Top 350+ Solved Security Analysis and Investment Management MCQ Questions Answer
Q. _______ measures the percentage of net income not paid to the shareholders in the form of dividends.
a. Withholding ratio
b. Retention ratio
c. Preservation ratio
d. Maintenance ratio
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. Particulars Falcon International Triumph InternationalAverage Return (%) 10 8 Average Volatility (%) 12 15 For the portfolio to yield lower risk than the individual stocks, the correlation coefficient of stocks should be
a. Less than 1.25
b. Less than 0.85
c. Less than 0.80
d. More than 0.83
Q. Which of the following statements is/are true with respect to feasible set of portfolio?I. Feasible set is also known as opportunity set. II. It represents all the portfolios that could be formed from group of N securities. III. Feasible set is also called efficient set
a. Only (I) above
b. Only (II) above
c. Only (III) above
d. Both (I) and (II) above
Q. 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
Q. Which of the following is not one of the considerations in setting investment objectives?
a. Risk versus safety of principal
b. Maximize wealth versus minimize expenses
c. Current income versus capital appreciation
d. Short versus long-term orientation
Q. One of the reasons a short-term trader has difficulty in beating the market is because of
a. Risk
b. Lack of information
c. Large institutional investors
d. Commissions
Q. 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
Q. Common stock dividends are now taxed at a maximum rate of
a. 10 percent
b. 15 percent
c. 20 percent
d. 30 percent
Q. Higher bond prices generally signal expectations of
a. Higher inflation
b. Lower inflation
c. Rising stock prices
d. Higher risk premiums
Q. 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
Q. 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
Q. The investor of a high-yielding utility can expect
a. Slow growth in earnings
b. Slow growth in the stock price
c. Slow growth in the stock price with a fast growth in earnings
d. Both a and b
Q. Because most investors are risk averse
a. The riskier the investment, the more the investor will pay for it
b. The riskier the investment, the less compensation the investor requires
c. Only financial institutions invest in risky assets
d. They will require a higher rate of return for a riskier investment