. | equal to one. |
| D. | less than one. |
| Answer» C. equal to one. | |
| 1063. |
Choosing stocks by searching for predictable patterns in stock prices is called ________. |
| A. | Fundamental Analysis |
| B. | Technical Analysis |
| C. | Index Management |
| D. | Random Walk Investment |
| Answer» C. Index Management | |
| 1064. |
If the market is _______, the period after a favorable (unfavorable) event would not generate returns beyond (less than) what is suggested by an equilibrium model such as CAPM |
| A. | Semi strong form efficiency |
| B. | Weak-form efficiency |
| C. | Strong form efficiency |
| D. | none |
| Answer» B. Weak-form efficiency | |
| 1065. |
Exposure indicates |
| A. | Sensitivity to changes in risk |
| B. | Sensitivity to changes in asset prices |
| C. | Sensitivity to changes in portfolio |
| D. | Sensitivity to changes in assets |
| Answer» E. | |
| 1066. |
The price of a T-bill today is $97 and its maturity value is $100. The maturity is 6 months from now. |
| A. | The dollar return to the investor would be $1 if held to maturity |
| B. | The investor cannot lose money, but its earnings are not known before the maturity date |
| C. | The dollar return to the investor would be $3 if the T-bill is held to maturity |
| D. | The investor can lose money on these T-bills if held to maturity |
| Answer» D. The investor can lose money on these T-bills if held to maturity | |
| 1067. |
Which of the following securities have potentially the highest risk level, and also have the highest potential return? |
| A. | Commercial paper |
| B. | Bonds |
| C. | Preferred stocks |
| D. | Derivative securities |
| Answer» E. | |
| 1068. |
Variance calculation and measuring the Standard deviation is one way of measuring the______ |
| A. | Risk |
| B. | Return |
| C. | Speculation |
| D. | Gambling |
| Answer» B. Return | |
| 1069. |
Which of the following might be found in a bond indenture? |
| A. | A dividend restriction clause. |
| B. | A subordination clause. |
| C. | A sinking fund clause. |
| D. | All of the above. |
| Answer» E. | |
| 1070. |
Lara wants to buy a bond and hold it until it matures. Which of the following must occur if Lara is to realize a holding period return equal to the bond’s yield to maturity? |
| A. | She must reinvest all coupons to earn the yield to maturity. |
| B. | The issuer must not call the bond away early. |
| C. | The issuer must make all payments in full and on schedule. |
| D. | All of the above must occur. |
| Answer» E. | |
| 1071. |
The accounting measure of a firm's equity value generated by applying accounting principlesto asset and liability acquisitions is called ________. |
| A. | Book Value |
| B. | Market value |
| C. | Liquidation Value |
| D. | Tobins q |
| Answer» B. Market value | |
| 1072. |
The annual coupon of a bond divided by its face value is called the bond: |
| A. | Coupon |
| B. | Face value. |
| Answer» F. | |
| 1073. |
___ is the market which helps existing investors to sell their securities. |
| A. | Primary market |
| B. | Secondary market |
| C. | Capital market |
| D. | Commodity market |
| Answer» C. Capital market | |
| 1074. |
In a variable growth model, the dividend is believed to grow at a constant pace forever after an initial growth period. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» B. False | |
| 1075. |
What are the features of line charts? |
| A. | It connects closing prices from one period to the next |
| B. | It connects low prices from one period to the next |
| C. | It connects high prices from one period to the next |
| D. | None of the above |
| Answer» B. It connects low prices from one period to the next | |
| 1076. |
The need to have an understanding about the ability of themarket to imbibe information into the prices has led to countless attempts to study and characterize the levels of efficiency of different segments of the financial markets. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» B. False | |
| 1077. |
The price-to-sales ratio is probably most useful for firms in which phase of the industry lifecycle?. |
| A. | Start-up phase |
| B. | Consolidation |
| C. | Maturity |
| D. | Relative decline |
| Answer» B. Consolidation | |
| 1078. |
Fundamental analysis focuses on predicting the future price of a security and Technical analysis on estimating the intrinsic value of a security. |
| A. | False |
| B. | True |
| C. | none |
| D. | all |
| Answer» B. True | |
| 1079. |
A liquid asset may |
| A. | Be converted into cash |
| B. | Be converted into cash with little chance of loss |
| C. | Not be converted into cash |
| D. | Not be converted without loss |
| Answer» C. Not be converted into cash | |
| 1080. |
Market price breaking through the moving average from below is a ……indicator. |
| A. | Bullish |
| B. | Bearish |
| C. | Flat |
| D. | None of the above |
| Answer» B. Bearish | |
| 1081. |
Which of the following would cause a bond’s required return to increase? |
| A. | Bond is convertible. |
| B. | Rating changes from B to BB. |
| C. | Dividend restrictions. |
| D. | Call provision. |
| Answer» E. | |
| 1082. |
If a firm increases its plowback ratio, this will probably result in _______ P/E ratio. |
| A. | Higher |
| B. | Lower |
| C. | Unchanged |
| D. | Can’t be determined |
