Investment Management Set 8

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 8

Q1 | Futures are highly standardized, whereas each ____________ is unique
  • forward contract
  • future contract
  • options
  • none of the above
Answer: forward contract
Q2 | ______________ option give the holder or buyer, the right to buy specified quantity of theunderlying asset at a specified price on or before a specified time
  • call option
  • put option
  • main option
  • none of the above
Answer: call option
Q3 | ___________ option gives the holder or buyer, the right to sell specified quantity of theunderlying asset at a specified price on or before a specified time
  • call option
  • put option
  • main option
  • none of the above
Answer: put option
Q4 | The following one is a financial asset
  • gold
  • silver
  • shares
  • land
Answer: shares
Q5 | Goverenment bond is a
  • short term security
  • long term security
  • medium term security
  • either short term and long term security
Answer: medium term security
Q6 | The certificate which evidences an unsecured corporate debt of short term maturity is
  • short term loan certificate
  • certificate of deposits
  • interbank participation certificate
  • commercial paper
Answer: commercial paper
Q7 | The major player in the Indian money market is
  • co operative banks
  • indigenous banks
  • commercial banks
  • reserve bank of india
Answer: reserve bank of india
Q8 | A person appointed by a stock broker to assist him in the business of securities trading is called
  • sub broker
  • commission broker
  • authorized clerk
  • tarawaniwala
Answer: sub broker
Q9 | Political constancy is chief aspect concerning
  • Exchange risk
  • Systematic risk
  • Non-systematic risk
  • Country risk
Answer: Country risk
Q10 | Systematic risk is higher when:
  • Α > 0.
  • Α < 0.
  • Α > 1.
  • Β > 1
Answer: Α > 0.
Q11 | In the stock-price beta estimation for the Coca-Cola Company, the dependent variable isthe:
  • Return on Coca-Cola.
  • Price of Coca-Cola stock.
  • Return on the S&P 500.
  • Value of the S&P 500 Index.
Answer: Value of the S&P 500 Index.
Q12 | If the beta of a stock is 1.8 and the overall market declines 20%, the expected return is:
  • -36%
  • -18%.
  • -20%.
  • -28%
Answer: -36%
Q13 | Total risk for common stocks is:
  • The sum of systematic risk and diversifiable risk.
  • Measured by beta.
  • The sum of market risk and systematic risk.
  • The sum of diversifiable risk and unsystematic risk
Answer: The sum of systematic risk and diversifiable risk.
Q14 | The tracking error of an optimized portfolio can be expressed in terms of the ____________ of the portfolio and thus reveal ____________.
  • Return; portfolio performance
  • Total risk; portfolio performance
  • Beta; portfolio performance
  • Beta; benchmark risk
Answer: Beta; portfolio performance
Q15 | A portfolio comprises of two stocks A and B. Stock A gives a return of 8%and stock B Gives a return of 7%. Stock A has a weight of 60% in the portfolio. What is the Portfolio Return?
  • 9%
  • 11%
  • 10%
  • 8%
Answer: 8%
Q16 | Shares which are not affected by market movements are known as:
  • Offensive shares
  • Growth shares
  • Defensive shares
  • Income shares
Answer: Defensive shares
Q17 | Exposure indicates
  • Sensitivity to changes in risk
  • Sensitivity to changes in asset prices
  • Sensitivity to changes in portfolio
  • Sensitivity to changes in assets
Answer: Sensitivity to changes in assets
Q18 | Which of the following securities is most liquid?
  • Money market instruments
  • Capital market instruments
  • Gilt-edged securities
  • Index Futures
Answer: Capital market instruments
Q19 | Which of the following goals will be considered by the individuals who invest in upcoming companies and wait till the companies to grow and then harvest their profits and move on to other company?
  • Short-term high priority goals
  • Money making goals
  • Long-term high priority goals
  • Lower priority goals
Answer: Long-term high priority goals
Q20 | A purely passive strategy is defined as
  • One that uses only index funds.
  • One that allocates assets in fixed proportions that do not vary with market conditions.
  • One that is mean-variance efficient.
  • Both A and B.
Answer: One that allocates assets in fixed proportions that do not vary with market conditions.
Q21 | An industry in the expansion stage of its life cycle is indicated by its
  • Low P/E Ratio.
  • High P/E Ratio.
  • High Dividend Pay-Out Ratio
  • High Default
Answer: High Default
Q22 | Which of the following is true of municipal government debt?
  • It pays more interest than corporate debt.
  • It is often purchased by individuals with high incomes.
  • It is exempt from estate taxation.
  • It is not subject to interest rate risk.
Answer: It is often purchased by individuals with high incomes.
Q23 | The net asset value of a mutual fund investing in stock rises with
  • Higher stock prices
  • Lower equity values
  • An increased number of shares
  • Increased liabilities
Answer: Lower equity values
Q24 | Equity does NOT include
  • Cash and paid-in capital
  • Common stock and paid-in capital
  • Paid-in capital and retained earnings
  • Common stock, paid-in capital and retained earnings
Answer: Cash and paid-in capital
Q25 | A liquid asset may
  • Be converted into cash
  • Be converted into cash with little chance of loss
  • Not be converted into cash
  • Not be converted without loss
Answer: Be converted into cash with little chance of loss
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