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.
| 151. |
The daily high price is represented on a candlestick chart by the: |
| A. | channel. |
| B. | trendline. |
| C. | shadow. |
| D. | real body. |
| Answer» D. real body. | |
| 152. |
According to security market line, the expected return of any security is a function of: |
| A. | diversifiable risk. |
| B. | total risk. |
| C. | systematic risk. |
| D. | unsystematic risk. |
| Answer» D. unsystematic risk. | |
| 153. |
An efficient market does not require that: |
| A. | stock prices incorporate all information. |
| B. | all known information be reflected in prices. |
| C. | the adjustments occur very quickly. |
| D. | each adjustment be perfect. |
| Answer» E. | |
| 154. |
What is a call? |
| A. | An option to sell stock at a specified price |
| B. | An option to buy stock at a specified price |
| C. | An option to sell stock on a specified date |
| D. | An option to buy stock on a specified date |
| Answer» C. An option to sell stock on a specified date | |
| 155. |
On the day following big "up days," the DJIA tends to: |
| A. | rise substantially. |
| B. | fall precipitously. |
| C. | rise moderately. |
| D. | none of the above. |
| Answer» E. | |
| 156. |
Primarily Inflation gives rise to |
| A. | Market risk |
| B. | Purchasing power risk |
| C. | Business risk |
| D. | Financial risk |
| Answer» C. Business risk | |
| 157. |
Analysts may use regression analysis to estimate the index model for a stock. When doing so,the slope of the regression line is an estimate of ______________. |
| A. | the α of the asset |
| B. | the β of the asset |
| C. | the σ of the asset |
| D. | the δ of the asset |
| Answer» C. the σ of the asset | |
| 158. |
Which of the following examples involves objective probabilities? |
| A. | Common stock rates of return. |
| B. | Coin-flipping experiment. |
| C. | Bond rates of return. |
| D. | Both the first and second answer. |
| Answer» C. Bond rates of return. | |
| 159. |
The holding period to qualify for a long-term capital gains is |
| A. | At least 6 months |
| B. | At least 12 months |
| C. | At least 18 months |
| D. | At most 18 months |
| Answer» C. At least 18 months | |
| 160. |
Graphical presentation of CAPM is known as |
| A. | Capital asset line |
| B. | Pricing line |
| C. | Assets pricing line |
| D. | Security market line |
| Answer» E. | |
| 161. |
Which statement is not true regarding the market portfolio? |
| A. | It includes all publicly traded financial assets. |
| B. | It lies on the efficient frontier. |
| C. | All securities in the market portfolio are held in proportion to their market values. |
| D. | It is the tangency point between the capital market line and the indifference curve. |
| Answer» E. | |
| 162. |
Which of the following is a measure of the dispersion of returns around the mean? |
| A. | Variance. |
| B. | Risk premium. |
| C. | Correlation. |
| D. | Expected return. |
| Answer» B. Risk premium. | |
| 163. |
If an asset’s expected return plots above the security market line, the asset is: |
| A. | fairly priced (if it has an unusually large amount of unique risk). |
| B. | under priced. |
| C. | overpric |
| Answer» C. overpric | |
| 164. |
____________ can be used to measure forecast quality and guide in the proper adjustment of forecasts. |
| A. | Regression analysis |
| B. | Exponential smoothing |
| C. | ARIMA |
| D. | Moving average models |
| Answer» B. Exponential smoothing | |
| 165. |
Higher bond prices generally signal expectations of |
| A. | Higher inflation |
| B. | Lower inflation |
| C. | Rising stock prices |
| D. | Higher risk premiums |
| Answer» C. Rising stock prices | |
| 166. |
An Investor can form a portfolio that lies to the right of the optimal risky portfolio on asset allocation line byI. Lend some money at the risk free rate and invest the remainder in the optimal risky portfolio. II. Borrow some money at the risk free rate and invest in the optimal risky portfolio III. Such a portfolio cannot be formed IV. Invest only in risky assets |
| A. | Only (I) above |
| B. | Only (II) above |
| C. | Only (III) above |
| D. | Only (IV) above |
| Answer» C. Only (III) above | |
| 167. |
The beta of an active portfolio is 1.20. The standard deviation of the returns on the market index is 20%. The nonsystematic variance of the active portfolio is 1%. The standard deviation of the returns on the active portfolio is __________. |
| A. | 3.84% |
| B. | 5.84% |
| C. | 19.60% |
| D. | 26.0% |
| Answer» E. | |
| 168. |
Which of the following is not a characteristic of a risk averter? |
| A. | A risk averter will not buy lottery tickets because the expected payoffs are less than the cost of the tickets. |
