306 Unit Test Series
The degree to which an asset or security can be bought or sold in the market without affecting the asset's price.
Liquidity
Risk
Return
Safety
Yes, the
answer is correct.
Feedback:
It's refers
to the ease with which an asset, or security, can be converted into ready cash
without affecting its market price.
Accepted
Answers:
Liquidity
Investment
in tangible assets such as land, house property, metals or paintings and
antiques.
Small Investments
Financial Investments
Fixed Investments
Real Investments
Yes, the
answer is correct.
Feedback:
Savers who
deliberately buy tangible assets for investment purposes value their tangible
goods as a form of value diversification and as a hedge against economic
uncertainty.
Accepted
Answers:
Real
Investments
A game of
chance which may or may not give returns.
Gambling
Probability
Chance
Game of Thrones
Yes, the
answer is correct.
Feedback:
This is the
wagering of money or something of value (referred to as "the stakes")
on an event with an uncertain outcome, with the primary intent of winning money
or material goods.
Accepted
Answers:
Gambling
A financial
instrument that is derived from some other asset, index, event, value or
condition (known as the underlying).
Zero Coupon Bonds
Debenture
Commercial Paper
Derivative
Yes, the
answer is correct.
Feedback:
It is a
monetary contract between parties. We can create, trade, or modify them. We can
also settle them.
Accepted
Answers:
Derivative
A
certificate issued by a depository bank, which purchases shares of foreign
companies and deposits it on the account.
American Depository Receipt
International Depository Receipt
Global Depository Receit
National Depository Receipt
Yes, the
answer is correct.
Feedback:
This is a
bank certificate issued in more than one country for shares in a foreign
company.
Accepted
Answers:
Global
Depository Receit
Equity
Derivative is an instrument designed to separate and transfer the credit risk
of underlying loan.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
This is a
financial instrument whose value is based on equity movements of the underlying
asset.
Accepted
Answers:
FALSE
Futures /
Forwards are contracts to buy or sell an asset on or before a future date at a
price specified today.
TRUE
FALSE
Yes, the answer
is correct.
Feedback:
A forward
contract is a private and customizable agreement that settles at the end of the
agreement and is traded over-the-counter.
Accepted
Answers:
TRUE
Registrars
are persons or firms who execute buy/sell order on behalf of the investors and
charge a commission for rendering the service.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
A registrar
is a bank or a similar company that is responsible for record keeping of
bondholders and shareholders.
Accepted
Answers:
FALSE
The
__________ is a wholesale debt market for low-risk, highly-liquid, short-term
instrument.
Capital market
Money Market
Wholesale market
Insurance Market
Yes, the
answer is correct.
Feedback:
It's refers to trading in very short-term debt
investments.
Accepted
Answers:
Money Market
____________
is a standardized derivative contract (e.g. futures contracts and options) that
is transacted on an organized derivative exchange.
Exchange Traded Derivative
Equity Derivative
Credit Derivative
Foreign Exchange Derivative
Yes, the
answer is correct.
Feedback:
This is a
financial contract that is listed and trades on a regulated exchange.
Accepted
Answers:
Exchange
Traded Derivative
This is the
risk that returns will be adversely affected by changes in the exchange rate.
Exchage Rate Risk
Interest Rate Risk
Liquidity
Inflation Risk
Yes, the
answer is correct.
Feedback:
It is the
financial risk arising from fluctuations in the value of a base currency
against a foreign currency in which a company or individual has assets or
obligations.
Accepted
Answers:
Exchage Rate
Risk
It is the
risk related to sources of finance.
Country Risk
Operational Risk
Business Risk
Financial Risk
Yes, the
answer is correct.
Feedback:
It is the
possibility of losing money on an investment or business venture.
Accepted
Answers:
Financial
Risk
This type of
risk cannot be reduced through diversification.
Systematic Risk
Unsystematic Risk
Country Risk
Inflation Risk
Yes, the
answer is correct.
Feedback:
The risk
refers to the risk inherent to the entire market or market segment. Systematic
risk, also known as “undiversifiable risk,” “volatility” or “market risk,”
affects the overall market, not just a particular stock or industry.
Accepted
Answers:
Systematic
Risk
It is caused
by the factors internal to the company such as fluctuation in demand or profit
etc.
Country Risk
Inflation Risk
Systematic Risk
Unsystematic Risk
Yes, the
answer is correct.
Feedback:
It is that
which is associated with a particular investment such a company's stock.
Accepted
Answers:
Unsystematic
Risk
Larger the
value of variance, greater the
Beta
Frequency
Fluctuation
Difference
Yes, the
answer is correct.
Feedback:
The term
variance refers to a statistical measurement of the spread between numbers in a
data set.
Accepted
Answers:
Fluctuation
Risk due to
internal factors is called unsystematic risk.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
This is
associated with a particular investment such a company's stock.
Accepted
Answers:
TRUE
Beta is a
measure of the unsystematic risk for any asset can be measured by the
covariance of its returns with returns on a market portfolio.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Unsystematic
risk is unique to a given business or industry. It is also known as specific
risk, nonsystematic risk, residual risk, or diversifiable risk. Unsystematic
risk is caused due to internal factors; it can be avoided and controlled.
Accepted
Answers:
FALSE
Standard
Deviation is the square root of the variance.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
This is a
statistic that measures the dispersion of a dataset relative to its mean and is
calculated as the square root of the variance.
Accepted
Answers:
TRUE
__________ risks
are the business process risks failing due to human errors.
Financial
Operational
Systematic
Unsystematic
Yes, the
answer is correct.
Feedback:
It is
defined as the risk of loss resulting from inadequate or failed internal
processes, people, controls, systems or from external events.
Accepted
Answers:
Operational
_______ risk
originates from the sale and purchase of securities affected by business
cycles, technological changes, etc.
Liquidity
Financial Institutions
Insurance
Business
Yes, the
answer is correct.