| Answer» E. | |
| 1083. |
__________ would mean that no investor would be able to outperform the market with trading strategies based on publicly available information. |
| A. | Semi strong form efficiency |
| B. | Weak-form efficiency |
| C. | Strong form efficiency |
| D. | none |
| Answer» B. Weak-form efficiency | |
| 1084. |
What is Bottom-Up approach also known as? |
| A. | Company-industry-economy approach |
| B. | Economy -industry-Company approach |
| C. | Industry-economy-Company approach |
| D. | Company -economy-industry approach |
| Answer» B. Economy -industry-Company approach | |
| 1085. |
The feasibility of converting an asset quickly and without significantly affecting its price is called: |
| A. | divisibility |
| B. | marketability |
| C. | liquidity |
| D. | low risk |
| Answer» C. liquidity | |
| 1086. |
If you believe in the __________ form of the EMH, you believe that stock prices reflect all publicly available information but not information that is available only to insiders. |
| A. | Semi strong |
| B. | Strong |
| C. | Weak |
| D. | Perfect |
| Answer» B. Strong | |
| 1087. |
In the stock-price beta estimation for the Coca-Cola Company, the dependent variable isthe: |
| A. | Return on Coca-Cola. |
| B. | Price of Coca-Cola stock. |
| C. | Return on the S&P 500. |
| D. | Value of the S&P 500 Index. |
| Answer» E. | |
| 1088. |
An example of a depreciable asset is |
| A. | Land |
| B. | Cash |
| C. | Accounts receivable |
| D. | Equipment |
| Answer» E. | |
| 1089. |
For a bond YTM is always equal to coupon rate. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» C. none | |
| 1090. |
A negatively sloped yield curve suggests that |
| A. | Short-term rates exceed long-term rates, and the Federal Reserve is following a tight monetary policy |
| B. | Short-term rates exceed long-term rates, and the Federal Reserve is following an easy monetary policy |
| C. | Long-term rates exceed short-term rates, and the Federal Reserve is following a tight monetary policy |
| D. | Long-term rates exceed short-term rates, and the Federal Reserve is following an easy monetary policy |
| Answer» B. Short-term rates exceed long-term rates, and the Federal Reserve is following an easy monetary policy | |
| 1091. |
A statistical measure of the degree to which two variables (e.g., securities' returns) move together. |
| A. | coefficient of variation |
| B. | variance |
| C. | covariance |
| D. | certainty equivalent |
| Answer» D. certainty equivalent | |
| 1092. |
Bill, Jim, and Shelly are all interested in buying the same stock that pays dividends. Bill plans on holding the stock for 1 year. Jim plans on holding the stock for 3 years. Shelly plans on holding the stock until she retires in 10years. Which one of the following statements is correct? |
| A. | Bill will be willing to pay the most for the stock because he will get his money back in 1 year when he sells. |
| B. | Shelly should be willing to pay the most for the stock because she will hold it the longest and hence will get the most dividends. |
| C. | All three should be willing to pay the same amount for the stock regardless of their holding period. |
| D. | None of these |
| Answer» D. None of these | |
| 1093. |
Which of the following is not a characteristic of an exchange? |
| A. | It provides liquidity to individuals who acquire securities in the primary market. |
| B. | It requires one to be a member in order to be allowed to trade. |
| C. | Stocks traded on an exchange must meet minimum listing requirements. |
| D. | It allows exchange-listed issues to trade off the exchange floor with the aid of brokers. |
| Answer» E. | |
| 1094. |
An efficient market is defined as one in which |
| A. | all participants have the same opportunity to make the make the same returns. |
| B. | all participants have the same legal rights and transactions costs. |
| C. | securities’ prices quickly and fully reflect all available information. |
| D. | securities’ prices are completely in line with the intrinsic value. |
| Answer» D. securities’ prices are completely in line with the intrinsic value. | |
| 1095. |
Two popular moving average periods are |
| A. | 90-day and 52 week |
| B. | 180-day and three year |
| C. | 180-day two year |
| D. | 200-day and 53 week |
| Answer» E. | |
| 1096. |
Which of the following is not a part of the candlestick chart? |
| A. | Opening price. |
| B. | Shadows. |
| Answer» F. | |
| 1097. |
The random walk hypothesis is most related to the: |
| A. | weak-form EMH |
| B. | semistrong-form EMH |
| C. | semiweak-form EMH |
| D. | strong-form EMH |
| Answer» B. semistrong-form EMH | |
| 1098. |
Which of the following is not part of the bar chart? |
| A. | Opening price. |
| B. | Closing price. |
| C. | High price. |
| D. | Low price. |
| Answer» B. Closing price. | |
| 1099. |
Studies of stock price reactions to news are called |
| A. | reaction studies. |
| B. | event studies. |
| C. | drift studies. |
| D. | both reaction studies and drift studies. |
| Answer» C. drift studies. | |
| 1100. |
A top down analysis of a firm starts with ____________. |
| A. | the relative value of the firm |
| B. | the absolute value of the firm |
| C. | the domestic economy |
| D. | the global economy |
| Answer» E. | |