| B. | A risk averter will be ready to pay a higher price for an asset whose variance increases. |
| C. | A risk averter always prefers a certain investment over an uncertain investment if the expected returns on the two investments are identical. |
| D. | To be induced to take risk, a risk averter must be offered a risk premium. |
| Answer» C. A risk averter always prefers a certain investment over an uncertain investment if the expected returns on the two investments are identical. | |
| 169. |
Which of the following statements is false about the Security Market Lines (SML)? |
| A. | SML represents normal trade-off between return and risk |
| B. | The vertical distance of the security‘s plot on the graph from the SML is called the security‘s alpha |
| C. | SML is same as the characteristic line for any security |
| D. | Ex-post SMLs are used to evaluate the performance of portfolio managers |
| Answer» D. Ex-post SMLs are used to evaluate the performance of portfolio managers | |
| 170. |
A ________ provides an account of the total revenue generated by a firm during a period (usually a financial year, or a quarter) |
| A. | Accounting analysis statement |
| B. | financial re-engineering statement |
| C. | promotional expenses statement |
| D. | profit& loss statement |
| Answer» E. | |
| 171. |
Information about return on an investment is as follows: (a) Risk free rate 10% (b) Market Return is 15% (c) Beta is 1.2 What would be the return from this investment? |
| A. | 12% |
| B. | 14% |
| C. | 16% |
| D. | 18% |
| Answer» D. 18% | |
| 172. |
What is the art of technical analysis? |
| A. | To identify trend changes at an early stage and maintain investment posture till the trend has reversed |
| B. | To know the type of security to invest in. |
| C. | To know the under and over priced shares. |
| D. | None of the above |
| Answer» B. To know the type of security to invest in. | |
| 173. |
The "normal" range of price-earnings ratios for the S&P500 Index is |
| A. | between 2 and 10. |
| B. | between 5 and 15. |
| C. | less than 8. |
| D. | between 12 and 25 |
| Answer» E. | |
| 174. |
Price movement between two Steel company stocks would generally have a ______ co- variance |
| A. | Positive |
| B. | Negative |
| C. | Zero |
| D. | all |
| Answer» B. Negative | |
| 175. |
Program trading decreases market efficiency by exaggerating price discrepancies between the cash and futures markets |
| A. | True |
| B. | False |
| C. | all |
| D. | none |
| Answer» E. | |
| 176. |
What are the components in determining the real rate of return? |
| A. | The risk premium |
| B. | The inflation factor |
| C. | The required rate of return |
| D. | Neither a) nor b) |
| Answer» E. | |
| 177. |
Investment in a mutual fund results in |
| A. | An indirect equity claim |
| B. | A direct equity claim |
| C. | A creditor claim |
| D. | None of the above. |
| Answer» B. A direct equity claim | |
| 178. |
A call is an option to |
| A. | Sell stock at a specified price |
| B. | Buy stock at a specified price |
| C. | Sell stock on a specified date |
| D. | Buy stock on a specified date |
| Answer» C. Sell stock on a specified date | |
| 179. |
If you believe in the _________ form of the EMH, you believe that stock prices reflect all available information, including information that is available only to insiders. |
| A. | semistrong |
| B. | strong |
| C. | weak |
| D. | semistrong, strong, and weak |
| Answer» C. weak | |
| 180. |
Expected value is the: |
| A. | Inverse of the standard deviation |
| B. | Correlation between security’s risk and return |
| C. | Weighted average of all possible outcomes |
| D. | Same as the discrete probability distribution |
| Answer» D. Same as the discrete probability distribution | |
| 181. |
___________ is a function of the operating conditions faced by a firm and the variability these conditions inject into operating income and expected dividends. |
| A. | Market risk |
| B. | Business risk |
| C. | Interest rate risk |
| D. | Systematic risk |
| Answer» E. | |
| 182. |
Alpha is: |
| A. | the intercept of the SML line. |
| B. | the intercept of the CML line. |
| C. | the actual excess return on a portfolio during one peri |
| Answer» C. the actual excess return on a portfolio during one peri | |
| 183. |
Future on fixed Income securities are known as |
| A. | Stock Index futures |
| B. | Interest rate futures |
| C. | Mutual fund futures |
| D. | Stock market futures |
| Answer» E. | |
| 184. |
__________ refers to capitalize on downward movement in stock prices. |
| A. | Long selling |
| B. | small selling |
| C. | Large selling |
| D. | Short selling |