Feedback:
This is the
ability of a firm, company, or even an individual to pay its debts without
suffering catastrophic losses.
Accepted
Answers:
Liquidity
This
involves direct sale of securities to public.
Rights Issue
Private Placement
Offers for sale
Public Offer
Yes, the
answer is correct.
Feedback:
The issuer
creates new shares that are underwritten by an intermediary, such as an
investment bank or financial advisors.
Accepted
Answers:
Public Offer
It is a
method of floatation of shares through an ‘intermediary’ and ‘indirectly’
through an issue house.
Rights Issue
Private Placement
Offers for sale
Public Offer
Yes, the
answer is correct.
Feedback:
It is the
process of converting a private company into a public company by issuing shares
available for the public to purchase.
Accepted
Answers:
Offers for
sale
Investigation,
analysis and processing of new issue proposal is called
Origination
Underwriting
Distribution
Research
Yes, the
answer is correct.
Feedback:
It is the
multi-step process that every individual must go through to obtain a mortgage
or home loan. The term also applies to other types of amortized personal loans.
Accepted
Answers:
Origination
There are
basically two methods of pricing IPOs viz. fixed pricing and
Portfolio Management
Underwriting
Price earning
Book building
Yes, the
answer is correct.
Feedback:
The process
by which a privately-owned enterprise is transformed into a public company
whose shares are traded on a stock exchange.
Accepted
Answers:
Book
building
They use
derivatives markets to reduce or eliminate the risk associated with price of an
asset
Speculators
Arbitrators
Hedgers
Analyst
Yes, the
answer is correct.
Feedback:
These are
primary participants in the futures markets. It is any individual or firm that
buys or sells the actual physical commodity.
Accepted
Answers:
Hedgers
Hedgers
transact futures and options contracts to get extra leverage in betting on
future movements in the price of an asset.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
This is a
tactical action that an investor takes with the intent of reducing the risk of
losing money.
Accepted
Answers:
FALSE
The
Securities and Exchange Board of India (SEBI) is the regulatory authority established
under the SEBI Act 1992 and is the principal regulator for Stock Exchanges in
India.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Securities
and Exchange Board of India (SEBI) is a statutory regulatory body entrusted
with the responsibility to regulate the Indian capital markets.
Accepted
Answers:
TRUE
A new
company is listed in the primary market through the process of an Initial
Public Offering
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
An initial
public offering (IPO) refers to the process of offering shares of a private
corporation to the public in a new stock issuance.
Accepted
Answers:
TRUE
Indian stock
market stands among the top ________ stock markets of the world
Ten
Three
Fifty
Hundred
Yes, the
answer is correct.
Feedback:
India's
ranking has improved two notches in the league table of the world's biggest
stock markets.
Accepted
Answers:
Three
_______
issues are made in primary market
Equity
Rights
Bonus
New
Yes, the
answer is correct.
Feedback:
The primary market
is where companies issue a new security, not previously traded on any exchange.
Accepted
Answers:
New
Responsible
for proceedings related to regulatory action and obtaining redress for
violations of securities laws and regulations against all market participants,
issuers and individuals and other entities that breach securities laws and
regulations.
Enforcement department
Legal Affairs Department
Investigations Department
Investment Managemnt Department
Yes, the
answer is correct.
Feedback:
This is a
government agency formed to enforce economic laws and fight economic crimes in
India.
Accepted
Answers:
Enforcement
department
A bank or
company which holds securities deposited by others, and where exchanges of
these securities take place
Derivatives Account
Fixed Deposit Account
Recurring Account
Depository
Yes, the
answer is correct.
Feedback:
This is a
facility or institution, such as a building, office, or warehouse, where
something is deposited for storage or safeguarding.
Accepted
Answers:
Depository
The process
by which an underwriter attempts to determine at what price to offer an IPO
based on demand from institutional investors.
Book Building
New Issue
Underwriting
Inflation Risk
Yes, the
answer is correct.
Feedback:
It is a document
published by the registrar of an IPO after finalizing the share allocation
based on regulatory guidelines.
Accepted
Answers:
Book
Building
Market Place
where securities or financial assets, are traded.
Industrial Market
Insurance market
Investment Market
Stock Market
Yes, the
answer is correct.
Feedback:
It is the
set of all individuals and organizations that acquire goods and services that
enter into the production of other products or services that are sold, rented,
or supplied to others.
Accepted
Answers:
Industrial
Market
Which of the
following is not a department of SEBI?
Market Regulation Department
Corporation Finance Department
Securities Department
Investment Management Department
Yes, the
answer is correct.
Feedback:
The Market
Regulation Department (MRD) is responsible for formulation of policy and
supervision of functioning and operations of Market Infrastructure Institutions
(MIIs)such as, Stock Exchanges, Depositories and Clearing Corporations.
Accepted
Answers:
Market Regulation
Department
Market
Capitalization = Price of Company’s Stock X No of shares Issued
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
It allows
investors to understand the relative size of one company versus another.
Accepted
Answers:
TRUE
The CNX Nifty
covers 50 sectors of the Indian economy and offers investment managers’
exposure to the Stock Market.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
The Index
has been trading since April 1996 and is well suited for bench marking, index
funds and index-based derivatives.
Accepted
Answers:
FALSE
BSE SENSEX
is called The Barometer of Indian Capital Markets
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
This is the
index which broadly represents BSE and the market sentiment. The base year is 1978-1979
with a base value of 100.
Accepted
Answers:
TRUE
____________means
admission of securities of an issuer to trading privileges on a stock exchange
through a formal agreement.
Trading
Listing
Clearing
Settlement
Yes, the
answer is correct.
Feedback:
To dealings
on a recognized stock exchange.This may be of any public limited company,
Central or State Government, quasi governmental and other financial
institutions/corporations, municipalities, etc.
