Top 350+ Solved Investment Management MCQ Questions Answer
Q. “The yield curve will be downward sloping if the market believes that future short-term interest rates will be less than current short-term interest rate.” This statement about the term structure of interest rates is most consistent with the:
a. forward rate hypothesis.
b. market segmentations hypothesis.
c. liquidity preference hypothesis.
d. unbiased expectations hypothesis
Q. Which of the following is another name for an unsecured bond?
a. Obligation trust bond
b. Junk bond.
c. Speculative bond.
d. Debenture.
Q. Which of the following would cause a bond’s required return to increase?
a. Bond is convertible.
b. Rating changes from B to B
c. Dividend restrictions.
d. Call provision.
Q. Which of the following causes a lower required return on a bond?
a. The bond is callable.
b. The bond is convertible.
c. The bond’s rating changes from AA to A.
d. Both the first and third option.
Q. Which of the following causes a lower required return on a bond?
a. Dividend restrictions are placed on the company.
b. The bond is subordinated to other debt.
c. The bond has no collateral.
d. Both the first and second option.
Q. 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.
Q. Bonds rated double A and higher are called:
a. speculative grade bonds.
b. supreme bonds.
c. high-grade bonds.
d. investment grade bonds.
Q. 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
Q. 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.
Q. __________ was the grandfather of technical analysis.
a. Harry Markowitz
b. William Sharpe
c. Charles Dow
d. Benjamin Graham
Q. 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.
Q. A long-term movement of prices, lasting from several months to years is called _______.
a. a minor trend
b. a primary trend
c. an intermediate trend
d. trend analysis
Q. 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
Q. 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
Q. If security prices exhibits semi-strong form of efficiency, one will not gain if he
a. Depicts the prices in the form of charts to identify pattern which will beat the market.
b. Buys stock of a company which has declared a bonus issue or has gone for a stock split
c. Refers to insiders’ advice
d. Both (a) and (b) above.