MCQOPTIONS
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MCQOPTIONS
This section includes 411 Mcqs, each offering curated multiple-choice questions to sharpen your Operating System knowledge and support exam preparation. Choose a topic below to get started.
| 251. |
Which of the following is not a form of a financial asset? |
| A. | Commercial paper |
| B. | Commodity futures |
| C. | Warrants |
| D. | Personal residence |
| Answer» D. Personal residence | |
| 252. |
Markets are inefficient when prices of securities assimilate and reflect information about them. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» C. none | |
| 253. |
The market risk premium is 15% and the risk-free rate is 5%. The beta of Asset D is 0.2. What is Asset D’s expected return under the CAPM? |
| A. | 8% |
| B. | 20% |
| C. | 7% |
| D. | 30% |
| Answer» B. 20% | |
| 254. |
Which amongst the following is not included in the Phases of Portfolio Management? |
| A. | Security Analysis |
| B. | Capital Market theory |
| C. | Portfolio analysis |
| D. | Portfolio selection |
| Answer» C. Portfolio analysis | |
| 255. |
Benchmark portfolio risk is defined as |
| A. | the return difference between the portfolio and the benchmark |
| B. | the variance of the return of the benchmark portfolio |
| C. | the variance of the return difference between the portfolio and the benchmark |
| D. | the variance of the return of the actively-managed portfolio |
| Answer» D. the variance of the return of the actively-managed portfolio | |
| 256. |
characteristic line is associated with |
| A. | Standard deviation |
| B. | Beta |
| C. | Variance |
| D. | Portfolio |
| Answer» C. Variance | |
| 257. |
The one-period rate of return from a stock or bond which may or may not be realized canbe described by using the term |
| A. | Holding-period return. |
| B. | Yield. |
| C. | Random variable |
| D. | Market return |
| Answer» B. Yield. | |
| 258. |
The intercept calculated by Merrill Lynch in the regression equations is equal to |
| A. | α in the CAPM |
| B. | α + rf (1 + β) |
| C. | α + rf (1 - β) |
| D. | 1 - α |
| Answer» D. 1 - α | |
| 259. |
Which of the following patterns is the most reliable and widely used for indicating trend reversal? |
| A. | Stochastics |
| B. | Moving Averages |
| C. | Rectangles |
| D. | Head and Shoulders |
| Answer» E. | |
| 260. |
An efficient market reflects: |
| A. | past, current and inferred information. |
| B. | future information. |
| C. | past and current information. |
| D. | current and inferred information. |
| Answer» B. future information. | |
| 261. |
Who popularized the dividend discount model, which is sometimes referred to by his name? |
| A. | Myron Gordon |
| B. | Frederick Macaulay |
| C. | Harry Markowitz |
| D. | Marshall Blume |
| Answer» B. Frederick Macaulay | |
| 262. |
Which of the following is on the horizontal axis of the Security Market Line? |
| A. | Standard deviation |
| B. | Beta |
| C. | Expected return |
| D. | Required return |
| Answer» C. Expected return | |
| 263. |
If you were confident that the price of stock X would drop dramatically within two Months ,which of the following investment transactions would yield the highest return on your investment? |
| A. | Purchase stock X |
| B. | Sell stock X short |
| C. | Purchase a call on stock X |
| D. | Purchase a put on stock X |
| Answer» E. | |
| 264. |
The difference between a random walk and a submartingale is the expected price change in a random walk is ______ and the expected price change for a submartingale is ______. |
| A. | positive; zero |
| B. | positive; positive |
| C. | positive; negative |
| D. | zero; positive |
| Answer» E. | |
| 265. |
On which of the following does a hammer sometimes appear? |
| A. | Moving average chart. |
| B. | Point-and-figure chart. |
| C. | Candlestick chart. |
| D. | Bar chart. |
| Answer» D. Bar chart. | |
| 266. |
Capital asset pricing theory asserts that portfolio returns are best explained by: |
| A. | specific risk. |
| B. | systematic risk. |
| C. | economic factors. |
| D. | diversification. |
| Answer» C. economic factors. | |
| 267. |
What factors must be considered in choosing between investment alternatives? |
| A. | Risk and liquidity |
| B. | Interest or dividends vs. capital gains |
| C. | Time frame for managing funds and evaluating performance and tax effects |
| D. | Safety of principle |
| Answer» E. | |
| 268. |
The number of stocks hitting new 52-week highs is a(n): |
| A. | intermediate trend indicator. |
| B. | breadth indicator. |
| C. | sentiment indicator. |
| D. | primary trend indicator. |
| Answer» C. sentiment indicator. | |
| 269. |
Consider these two investment strategies: Strategy ___ is the dominant strategy because __________. |