Accepted
Answers:
Listing
Stock market
indexes are meant to capture the overall behavior of ________ markets.
Equity
Derivative
Bond
Debt
Yes, the
answer is correct.
Feedback:
Although
there are different ways to calculate index numbers, the numbers always
represent a change from an original or base value.
Accepted
Answers:
Equity
Capable of
being measured or expressed in numerical terms
Quantitative
Qualititative
Monetary
Financial
Yes, the
answer is correct.
Feedback:
Something
that's quantitative is expressed in terms of quantity.
Accepted
Answers:
Quantitative
Related to
or based on the quality or character of something, often as opposed to its size
or quantity.
Quantitative
Qualititative
Monetary
Financial
Yes, the
answer is correct.
Feedback:
It involves
collecting and analyzing non-numerical data (e.g., text, video, or audio) to
understand concepts, opinions, or experiences.
Accepted
Answers:
Qualititative
Involves
analysing capital flows, interest rate cycles, Currencies, commodities, indices
etc.
Macro-economic Analysis
Industry Analysis
Situational Analysis
Financial Analysis
Yes, the
answer is correct.
Feedback:
It comprises
economic trend analysis, long- term macroeconomic projections, analysis of
alternative trends, impact of fiscal and monetary measures and counterfactual
simulations of the economy.
Accepted
Answers:
Macro-economic
Analysis
Which of the
following is not a tool for company analysis?
Anaysing
Banking
Gambling
Investing
Yes, the
answer is correct.
Feedback:
This is the
process of evaluating a company's profitability, profile, product and services.
It's important for any investor to perform a thorough analysis in order to get
a fair view of the company he/she is interested in.
Accepted
Answers:
Investing
The cash
flow statement is divided into three parts: cash from operations, financing and
Market Regulation Department
Corporation Finance Department
Securities Department
Investment Management Department
Yes, the
answer is correct.
Feedback:
This is a
financial statement that summarizes the amount of cash and cash equivalents
entering and leaving a company.
Accepted
Answers:
Securities
Department
Assets =
Liabilities + Shareholders' Equity
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Total
liabilities and stockholders' equity equals the sum of the totals from the
liabilities and equity sections.
Accepted
Answers:
TRUE
Situational
analysis is a process whereby strengths and weaknesses of an economy are
analyzed.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
It is
defined as an analysis of the internal and external factors of a business.
Accepted
Answers:
FALSE
Fundamental
analysis believe securities are priced according to fundamental economic data.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
It is a
method of determining a stock's real or "fair market" value.
Accepted
Answers:
TRUE
____________involves
the analysis of industry and the companies that area part of the sector
Brand Analysis
Industry Analysis
Situational Analysis
Firm Analysis
Yes, the
answer is correct.
Feedback:
Industry
analysis is a tool that facilitates a company's understanding of its position
relative to other companies that produce similar products or services.
Accepted
Answers:
Industry
Analysis
__________
analysis is a stock valuation methodology that uses financial and economic
analysis to envisage the movement of stock prices.
Fundamental
Technical
Intrinsic Value
Debt
Yes, the
answer is correct.
Feedback:
Fundamental
analysis is a method of assessing the intrinsic value of a stock. It combines
financial statements, external influences, events, and industry trends.
Accepted
Answers:
Fundamental
Open-High-Low-Close
charts, also known as bar charts
Bar Charts
Pie Charts
Range Charts
Line Charts
Yes, the
answer is correct.
Feedback:
An OHLC
chart shows the open, high, low, and close price for a given period. It can be
applied to any time frame.
Accepted
Answers:
Bar Charts
Connects the
closing price values with line segments
Bar Chart
Line Chart
Candlestick Chart
Point and Figure chart
Yes, the
answer is correct.
Feedback:
A line chart
(aka line plot, line graph) uses points connected by line segments from left to
right to demonstrate changes in value.
Accepted
Answers:
Line Chart
This
formation is characterized by two small peaks on either side of a larger peak.
Double Top
Bottom Up
Head and Shoulders
Peak
Yes, the
answer is correct.
Accepted
Answers:
Head and
Shoulders
RSI stands
for
Rational Strength Index
Relative Strength Index
Range Strong Index
Reciprocal Stand Index
Yes, the
answer is correct.
Feedback:
The relative
strength index (RSI) is a momentum indicator used in technical analysis that
measures the magnitude of recent price changes to evaluate overbought or
oversold conditions in the price of a stock or other asset.
Accepted
Answers:
Relative
Strength Index
The price
level through which a stock or market seldom falls
Stop
Resistance
Support
Assist
Yes, the
answer is correct.
Feedback:
Support and
resistance are two major concepts in relation to stock market technical
analysis.
Accepted
Answers:
Support
A gap in a
chart is an empty space between a trading period and the following trading
period.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
A trading
period is a set length of time, usually a number of weeks, months, quarters, or
years, in which sales are measured and compared to previous periods.
Accepted
Answers:
TRUE
A security
average is the average price of a security over a set amount of time.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Average
price is the mean price of an asset or security over some period of time. For
intraday averages, the volume-weighted average price.
Accepted
Answers:
FALSE
A chart
pattern is a distinct formation on a stock chart that creates a trading signal,
or a sign of future price movements.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
It is a
shape within a price chart that helps to suggest what prices might do next,
based on what they have done in the past. Chart patterns are the basis of
technical analysis and require a trader to know exactly what they are looking
at, as well as what they are looking for.
Accepted
Answers:
TRUE
_________is
formed by computing the average (mean) price of a security over a specified
number of periods.
Interesting Moving Average
Compound Moving Average
Exponential Moving Average
Simple Moving Average
Yes, the
answer is correct.
Feedback:
It
calculates the average of a selected range of prices, usually closing prices,
by the number of periods in that range.
Accepted
Answers:
Simple
Moving Average
Technical
analysis focuses on ______________- by studying the movement of price and
volume.
