Top 350+ Solved Security Analysis and Investment Management MCQ Questions Answer
Q. According to the Capital Asset Pricing Model (CAPM), fairly priced securities
a. have positive betas.
b. have zero alphas.
c. have negative betas.
d. have positive alphas.
Q. In a well diversified portfolio
a. market risk is negligible.
b. systematic risk is negligible.
c. unsystematic risk is negligible.
d. Non diversifiable risk is negligible.
Q. An industry in the expansion stage of its life cycle is indicated by its
a. Low P/E Ratio.
b. High P/E Ratio.
c. High Dividend Pay-Out Ratio
d. High Default
Q. Which of the following is true of municipal government debt?
a. It pays more interest than corporate debt.
b. It is often purchased by individuals with high incomes.
c. It is exempt from estate taxation.
d. It is not subject to interest rate risk.
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 is not among the important categories of real assets?
a. Land and house property
b. Art objects
c. Units of UTI
d. Bullion
Q. Which of the following statements is true of Insured Asset Allocation?
a. It is aimed at benefiting from short-term under pricing and over pricing of assets.
b. In this strategy the risk tolerance of the investor are ignored.
Q. Which of the following is/are true if a firm has a required rate of return equal to the ROE?I. The amount of earnings retained by the firm does not affect market price or the P/E. II. The firm can increase market price and P/E by increasing the growth rate. III. The P/E ratio is inversely proportional to the ROE of the firm.
a. Only (I) above
b. Both (I) and (II) above
c. Both (I) and (III) above
d. Both (II) and (III) above
Q. Consider these two investment strategies: Strategy ___ is the dominant strategy because __________.
a. 1, it is riskless
b. 1, it has the highest reward/risk ratio
c. 2, its return is at least equal to Strategy 1 and sometimes greater
d. 2, it has the highest reward/risk ratio
Q. Which of the following statements is/are not correct with respect to the ‘Constant Mix Strategies’ of asset allocation?I. Investors adopting these strategies tend to maintain an exposure to stocks that are in constant proportion of their wealth. II. The risk-tolerance level of the investors varies proportionately with the level of theirwealth. III. Reversals in stock markets oppose constant mix strategies over the buy and hold IV. strategies.
a. Only (I) above
b. Only (II) above
c. Only (III) above
d. Both (I) and (II) above
Q. The tracking error of an optimized portfolio can be expressed in terms of the ____________ of the portfolio and thus reveal ____________.
a. return; portfolio performance
b. total risk; portfolio performance
c. beta; portfolio performance
d. beta; benchmark risk
Q. Price movement between two Information Technology stocks would generally have a ______ co-variance.
a. zero
b. positive
c. negative
d. none