| Answer» E. | |
| 185. |
Which of the following is a sentiment indicator? |
| A. | Odd-lot trading. |
| B. | Advance-decline line. |
| C. | Trendline. |
| D. | Relative strength ratio. |
| Answer» B. Advance-decline line. | |
| 186. |
The risk-free rate and the expected market rate of return are 0.056 and 0.125, respectively. According to the capital asset pricing model (CAPM), the expected rate of return on a security with a beta of 1.25 is equal to |
| A. | 0.142 |
| B. | 0.144. |
| C. | 0.153. |
| D. | 0.134 |
| Answer» B. 0.144. | |
| 187. |
Inferior investment alternatives are identified when: |
| A. | α < 0. |
| B. | β = 0. |
| C. | β > 1. |
| D. | β < 1. |
| Answer» D. β < 1. | |
| 188. |
According to the Efficient Market Hypothesis (EMH)I. Stocks with smaller beta will be consistently overpriced. II. Stocks with higher beta will be consistently underpriced. III. Positive alphas on stocks will not remain for a longer period. |
| A. | Only (I) above |
| B. | Only (III) above |
| C. | Both (I) and (II) above |
| D. | Both (II) and (III) above |
| Answer» C. Both (I) and (II) above | |
| 189. |
Price movement between two Information Technology stocks would generally have a ______ co-variance. |
| A. | zero |
| B. | positive |
| C. | negative |
| D. | none |
| Answer» E. | |
| 190. |
According to the Capital Asset Pricing Model (CAPM), the expected rate of return on any security is equal to |
| A. | Rf + β [E(RM)]. |
| B. | Rf + β [E(RM) - Rf]. |
| C. | β [E(RM) - Rf]. |
| D. | E(RM) + Rf. |
| Answer» C. β [E(RM) - Rf]. | |
| 191. |
Markowitz's main contribution to portfolio theory is |
| A. | That risk is the same for each type of financial asset |
| B. | That risk is a function of credit, liquidity and market Factors |
| C. | Risk is not quantifiable |
| D. | Insight about the relative importance of variances and co variances in determining portfolio risk |
| Answer» C. Risk is not quantifiable | |
| 192. |
Conventional theories presume that investors ____________ and behavioral finance presumes that they ____________. |
| A. | are irrational; are irrational |
| B. | are rational; may not be rational |
| C. | are rational; are rational |
| D. | may not be rational; may not be rational |
| Answer» C. are rational; are rational | |
| 193. |
Which of the following statements regarding portfolio revisions is/are incorrect? |
| A. | For effective implementation of constant Dollar value plan, it is necessary to estimate the possibility and extent of downward fluctuation of the aggressive portfolio |
| B. | Constant ratio plan becomes less aggressive in sales when the stock price rise |
| C. | During a sustained rise or fall of stock prices the constant ratio plan gives higher profit than other two formula plans. |
| D. | Variable ratio plan stock portfolio becomes more aggressive when stock prices rise and vice versa. |
| Answer» E. | |
| 194. |
________ ratio is the ratio of net profit to the sales. |
| A. | Net Profit |
| B. | Gross profit |
| C. | Operating profit |
| D. | Expense |
| Answer» B. Gross profit | |
| 195. |
A(n) _____ is a legally documented claim on an asset, while a _____ is an actual, tangible asset which may be seen, felt, held, or collected. |
| A. | Real asset; financial asset |
| B. | Financial asset; real asset |
| C. | Indirect equity claim; direct equity claim |
| D. | Direct equity claim; indirect equity claim |
| Answer» C. Indirect equity claim; direct equity claim | |
| 196. |
What should be the investment decision When CAPM < Expected Return ? |
| A. | Hold |
| B. | Buy |
| C. | Sell |
| D. | Sale later |
| Answer» C. Sell | |
| 197. |
Underlying all investments is the tradeoff between |
| A. | Expected return and actual return |
| B. | Low risk and high risk |
| C. | Actual return and high risk |
| D. | Expected return and risk. |
| Answer» B. Low risk and high risk | |
| 198. |
One of the assumptions of the CAPM is that investors exhibit myopic behavior. What does this mean? |
| A. | They plan for one identical holding period. |
| B. | They are price-takers who can't affect market prices through their trades. |
| C. | They are mean-variance optimizers. |
| D. | They have the same economic view of the world. |
| Answer» B. They are price-takers who can't affect market prices through their trades. | |
| 199. |
Which of the following accounting statements form the backbone of financial analysis of a company? |
| A. | The income statement (profit & loss), |
| B. | The balance sheet |
| C. | Statement of cash flows |
| D. | All of the above |
| Answer» E. | |
| 200. |
Prices of stocks usually move in trends. |
| A. | False |
| B. | True |
| C. | none |
| D. | all |
| Answer» C. none | |