Demand & supply
Quantitative Data
Stock Market
Industry performance
Yes, the
answer is correct.
Feedback:
The law of
demand says that at higher prices, buyers will demand less of an economic good.
The law of supply says that at higher prices, sellers will supply more of an
economic good.
Accepted
Answers:
Demand &
supply
Value shown
in Balance Sheet – Face value of the shares
Book Value
Market Value
Intrinsic Value
Demanded Value
Yes, the
answer is correct.
Feedback:
Book value
is the accounting value of the company's assets less all claims senior to
common equity (such as the company's liabilities). The term book value derives
from the accounting practice of recording asset value at the original
historical cost in the books.
Accepted
Answers:
Book Value
Value
determined by stock exchanges – Market Price of share
Book Value
Market Value
Intrinsic Value
Demanded Value
Yes, the
answer is correct.
Feedback:
The supply
and demand determine a share price. If the demand is high, it will increase,
and if the demand is low, it decreases.
Accepted
Answers:
Market Value
The return
is the rate which investors expect from the investment. It is determined by;
Dividend
Revenue
Profit
Required Rate of Return
Yes, the
answer is correct.
Feedback:
The required
rate of return is the minimum return an investor will accept for owning a
company's stock, as compensation for a given level of risk associated with
holding the stock.
Accepted
Answers:
Required
Rate of Return
This method
assumes that the value of a share of common stock is the present value of all
future dividends.
Earnings Multiplier Model
Dividend Discount Model
Price Increase Model
Interest compounded model
Yes, the
answer is correct.
Feedback:
The dividend
discount model (DDM) is a quantitative method used for predicting the price of
a company's stock based on the theory that its present-day price is worth the
sum of all of its future dividend payments when discounted back to their
present value.
Accepted
Answers:
Dividend
Discount Model
It is used
for valuing a stock relative to its own past performance or the other companies
Debt Equity Ratio
Gross profit ratio
Price-sales ratio
Cost revenue ratio
Yes, the
answer is correct.
Feedback:
The
price-to-sales ratio (Price/Sales or P/S) is calculated by taking a company's market
capitalization (the number of outstanding shares multiplied by the share price)
and divide it by the company's total sales or revenue over the past 12 months.
Accepted
Answers:
Price-sales
ratio
Infinite
period model assumes a constant growth rate for estimating future dividends.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
In finance,
a dividend future is an exchange-traded derivative contract that allows
investors to take positions on future dividend payments. Dividend futures can
be on a single company, a basket of companies, or on an Equity index.
Accepted
Answers:
TRUE
There are
three approaches to valuation of equity stock: discounted cash flows, relative
valuation techniques ad equity growth model.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Absolute
valuation method attempts to find the 'true' value of a stock based only on
fundamentals such things as dividends, cash flow and growth rate of the
company. 1. Equity Valuation is a method of deriving the fair value of a firm
or its equity stock.
Accepted
Answers:
FALSE
Intrinsic
Value is the Intrinsic Worth of the share
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
ntrinsic
value is the anticipated or calculated value of a company, stock, currency or
product determined through fundamental analysis. It includes tangible and
intangible factors. Intrinsic value is also called the real value and may or
may not be the same as the current market value.
Accepted
Answers:
TRUE
___________
is the process of estimating the worth of any item.
Analysis
Evaluation
Assessment
Valuation
Yes, the
answer is correct.
Feedback:
It is a
quantitative process of determining the fair value of an asset or a firm. In
general, a company can be valued on its own on an absolute basis, or else on a
relative basis compared to other similar companies or assets.
Accepted
Answers:
Valuation
_________-
appears on a company's balance sheet as "stockholder equity
Book value
Market Value
Intrinsic Value
Industry Value
Yes, the
answer is correct.
Feedback:
It is
calculated by multiplying a company's share price by its number of shares
outstanding, whereas book value or shareholders' equity is simply the
difference between a company's assets and liabilities.
Accepted
Answers:
Book value
Which is not
a component of Bond?
Debenture
Issuer
Coupon
Maturity Date
Yes, the
answer is correct.
Feedback:
A debenture
is a type of bond or other debt instrument that is unsecured by collateral.
Since debentures have no collateral backing, debentures must rely on the
creditworthiness and reputation of the issuer for support.
Accepted
Answers:
Debenture
It is a
process of finding intrinsic worth of any security.
Assessment
Valuation
Evaluation
Measurement
Yes, the
answer is correct.
Feedback:
Valuation is
a quantitative process of determining the fair value of an asset or a firm. In
general, a company can be valued on its own on an absolute basis, or else on a
relative basis compared to other similar companies or assets.
Accepted
Answers:
Valuation
It is any
continuing payment with a fixed total annual amount.
Compound Interest
Time Series
Annuity
Index Number
Yes, the
answer is correct.
Feedback:
An annuity
is a series of payments made at equal intervals. Examples of annuities are
regular deposits to a savings account, monthly home mortgage payments, monthly
insurance payments and pension payments.
Accepted
Answers:
Annuity
It is a debt
security, under which the issuer is obliged to pay them interest (the coupon)
and to repay the principal at the maturity date.
Preference Share
Equity share
Debenture
Bond
Yes, the
answer is correct.
Feedback:
The bond is
a debt security, under which the issuer owes the holders a debt and (depending
on the terms of the bond) is obliged to pay them interest (the coupon) or to
repay the principal at a later date, termed the maturity date.
Accepted
Answers:
Bond
Long-term
obligations with maturity greater than ten years.
Bonds
Debenture
Public Deposits
Loan
Yes, the
answer is correct.
Feedback:
Long-term
debt refers to fixed income securities set to mature more than 10 years from
the issue or purchase date. Examples of long-term debt include the 20-year and 30-year
Treasury bonds.