| A. | 1, it is riskless |
| B. | 1, it has the highest reward/risk ratio |
| C. | 2, its return is at least equal to Strategy 1 and sometimes greater |
| D. | 2, it has the highest reward/risk ratio |
| Answer» C. 2, its return is at least equal to Strategy 1 and sometimes greater | |
| 270. |
Passive management is a process of holding a well diversified portfolio for |
| A. | Short term with buy and hold approach |
| B. | Long term with buy and hold approach |
| C. | Short term with buy and sell approach |
| D. | Long term with buy and sell approach |
| Answer» C. Short term with buy and sell approach | |
| 271. |
Which of the following terms represents an upper price limit for a stock, based on the quantity of willing sellers? |
| A. | Support. |
| B. | Channel. |
| C. | Trendline. |
| D. | Resistance. |
| Answer» E. | |
| 272. |
REITs stand for |
| A. | Real estate investment trades |
| B. | Real estate investing trades |
| C. | Real estate investment trusts |
| D. | Real estate investment trusts |
| Answer» D. Real estate investment trusts | |
| 273. |
Fund managers generally want which of following objectives to be optimal?I. Stability of principle. II. Income. III. Growth of income. IV. Capital appreciation. |
| A. | Both (I) and (II) above |
| B. | Both (I) and (III) above |
| C. | Both (II) and (III) above |
| D. | All (I), (II), (III) and (IV) above |
| Answer» E. | |
| 274. |
A hybrid strategy is one where the investor |
| A. | uses both fundamental and technical analysis to select stocks. |
| B. | selects the stocks of companies that specialize in alternative fuels. |
| C. | selects some actively-managed mutual funds on their own and uses an investment advisor to select other actively-managed funds. |
| D. | maintains a passive core and augments the position with an actively managed portfolio. |
| Answer» E. | |
| 275. |
Stock market value can deviate from its fundamental value because of strong: |
| A. | earnings news. |
| B. | investor mood. |
| C. | semi-strong form efficiency. |
| D. | data-snooping. |
| Answer» C. semi-strong form efficiency. | |
| 276. |
Arbitrage trading strategy implies that: |
| A. | profits are made by investing in riskless securities. |
| B. | large profits are made by undertaking high risk investments. |
| C. | profits are made with no risk and no investment. |
| D. | arbitrage opportunities will continue to exist in equilibrium. |
| Answer» D. arbitrage opportunities will continue to exist in equilibrium. | |
| 277. |
In a private limited company, the maximum number ofmembers are limited to: |
| A. | 20 |
| B. | 50 |
| C. | 100 |
| D. | 200 |
| Answer» C. 100 | |
| 278. |
Active portfolio managers try to construct a risky portfolio with __________. |
| A. | a higher Sharpe measure than a passive strategy |
| B. | a lower Sharpe measure than a passive strategy |
| C. | the same Sharpe measure as a passive strategy |
| D. | very few securities |
| Answer» B. a lower Sharpe measure than a passive strategy | |
| 279. |
If the future were known with certainty, which of the following statements would be wrong? |
| A. | There is no dependency with other assets. |
| B. | The risk premium is zero. |
| C. | The mean return equals the riskless interest rate. |
| D. | The variance is greater than zero. |
| Answer» E. | |
| 280. |
Investors who completely ignore an asset’s variance and only consider the asset’s expectedreturn are called: |
| A. | value-seeking investors. |
| B. | growth-oriented investors. |
| C. | risk-neutral investors. |
| D. | risk averters. |
| Answer» D. risk averters. | |
| 281. |
_____, because of increasing replacement value and scarcity, perform best in periods of high inflation. |
| A. | Real assets |
| B. | Common stock |
| C. | Preferred stock |
| D. | Financial assets |
| Answer» B. Common stock | |
| 282. |
If a firm's beta was calculated as 0.6 in a regression equation, Merrill Lynch would state the adjusted beta at a number |
| A. | Less than 0.6 but greater than zero. |
| B. | Between 0.6 and 1.0. |
| C. | Between 1.0 and 1.6. |
| D. | Greater than 1.6. |
| Answer» C. Between 1.0 and 1.6. | |
| 283. |
Which of the following investment areas is heavily tied to work using mathematical and statistical models? |
| A. | Security analysis |
| B. | Portfolio management |
| C. | Institutional investing |
| D. | Retirement planning. |
| Answer» B. Portfolio management | |
| 284. |
If you believe in the _______ form of the EMH, you believe that stock prices only reflect all information that can be derived by examining market trading data such as the history of past stock prices, trading volume or short interest. |
| A. | semistrong |
| B. | strong |
| C. | weak |
| D. | semistrong, strong, and weak |
| Answer» D. semistrong, strong, and weak | |
| 285. |
