Investment Management Set 12

Bachelor of Business Administration in Finance (BBA Finance)

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This set of Investment Management Multiple Choice Questions & Answers (MCQs) focuses on Investment Management Set 12

Q1 | The risk-free security has a beta equal to , while the market portfolio's beta is equal to
  • one; more than one.
  • one; less than one.
  • zero; one.
  • less than zero; more than zero.
Answer: zero; one.
Q2 | Beta is the slope of
  • the security market line.
  • the capital market line.
  • a characteristic line.
  • the CAPM.
Answer: a characteristic line.
Q3 | A measure of "risk per unit of expected return.
  • standard deviation
  • coefficient of variation
  • correlation coefficient
  • beta
Answer: coefficient of variation
Q4 | Which of the following securities have potentially the highest risk level, and also have the highest potential return?
  • Commercial paper
  • Bonds
  • Preferred stocks
  • Derivative securities
Answer: Derivative securities
Q5 | The feasibility of converting an asset quickly and without significantly affecting its price is called:
  • divisibility
  • marketability
  • liquidity
  • low risk
Answer: marketability
Q6 | The price of a T-bill today is $97 and its maturity value is $100. The maturity is 6 months from now.
  • The dollar return to the investor would be $1 if held to maturity
  • The investor cannot lose money, but its earnings are not known before the maturity date
  • The dollar return to the investor would be $3 if the T-bill is held to maturity
  • The investor can lose money on these T-bills if held to maturity
Answer: The dollar return to the investor would be $3 if the T-bill is held to maturity
Q7 | Blue chip stocks:
  • are common stocks of large, financially sound corporations with a good history of dividend payments and consistent earnings growth
  • are common stocks of medium-size firms having earnings growth in excess of the industry average
  • have high growth potential but are very risky
  • tend to do well in recessionary periods, but do not do well when the economy is booming
Answer: are common stocks of large, financially sound corporations with a good history of dividend payments and consistent earnings growth
Q8 | A ____________________ represents part ownership in a public firm.
  • cumulative preferred stock
  • preference share
  • call option
  • common stock
Answer: common stock
Q9 | Variance calculation and measuring the Standard deviation is one way of measuring the______
  • Risk
  • Return
  • Speculation
  • Gambling
Answer: Risk
Q10 | Labour strike, consumer preferences and management policies are making to arises out ofuncertainty is known as ____________
  • Financial Risk
  • Business Risk
  • Unsystematic Risk
  • Systematic Risk
Answer: Unsystematic Risk
Q11 | Horse racing, game of cards, lottery are the typical examples of ______________
  • Investment
  • Speculation
  • Gambling
  • Arbitrage
Answer: Gambling
Q12 | Buying low and selling high, making a large capital gain is associated with ________
  • Investment
  • Speculation
  • Gambling
  • Arbitrage
Answer: Speculation
Q13 | The process of holding shares in electronic form is known as
  • Demutualisation
  • Dematerialisation
  • Speculation
  • None of the above
Answer: Dematerialisation
Q14 | ___ is the market which helps existing investors to sell their securities.
  • Primary market
  • Secondary market
  • Capital market
  • Commodity market
Answer: Secondary market
Q15 | The exchange generating the largest volume in the United States is the:
  • New York Stock Exchange
  • National Market System
  • Pacific Stock Exchange
  • Chicago Stock Exchange
Answer: New York Stock Exchange
Q16 | Which of the following is not a characteristic of an exchange?
  • It provides liquidity to individuals who acquire securities in the primary market.
  • It requires one to be a member in order to be allowed to trade.
  • Stocks traded on an exchange must meet minimum listing requirements.
  • It allows exchange-listed issues to trade off the exchange floor with the aid of brokers.
Answer: It allows exchange-listed issues to trade off the exchange floor with the aid of brokers.
Q17 | SENSEX is the index of --------------------.
  • BOMBAY STOCK EXCHANGE
  • NATIONAL STOCK EXCHANGE
  • BOTH OF THESE
  • NONE OF THESE
Answer: BOMBAY STOCK EXCHANGE
Q18 | It acts like a bank and keeps securities in electronic form on behalf of the investor,
  • Depository Participant
  • Depository
  • Stock Exchange
  • None of these
Answer: Depository
Q19 | On this day, the exchange will deliver the share or make payment to the other broker,
  • PAY-IN DAY
  • PAY-OUT DAY
  • TRANSACTION DAY
  • NONE OF THESE
Answer: PAY-OUT DAY
Q20 | ___ is the institution which provides a platform for trading of existing securities having longterm maturity.
  • SEBI
  • WTO
  • Stock Exchange
  • RBI
Answer: Stock Exchange
Q21 | Which one of the following is not a function of financial market?
  • Mobilisation of savings
  • Price determination of securities
  • Floating of companies
  • Lowering transaction cost
Answer: Floating of companies
Q22 | A _____________ is a person who acts as an intermediary between a buyer or seller in the market.
  • broker
  • floor broker
  • registered competitive trader
  • dealer
Answer: broker
Q23 | 100 shares of Reliance Ltd. are purchased on Monday. Provided there are no holidays in between, the settlement should take place on _____ _?
  • Wednesday (T+2)
  • Tuesday (T+1)
  • Thursday (T+3)
  • Friday (T+4)
Answer: Wednesday (T+2)
Q24 | CDSL stands for ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
  • Central Depository Services Ltd.
  • Central Derivatives Services Ltd.
  • Central Deposit System Ltd
  • Central Derivatives System Ltd
Answer: Central Depository Services Ltd.
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