Accepted
Answers:
Bonds
Bonds and
their variants such as loans and debentures are issued by governments
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
An annuity
is a series of payments made at equal intervals. Examples of annuities are
regular deposits to a savings account, monthly home mortgage payments, monthly
insurance payments and pension payments.
Accepted
Answers:
TRUE
Interest
rate on bonds is known as Annuity
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
An annuity
is a series of payments made at equal intervals. Examples of annuities are
regular deposits to a savings account, monthly home mortgage payments, monthly
insurance payments and pension payments.
Accepted
Answers:
FALSE
Holding
period return is the total return received from holding an asset or portfolio
of assets.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Holding
period return is the total return received from holding an asset or portfolio
of assets over a period of time, known as the holding period, generally
expressed as a percentage.
Accepted
Answers:
TRUE
___________
is the process of estimating the worth of any item.
Analysis
Evaluation
Assessment
Valuation
Yes, the
answer is correct.
Feedback:
Valuation is
a quantitative process of determining the fair value of an asset or a firm. In
general, a company can be valued on its own on an absolute basis, or else on a
relative basis compared to other similar companies or assets.
Accepted
Answers:
Valuation
__________
is calculated by discounting cash flows with discount rate.
Present value
Accounting Rate of Return
Internal rate of Return
Profitability Index
Yes, the
answer is correct.
Feedback:
The NPV will
be calculated for an investment by using a discount rate and series of future
cash flows.
Accepted
Answers:
Present
value
This asset
class includes short term investment avenues like bank deposits and money
market instruments such as T-Bills and certificate of deposits.
Coupon Rates
Trade Bills
Commercial Paper
Cash Equivalents
Yes, the
answer is correct.
Feedback:
Examples of
cash equivalents include commercial paper, Treasury bills, and short-term
government bonds with a maturity date of three months or less.
Accepted
Answers:
Cash
Equivalents
The chance
that an investment's actual return will be different than expected.
Probability
Risk
Chance
Gambling
Yes, the
answer is correct.
Feedback:
In the
financial world, risk refers to the chance that an investment's actual return
will differ from what is expected.
Accepted
Answers:
Risk
A technique
that reduces risk by allocating investments among various financial
instruments, industries and other categories.
Diversification
Integration
Combination
Differentiation
Yes, the
answer is correct.
Feedback:
Diversification
is a technique that reduces risk by allocating investments among various
financial instruments, industries, and other categories. It aims to maximize
returns by investing in different areas that would each react differently to
the same event.
Accepted
Answers:
Diversification
It is set of
all the securities or basket of investment held by an investor.
Capital Budgeting
Investment
Mutual Fund
Portfolio
Yes, the
answer is correct.
Feedback:
A portfolio
is a collection of financial investments like stocks, bonds, commodities, cash,
and cash equivalents, including closed-end funds and exchange-traded funds
(ETFs).
Accepted
Answers:
Portfolio
It is based
on a belief that capital markets are fairly efficient with respect to available
information.
Business Strategy
Competitive Strategy
Passive Strategy
Active Strategy
Yes, the
answer is correct.
Feedback:
Efficient
capital markets are commonly thought of as markets in which security prices
fully reflect all relevant information that is available about the fundamental
value of the securities.
Accepted
Answers:
Passive
Strategy
In
Discretionary portfolio management services, an individual authorizes a
portfolio manager to take care of his financial needs on his behalf.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Discretionary
investment management is a form of investment management in which buy and sell
decisions are made by a portfolio manager or investment counselor for the
client's account.
Accepted
Answers:
TRUE
Diversification
is a set of securities held by an investor.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
The process
of combining securities in an investment portfolio is known as diversification.
The aim of diversification of securities is to reduce total risk without
sacrificing portfolio return.
Accepted
Answers:
FALSE
Portfolio
Managemnt refers to managing money of an individual under the expert guidance
of portfolio managers.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Portfolio
management is the selection, prioritisation and control of an organisation's
programmes and projects, in line with its strategic objectives and capacity to
deliver.
Accepted
Answers:
TRUE
There are
two types of portfolio management strategies; active and __________.
Non reactive
Deactive
Passive
Inactive
Yes, the
answer is correct.
Feedback:
Active
management requires frequent buying and selling in an effort to outperform a
specific benchmark or index. Passive management replicates a specific benchmark
or index in order to match its performance.
Accepted
Answers:
Passive
In
_____________, investment is made in shares of companies across different
sectors and is changed at regular intervals according to performance of
particular industry.
Market Timing
Security Selection
Use of specialised investment concepts
Sector Rotation
Yes, the
answer is correct.
Feedback:
What Is
Sector Rotation? Sector rotation is the movement of money invested in stocks
from one industry to another as investors and traders anticipate the next stage
of the economic cycle.
Accepted
Answers:
Sector
Rotation
This model
assumes that co-movement between stocks is due to change or movement in the
market index.
Arbitrage Pricing Policy
Capital Asset Pricing Model
Markowitz Portfolio Optimization Model
Sharpe Single Index model
Yes, the
answer is correct.
Feedback:
The
single-index model (SIM) is a simple asset pricing model to measure both the
risk and the return of a stock. The model has been developed by William Sharpe
in 1963 and is commonly used in the finance industry.
Accepted
Answers:
Sharpe
Single Index model
It involves
deciding about long term asset mix.
Tactical asset Allocation
Strategic Asset Allocation
Dynamic Asset Allocation
Rigid Asset Allocation
Yes, the
answer is correct.
Feedback:
Strategic
asset allocation is a portfolio strategy whereby the investor sets target
allocations for various asset classes and re-balances the portfolio
periodically.
Accepted
Answers:
Strategic
Asset Allocation
It focuses
on maximizing value of portfolio.
Tactical asset Allocation
Strategic Asset Allocation
Dynamic Asset Allocation
Rigid Asset Allocation
Yes, the
answer is correct.