Which statement is not true regarding the Capital Market Line (CML)? |
| A. | The CML is the line from the risk-free rate through the market portfolio. |
| B. | The CML is the best attainable capital allocation line. |
| C. | The CML is also called the security market line. |
| D. | The CML always has a positive slope. |
| Answer» D. The CML always has a positive slope. | |
| 286. |
In the stock-price beta estimation for the Coca-Cola Company, the independent variable is the: |
| A. | value of the S&P 500 Index. |
| B. | return on the S&P 500. |
| C. | return on Coca-Cola. |
| D. | price of Coca-Cola stock. |
| Answer» E. | |
| 287. |
Which of the following assumptions is common between the pricing models of CAPM and APT? |
| A. | A single period investment horizon |
| B. | The investors can freely borrow and lend at risk-free rate |
| C. | The investors select portfolios based on expected mean and variance of return |
| D. | Investors have homogeneous expectations and are expected-utility-of-wealth maximizers. |
| Answer» E. | |
| 288. |
The "real", or inflation-adjusted, exchange rate, is |
| A. | the balance of trade. |
| B. | the budget deficit. |
| C. | the purchasing power ratio. |
| D. | unimportant to the U. S economy. |
| Answer» D. unimportant to the U. S economy. | |
| 289. |
Which of the following is not a form of real asset? |
| A. | Rare paintings |
| B. | Baseball cards |
| C. | Diamonds |
| D. | Real estate |
| Answer» C. Diamonds | |
| 290. |
Which of the following is not a part of systematic risk |
| A. | Economic changes |
| B. | Management capability |
| C. | Political changes |
| D. | Sociological changes |
| Answer» C. Political changes | |
| 291. |
Deposits in an IRA are |
| A. | Allowed to grow tax free until withdrawal |
| B. | Deducted from current income tax due |
| C. | Deducted from current income to reduce income tax due |
| D. | A and C |
| Answer» E. | |
| 292. |
Which type of chart includes daily high price, low price, opening price, and closing price? |
| A. | Bar chart. |
| B. | Candlestick chart. |
| C. | Point-and-figure chart. |
| D. | Moving average chart. |
| Answer» C. Point-and-figure chart. | |
| 293. |
Empirical results regarding betas estimated from historical data indicate that |
| A. | betas are constant over time. |
| B. | betas of all securities are always greater than one. |
| C. | betas are always near zero. |
| D. | betas appear to regress toward one over time. |
| Answer» E. | |
| 294. |
The market risk premium is the slope of: |
| A. | the efficient frontier. |
| B. | the capital market line. |
| C. | the security market line. |
| D. | the characteristic line. |
| Answer» D. the characteristic line. | |
| 295. |
The expected return is determined by: |
| A. | probabilities. |
| B. | rates of return on an asset. |
| C. | correlations. |
| D. | both a and b. |
| Answer» E. | |
| 296. |
When ranking the riskiness of securities using the standard deviation, the highest risk security to the lowest risk security is as follows: |
| A. | Small stocks, large stocks, long-term government bonds, U.S. treasury bills |
| B. | Long-term government bonds, small stocks, large stocks, U.S. treasury bills |
| C. | Large stocks, small stocks, long-term government bonds, U.S. treasury bills |
| D. | Small stocks, long-term government bonds, large stocks, U.S. treasury bills |
| Answer» B. Long-term government bonds, small stocks, large stocks, U.S. treasury bills | |
| 297. |
Market risk is also called: |
| A. | systematic risk and unique risk. |
| B. | nondiversifiable risk and systematic risk. |
| C. | unique risk and nondiversifiable risk. |
| D. | systematic risk and diversifiable risk. |
| Answer» C. unique risk and nondiversifiable risk. | |
| 298. |
According to the Capital Asset Pricing Model (CAPM), the expected return of a well- diversified portfolio with abeta of 1.0 and positive ex-ante alpha (a) is |
| A. | The risk-free rate, rf |
| B. | ß (rœ r)mf |
| C. | Between rand rmf |
| D. | r+ a |
| Answer» E. | |
| 299. |
An investment requires a total return that comprises |
| A. | A real rate of return and compensation for inflation |
| B. | A real rate of return, compensation for inflation, and a risk premium |
| C. | Compensation for inflation and a risk premium |
| D. | A real rate of return, compensation for inflation, a risk premium, and compensation for time and effort devoted to researching alternative investments |
| Answer» C. Compensation for inflation and a risk premium | |
| 300. |
If the current market price is considered as a basis of CAPM, then what would happen if Actual Market Price < CAPM, |
| A. | stock is undervalued |
| B. | stock is overvalued |
| C. | stock is correctly valued |
| D. | none |
| Answer» B. stock is overvalued | |