Top 350+ Solved Security Analysis and Investment Management MCQ Questions Answer
Q. 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
Q. 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
Q. The market price of a bond depends on the
a. coupon rate, and terms of the indenture
b. coupon rate, and maturity date
c. terms of the indenture, and maturity date
d. coupon rate, terms of the indenture, and maturity date
Q. 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
Q. If interest rates rise, the price of preferred stock
a. is not affected
b. rises
c. falls
d. may rise or fall
Q. Municipal government debt
a. pays more interest than corporate debt
b. is often purchased by individuals with high incomes
c. is exempt from estate taxation
d. is not subject to interest rate risk
Q. The use of financial leverage by a firm may be measured by the
a. ratio of debt to total assets
b. firm’s beta coefficient
c. firm’s retention of earnings
d. ratio of the price of the firm’s stock price to its earnings
Q. As the debt ratio increases,
a. Fewer assets are debt-financed, and the ratio of debt-to-equity increases
b. Fewer assets are debt-financed, and the ratio of debt-to-equity decreases
c. More assets are debt-financed, and the ratio of debt-to-equity increases
d. More assets are debt-financed, and the ratio of debt-to-equity decreases
Q. The net asset value of a mutual fund investing in stock rises with
a. Higher stock prices
b. Lower equity values
c. An increased number of shares
d. Increased liabilities
Q. Which of the following helps determine the relationship between the expected return and risk for individual securities?
a. Security market line
b. Capital market line
c. Markowitz model
d. (a) and (b)
Q. 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
Q. You own a large orange grove and will be harvesting from November through April. To hedge against price risks you should
a. sell orange juice contracts with a November delivery
b. buy orange juice contracts with a November delivery
c. sell orange juice contracts with delivery dates between November and April
d. buy orange juice contracts with delivery dates between November and April
Q. Financial leverage may increase a corporation’s risk because
a. operating income may stabilize
b. the firm has fixed obligations to meet
c. more common stock is outstanding
d. dividends must be paid
Q. What is the value of a call on the expiration date, if on that date the price of the stock is Rs.25 and the exercise price is Rs.26?
a. Rs.-1
b. Rs 0
c. Rs 1
d. Rs 25