Feedback:
Tactical
asset allocation (TAA) is an investment style in which the three primary asset
classes (stocks, bonds, and cash) are actively balanced and adjusted. The
ultimate strategy of tactical asset allocation is to maximize portfolio returns
while keeping market risk to a minimum.
Accepted
Answers:
Tactical
asset Allocation
Which is not
a modern portfolio theory?
Arbitrage Pricing Policy
Capital Asset Pricing Model
Markowitz Portfolio Optimization Model
Modigilani and Miller Portfolio Theory
Yes, the
answer is correct.
Feedback:
Modigliani
and Miller theories, held as one of the most important theoretical compass for
the world of Corporate Finance, has stated some aspects and measurements in
which will determine one company's step of heading towards financial decision
of its capital structure.
Accepted
Answers:
Modigilani
and Miller Portfolio Theory
In this
initial portfolio is not disturbed irrespective of what happens in the market.
Tactical asset Allocation
Strategic Asset Allocation
Dynamic Asset Allocation
Rigid Asset Allocation
Yes, the
answer is correct.
Feedback:
Dynamic
asset allocation is a portfolio management strategy that frequently adjusts the
mix of asset classes to suit market conditions. Adjustments usually involve
reducing positions in the worst-performing asset classes while adding to
positions in the best-performing assets.
Accepted
Answers:
Dynamic
Asset Allocation
According to
APT, an investor tries to find out the possibility to increase returns without
increasing funds in the portfolio
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Arbitrage
pricing theory (APT) is a multi-factor asset pricing model based on the idea
that an asset's returns can be predicted using the linear relationship between
the asset's expected return and a number of macroeconomic variables that
capture systematic risk.
Accepted
Answers:
TRUE
Diversification
is a process of earning profit by taking advantage of differential pricing of a
same asset.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Diversification
is a risk management strategy that mixes a wide variety of investments within a
portfolio.
Accepted
Answers:
FALSE
Unsystematic
risks can be averted through diversification and is related to random
variables.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Unsystematic
risk can be mitigated through diversification, and so is also known as
diversifiable risk.
Accepted
Answers:
TRUE
_________
has formalized the risk return relationship and developed the concept of
efficient frontier.
Sharpe
Markowitz
Modigilani
Miller
Yes, the
answer is correct.
Feedback:
The
efficient frontier is the set of optimal portfolios that offer the highest
expected return for a defined level of risk or the lowest risk for a given
level of expected return.
Accepted
Answers:
Markowitz
The
traditional theory of portfolio management is based on _____________of
individual investor.
History of investment
Business performance
Investment Portfolio
Financial need
Yes, the
answer is correct.
Feedback:
In the
tradition approach, investor's needs in terms of income and capital
appreciation are evaluated and appropriate securities are selected to meet the
needs of the investor.
Accepted
Answers:
Financial
need
The process
of changing the mix of securities in a portfolio
Portfolio Measurement
Portfolio Upgradation
Portfolio Upgrading
Portfolio Revision
Yes, the
answer is correct.
Feedback:
The process
of addition of more assets in an existing portfolio or changing the ratio of
funds is invested.
Accepted
Answers:
Portfolio
Revision
It means
reviewing and revising portfolio composition i.e. equity – bond mix.
Portfolio Measurement
Portfolio Upgradation
Portfolio Rebalancing
Portfolio Upgrading
Yes, the
answer is correct.
Accepted
Answers:
Portfolio
Rebalancing
It involves
making periodic investments of equal rupee amount in particular stock.
Variable Ratio Plan
Constant Ratio Plan
Constant Rupee Value Plan
Rupee Cost Averaging Plan
Yes, the
answer is correct.
Feedback:
It is an
approach in which you invest a fixed amount of money at regular intervals.
Accepted
Answers:
Rupee Cost Averaging
Plan
These refer
to the difficulties in portfolio revision such as transaction costs, taxes,
statutory stipulations and human subjectivity.
Portfolio Constraints
Portfolio Measurement
Portfolio Upgradation
Portfolio Upgrading
Yes, the
answer is correct.
Accepted
Answers:
Portfolio
Constraints
The process
of changing the mix of securities in a portfolio is called as
Portfolio Rebalancing
Portfolio Upgrading
Portfolio Revision
Portfolio Evaluation
Yes, the
answer is correct.
Feedback:
The sale and
purchase of assets in an existing portfolio over a certain period of time to
maximize returns and minimize risk.
Accepted
Answers:
Portfolio
Revision
Tax is
payable on the capital gains arising from sale of securities.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Capital
gains tax is payable on the sale of a capital asset, depending on the tax rate
and minimum holding period for the asset.
Accepted
Answers:
TRUE
The constant
ratio value plan specifies that the rupee value of the stock portion of the
portfolio will remain constant.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
It is a
strategic asset allocation strategy, which keeps the aggressive and
conservative portions of a portfolio set at a fixed ratio.
Accepted
Answers:
FALSE
Active
Revision Strategy involves frequent changes in an existing portfolio over a
certain period of time for maximum returns and minimum risks.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
It is
involves frequent changes in an existing portfolio over a certain period of
time for maximum returns and minimum risks.
Accepted
Answers:
TRUE
In Treynor's
measure, risk is measured by employing ________.
Character
Beta
Alpha
Gama
Yes, the
answer is correct.
Feedback:
The Treynor
ratio, also known as the reward-to-volatility ratio, is a performance metric
for determining how much excess return was generated for each unit of risk
taken on by a portfolio.
Accepted
Answers:
Beta
Portfolio
evaluation essentially comprises of two functions, performance measurement and
____________
Risk
Return on Investment
Performance Implementation
Performance evaluation.
Yes, the
answer is correct.
Feedback:
The
portfolio performance evaluation involves the determination of how a managed
portfolio has performed relative to some comparison benchmark.
Accepted
Answers:
Performance
evaluation.
