Top 350+ Solved Security Analysis and Investment Management MCQ Questions Answer
Q. Fundamental analysis, does not concentrate on the fundamental factors affecting the company such as
a. the dividend pay-out ratio,
b. the competition faced by the company,
c. Price Charts and Patterns
d. the EPS of the company
Q. The fundamental analyst compares this intrinsic value (true worth of a security based on its fundamentals) with the
a. Historical Market price
b. Past intrinsic value
c. Current market price.
d. Expected Intrinsic value
Q. Sharpe ratio and Treynor ratio measures which of the following:
a. Standard Deviation
b. Risk adjusted returns
c. Beta
d. Alpha factor
Q. The return expected = ……….+ Beta portfolio (Return of Market - Risk Free Return)
a. Standard Deviation
b. Risk adjusted returns
c. Risk Free Return
d. Beta
Q. Alpha = Return of Portfolio- ………..?
a. Beta
b. Expected Return
c. Standard Deviation
d. Risk Free Return
Q. The realized return
a. is what an investor actually obtains from his investment at the end of the investment period.
b. is what an investor expects to obtain from his investment at the end of the investment period.
c. is equivalent to risk free rate of return.
d. is what a creditor actually obtains from his investment at the end of the investment perio
Q. Possible variation of the actual return from the expected return is termed as ?
a. Adjusted retruns
b. Risk
c. Probability
d. Systematic return
Q. 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.
Q. The risk-free rate for the next year is 3%, and the market risk premium is expected to be 10%. The beta of Acme’s stock is 1.5. If you believe that Acme’s stock will actually return 18.2% over the next year, then according to the CAPM you should:
a. be indifferent between buying and selling the stock.
b. buy the stock because it is under priced.
Q. Stock A has a beta of 1.0 and very high unique risk. If the expected return on the market is 20%, then according to the CAPM the expected return on Stock A will be:
a. the answer cannot be found without knowing Stock A’s correlation or covariance with the market.
b. more than 20% because of Stock A’s very high unique risk.
c. exactly 20%.
d. the answer cannot be found without knowing the risk-free rate of interest.
Q. 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.
Q. Which one of the following is true?
a. Alpha is the slope of the characteristic line.
b. Beta is the slope of the capital market line.
c. Beta is the slope of the security market line.
d. Alpha is the slope of the opportunity line.