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Quiz 13
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Q.1
High portfolio return is 6.5% and low portfolio return is 3.0% then HML portfolio will be
2.16%
9.50%
3.50%
0.4615 times
Q.2
Type of financial security in which firms do not borrow money rather lease their assets is classified as
leases
preferred stocks
common stocks
corporate stocks
Q.3
An average return of portfolio divided by its coefficient of beta is classified as
Sharpe's reward to variability ratio
treynor's reward to volatility ratio
Jensen's alpha
treynor's variance to volatility ratio
Q.4
Slope coefficient of beta is classified statistically significant if its probability is
greater than 5%
equal to 5%
less than 5%
less than 2%
Q.5
Second factor in Fama French three factor model is the
size of industry
size of market
size of company
size of portfolio
Q.6
Call options situation in which strike price is greater than current price of stock is classified as
out-of-the-portfolio
in-the-portfolio
in-the-money
out-of-the-money
Q.7
If stock market price is higher than strike price so call option
price will be lower
rate will be higher
price will be higher
rate will be lower
Q.8
An unsystematic risk which can be eliminated but market risk is the
aggregate risk
remaining risk
effective risk
ineffective risk
Q.9
An indication in a way that variance of y-variable is explained by x-variable which is shown as
degree of dispersion is one
degree of dispersion is two
degree of dispersion is three
degree of dispersion is four
Q.10
Type of options in which buyer of options has call on 200 shares in stock is classified as
call option
stated option
unstated option
contractual option
Q.11
Movement of price or rise or fall of prices of options is classified as
option lattice
pricing movement
price change
binomial lattice
Q.12
New York Stock Exchange' is an example of
capital markets
money markets
liquid markets
short-term markets
Q.13
Hewlett-Packard and Microsoft are examples of
limited corporate business
unlimited corporate business
controlled corporate business
corporation
Q.14
Difference between actual return on stock and predicted return is considered as
probability error
actual error
prediction error
random error
Q.15
First step in binomial approach of option pricing is to
define ending price of stock
define beginning price of stock
define range of values
define domain of values
Q.16
Present value of portfolio Rs 850 and current option price Rs 1620 then value of stock included in portfolio would be
Rs 190.00
Rs 880.00
Rs 770.00
Rs 2,470.00
Q.17
In regression of capital asset pricing model, an intercept of excess returns is classified as
Sharpe's reward to variability ratio
tenor's reward to volatility ratio
Jensen's alpha
tenor's variance to volatility ratio
Q.18
In arbitrage pricing theory, required returns are functioned of two factors which have
dividend policy
market risk
historical policy
Both A and B
Q.19
An attitude of investor towards dealing with risk determines the
rate of return
rate of exchange
rate of intrinsic stock
rate of extrinsic stock
Q.20
Firm's which helps in indirect transfer such as Merrill Lynch is classified as
investment banking house
investment bank
saving house
saving bank
Q.21
Variability of stock price, option term to maturity and risk free rate are dependents of
price of an option
expiry of an option
exercise of an option
estimation of an option
Q.22
Type of options that do not have stock in portfolio to back up options is classified as
undue options
due options
naked options
total options
Q.23
Value of option which is considered as its worth as soon as it is expired is classified as
minimum option value
minimum value
maximum value
exercise value
Q.24
Current value of stock including in portfolio is subtracted from present value of portfolio to calculate
last month option price
last year option price
current option price
future option price
Q.25
Banks such as Bank of America serves a range of savers and borrowers are classified as
transfer banks
commercial banks
serving banks
nation's banks
Q.26
An inexpensive and easy business formation and few government regulations are advantages of
Private Corporation
personal ownership
proprietorship
personal business
Q.27
Beta reflects stock risk for investors which is usually
individual
collective
weighted
linear
Q.28
In Corporation characteristics, losses are subject to funds invested actually is considered as
limited liability
unlimited liability
general liability
controlled ownership liability
Q.29
Government spending, if it exceeds federal government tax revenues then it is classified as
Federal Reserve
federal budget
budget surplus
budget deficit
Q.30
Financial security with low degree risk and investment held by businesses is classified as
treasury bills
commercial paper
negotiable certificate of deposit
money market mutual funds
Q.31
Type of partnership in which liabilities are limited for business owners is classified as
unlimited partnership
limited partnership
joint corporate
joint venture
Q.32
Financial security issued by banks operating outside U.S is classified as
dollar bonds
euro deposits
Eurodollar market deposits
euro bonds
Q.33
Value of free cash flows Rs55000, operating cost and taxes Rs30000, then value of sales revenues (in Rs) will be
Rs 25,000.00
Rs 85,000.00
Rs 35,000.00
Rs 45,000.00
Q.34
Markets which deal with buying and selling of bonds, mortgages, notes and stocks are considered as
financial instruments
financial asset markets
physical asset markets
easy markets
Q.35
Capital gain expected by stockholders and dividends are included in
debt rate
investment return
interest rate
cost of equity
Q.36
Markets where assets are bought or sold within a few days or at some future dates are classified as
spot markets
future markets
Both A and B
financial instruments
Q.37
Default free financial security sells by U.S treasury is classified as
U.S treasury bills
commercial paper
certificate of deposit
mutual funds
Q.38
Corporate governance charter of rules of behaving is applicable on
competitors
shareholders
directors
all of above
Q.39
Type of option which cannot be exercised before an expiry date which is classified as
European option
American option
Australian option
money option
Q.40
Limited partners in partnership business have
no control
whole control
corporate authority
general authority
Q.41
In corporation characteristics, an easy transferring and division of stock of shares is classified as
ownership interest transferability
deceased transferability
shared division
deceased division
Q.42
Financial security issues by major banks and risk depends on strength of issuer is classified as
negotiable certificate of deposit
mutual funds
U.S treasury bills
commercial paper
Q.43
An unlimited liability is classified as liabilities of the
limited partners
general partners
venture partners
corporate partners
Q.44
Relevant information about stock market price if it is given, then this price is called
market price
intrinsic price
extrinsic price
unstable price
Q.45
Reduced consumer demand for loans, homes and new automobiles is result of
less disposable income
high disposable income
federal disposable income
discount disposable income
Q.46
A type of business ownership in which two or more entities join together for profit purpose is classified as
partnership
joint business
joint profit
corporate business
Q.47
Bonds issued to individuals by corporations are classified as
municipal bonds
corporate bonds
U.S treasury bonds
mortgages
Q.48
In financial markets, period of maturity less than one year of financial instruments is classified as
short-term
long-term
intermediate term
capital term
Q.49
Condition in which company's imports are more than its exports is classified as
foreign trade
foreign trade deficits
foreign trade surplus
trade surplus
Q.50
Financial security kept by non-financial corporations is
deposit cheque
distribution cost
short term treasury bills
short term capital cost
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