A short term
promise to repay a fixed amount that is placed on the market either directly or
through a specialized intermediary.
Commercial Paper
Treasury Bill
Certificate of Deposit
Bill Discounting
Yes, the
answer is correct.
Feedback:
It is a
money-market security issued (sold) by large corporations to obtain funds to
meet short-term debt obligations (for example, payroll) and is backed only by
an issuing bank or company promise to pay the face amount on the maturity date
specified on the note.
Accepted
Answers:
Commercial
Paper
Short-term
(up to 91 days) bearer discount security issued by the Government as a means of
financing its cash requirements.
Commercial Paper
Treasury Bill
Certificate of Deposit
Bill Discounting
Yes, the
answer is correct.
Feedback:
These are
money market instruments, are short term debt instruments issued by the
Government of India and are presently issued in three tenors,
Accepted
Answers:
Treasury
Bill
The
ownership interest in a company of holders of its common and preferred stock.
Rights shareholders
Bonus Shareholders
Preference Shareholders
Equity Share holders
Yes, the
answer is correct.
Feedback:
It's refers
to any stake a party owns in any property, company, real estate, product, etc.
Accepted
Answers:
Equity Share
holders
The issue of
new securities to existing shareholders at a ratio to those already held.
Rights issue
Bonus issue
Debenture issue
Bonds
Yes, the
answer is correct.
Feedback:
A rights
issue is an invitation to existing shareholders to purchase additional new
shares in the company.
Accepted
Answers:
Rights issue
A type of
preference shares on which dividend accumulates if remains unpaid.
Non cumulative Preference Share
Convertible Preference Share
Cumulative preference Share
Redeemable Preference Share
Yes, the
answer is correct.
Feedback:
It's give
the shareholder a right to dividends that may have been missed in the past.
Dividends are paid by companies to reward shareholders.
Accepted
Answers:
Cumulative
preference Share
Debt
investment can be done for the short term and long term as well.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Debt
investment refers to an investor lending money to a firm or project sponsor
with the expectation that the borrower will pay back the investment with
interest.
Accepted
Answers:
TRUE
The constant
ratio value plan specifies that the rupee value of the stock portion of the
portfolio will remain constant.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
It's
specifies the ratio of the value in the aggressive portfolio to the value of
the conservative portfolio.
Accepted
Answers:
FALSE
Kisan Vikas
Patra is an instrument of securities market.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
This s a
certificate scheme from the Indian post office. It doubles a one-time
investment in a period.
Accepted
Answers:
TRUE
A
_________is a trust that pools the savings of a number of investors who share a
common financial goal.
Portfolio
Diversification
Recruitment
Mutual Fund
Yes, the
answer is correct.
Feedback:
It is a
company that pools money from many investors and invests the money in
securities such as stocks, bonds, and short-term debt.
Accepted
Answers:
Mutual Fund
Tax savings
fund is also known as ____________.
Equity Linked Savings Scheme
Sector Funds
Rajiv Gandhi Savings Scheme
Tax benefit Scheme
Yes, the
answer is correct.
Feedback:
It is a type
of mutual fund scheme that primarily invests in the stock market or Equity.
Accepted
Answers:
Equity
Linked Savings Scheme
Involves
planning for the disposition of your asset when you die.
Retirement Planning
Death Planning
Estate Planning
Investment Planning
Yes, the
answer is correct.
Feedback:
This is the
preparation of tasks that serve to manage an individual's asset base in the
event of their incapacitation or death.
Accepted
Answers:
Estate
Planning
A finance
plan that allocates future personal income towards expenses, savings and debt
repayment.
Master Budget
Personal Budget
Cost Planning
Investment Planning
Yes, the
answer is correct.
Feedback:
It is a
finance plan that allocates future personal income towards expenses, savings
and debt repayment.
Accepted
Answers:
Personal
Budget
They are the
one who are employed by Financial Products and Services Company.
Financial Analyst
Cost Accountant
Institutional Financial Advisers
Auditor
Yes, the
answer is correct.
Feedback:
Financial
services offered within this segment include managing and investing customers'
wealth across various financial instruments.
Accepted
Answers:
Institutional
Financial Advisers
Annuity and
Catastrophe bonds are examples of
Cash and Cash Equivalents
Stocks
Coomodities
Insurance products
Yes, the
answer is correct.
Feedback:
This bond
allows the issuer to receive funding from the bond only if specific conditions,
such as an earthquake or tornado, occur.
Accepted
Answers:
Insurance
products
Which is not
a type of asset allocation strategies?
Strategic
Tactical
Flexible
Systematic
Yes, the
answer is correct.
Feedback:
Asset
allocation refers to a strategy in which individuals divide their investment
portfolio between different diverse categories to minimize investment.
Accepted
Answers:
Flexible
Net worth =
what’s left after subtracting one’s liabilities from one’s assets
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
It is the
value of the assets a person or corporation owns, minus the liabilities they
owe.
Accepted
Answers:
TRUE
Precious
metals are insurance products.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
With specie
insurance, bullion can be protected at all points of its journey, from mined
ore to refineries, to storage in a bullion bank, to a buyer.
Accepted
Answers:
FALSE
Financial
planning and retirement planning work hand in hand.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
It is the
process of deciding what your retirement goals are and the actions and
decisions you need to undertake to bring these goals to fruition.
Accepted
Answers:
TRUE
A __________
is a practicing professional who helps individual to deal with various
financial issues through proper planning to meet client's specific goals.
Financial Planner
Certified Planner
Tax planning
Tax practicing
Yes, the
answer is correct.
Feedback:
It is a
qualified investment professional who helps individuals and corporations meet
their long-term financial objectives.
Accepted
Answers:
Financial
Planner
Art, coins,
or stamps comes under _________ category.
Insurance Products
Debt Instruments
Commodities
Collectibles
Yes, the
answer is correct.
Feedback:
Common
categories of collectibles include antiques, toys, coins, comic book, and
stamps.
Accepted
Answers:
Collectibles
Financial
year for tax planning starts from
1st January
31st March
1st April
1st September
Yes, the
answer is correct.
Feedback:
A Financial
Year (FY) is the period between 1 April and 31 March – the year in which you
earn an income.
Accepted
Answers:
1st April
Which of the
following is not a head of income?
Income from salary
Gambling
Business and Profession
Capital Gains
Yes, the
answer is correct.
Feedback:
There are
five heads of income—salary, income from house/property, profit from business
or profession, capital gains and income from other sources.
Accepted
Answers:
Gambling
Investments
that allow, and purport to allow, a reduction in one's income tax liability.
Tax Planning
Tabx Ignorance
Tax Shelters
Tax Avoidance
Yes, the
answer is correct.
Feedback:
This is a vehicle
used by individuals or organizations to minimize or decrease their taxable
incomes and, therefore, tax liabilities.
Accepted
Answers:
Tax Shelters
Importation
or exportation of foreign products by unauthorized means.
Smuggling
Gambling
Cheating
Stealing
Yes, the
answer is correct.
Feedback:
This is the
illegal transportation of objects, substances, information or people, such as
out of a house or buildings, into a prison, or across an international border,
in violation of applicable laws or other regulations.
Accepted
Answers:
Smuggling
An old means
of collection of revenue when it is difficult to determine the leviable amount
taxes with certainty.
Tax Avoidance
Tax Ignorance
Tax Farming
Tax Evasion
Yes, the
answer is correct.
Feedback:
It is a
system wherein the right to collect taxes is auctioned off to the highest
bidder.
Accepted
Answers:
Tax Farming
Tax evasion
is a crime in almost all developed countries and subjects the guilty party to
fines and/or imprisonment.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
This is an
illegal activity in which a person or entity deliberately avoids paying a true
tax liability.
Accepted
Answers:
TRUE
PPF has a
lock-in period of 15 years
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
This is a
scheme is a long term investment option which offers an attractive rate of
interest and returns on the amount invested.
Accepted
Answers:
FALSE
Employment
Provident Fund required deduction qualifies for a deduction under Section 80C
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
The Central
Board of Trustees administers a contributory provident fund, pension scheme and
an insurance scheme for the workforce engaged in the organized sector in India.
Accepted
Answers:
TRUE
___________
is all about putting your hard earned money to good use instead of all going to
the government
Tax Ignorance
Certified Planner
Tax planning
Tax practicing
Yes, the
answer is correct.
Feedback:
It is the
analysis of a financial situation or plan to ensure that all elements work
together to allow you to pay the lowest taxes possible.
Accepted
Answers:
Tax planning
Tax
avoidance is the legitimate minimizing of taxes, using methods approved by the
IRS.
Tax Ignorance
Tax Farming
Tax Evasion
Tax Avoidance
Yes, the
answer is correct.
Feedback:
This is the
legal usage of the tax regime in a single territory to one's own advantage to
reduce the amount of tax that is payable by means that are within the law.
Accepted
Answers:
Tax
Avoidance
More than
just investment advice, as it can encompass all parts of a person's financial
life.
Retirement Planning
Investment Management
Tax Planning
Wealth Managemnt
Yes, the
answer is correct.
Feedback:
It is a
consultative process whereby the advisor gleans information about the client's
wants and tailors a bespoke strategy utilizing appropriate financial products
and services.
Accepted
Answers:
Wealth
Managemnt
Which of the
following is not a wealth management adviser?
Chartered Accountant
Tax Lawyers
Certified Financial Planners
Banks
Yes, the
answer is correct.
Feedback:
It is a
high-level professional who manages an affluent client's wealth for one set
fee.
Accepted
Answers:
Tax Lawyers
Cash Flow
Management deals with having adequate
Investment
Expenses
Liquidity
Asset
Yes, the
answer is correct.
Feedback:
This is the
process of tracking how much money is coming into and going out of your
business.
Accepted
Answers:
Liquidity
Purchasing
white goods, travel and leisure falls under
Discretionary Expenses
Committed Expenses
Essential expenses
Non essential expenses
Yes, the
answer is correct.
Feedback:
It's refers
to a cost that a business or household can get by without, if necessary.
Accepted
Answers:
Discretionary
Expenses
Savings make
additions to
Bank account
Income
Wealth
Satisfaction
Yes, the
answer is correct.
Feedback:
If you save
regularly, the day will come when you can invest in assets that have the
potential to increase in value or earn a higher return.
Accepted
Answers:
Wealth
Intermediary
model is a visionary market model that would require highly standardized
communication between the various market participants.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Intermediary
Models or Brokers are used by businesses in order to bring buyers/sellers to
the business website.
Accepted
Answers:
TRUE
Food is not
an essential expense
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
Some
expenses are classed as essential expenses and we will allow for these.
Accepted
Answers:
FALSE
Mass
customers represent the lowest customer segment.
TRUE
FALSE
Yes, the
answer is correct.
Feedback:
The mass
market is the group of end consumers of common household products who are
perceived as "average".
Accepted
Answers:
TRUE
Wealth
Management process is a _____________ process.
Complicated
Convertble
Dynamic
Flexible
Yes, the
answer is correct.
Feedback:
It is an
investment advisory service that combines other financial services to address
the needs of affluent clients.
Accepted
Answers:
Dynamic
________________involves
highly customized and sophisticated investment-management
Private wealth management (PWM)
Public Wealth Managemnt
Individual Wealth Managemnt
Wealth Management
Yes, the
answer is correct.
Feedback:
It is an
investment advisory practice that incorporates financial planning, portfolio
management, and other aggregated financial services for individuals, as opposed
to corporations, trusts, funds, or other institutional investors.
Accepted
Answers:
Private
wealth management (PWM)
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