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Quiz 18
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Q.1
Value of stock as concluded with help of analysis by particular investor is classified as
particular value
intrinsic value
fundamental value
Both B and C
Q.2
Dividend will grow at non-constant rate for N periods and periods such as N is classified as
growth date
terminal date
horizon date
Both B and C
Q.3
Beginning price is Rs 25 and capital gains yield is 5% then capital gain would be
Rs 50.00
Rs 1.25
50 times
Rs 23.75
Q.4
Value of stock is Rs 300 and preferred dividend is Rs 60 then required rate of return would be
18%
20%
22%
24%
Q.5
In expected rate of return for constant growth, an expected yield on capital must be
equal to zero
greater than expected growth rate
less than expected growth rate
equal to expected growth rate
Q.6
Capital gain is Rs 2 and beginning price is Rs 24 then capital gains yield will be
22.00%
24.00%
14.00%
12.00%
Q.7
If an expected final stock price is Rs 85 and an original investment is Rs 70 then value of expected capital gain would be
Rs 15.00
-Rs 15.00
Rs 155.00
-Rs 155.00
Q.8
Third step in calculating value of stock with non-constant growth rate is to find
PV of expected dividends
FV of expected dividends
PV of intrinsic rate
FV of intrinsic rate
Q.9
In expected rate of return for constant growth, expected total rate of return is equal to
buying pricing
dividend yield
rate of return
selling pricing
Q.10
An expected dividend yield is 5.5% and expected rate of return is 11.5% then constant growth rate would be
2.09%
-6.00%
17.50%
6.00%
Q.11
A right which controls and prevents transfer from current stockholders to other new stockholders is considered as
corporate charter
selling charter
laws
purchase chart
Q.12
In market analysis, market multiple is multiplied by firm earning before interest, taxes, depreciation and amortization to calculate
market total value
firm total value
industry value
taxes value
Q.13
Stock market theory which states that stocks are in equilibrium and impossible for investors to beat market is classified as an
inefficient market hypothesis
efficient market hypothesis
efficient stock hypothesis
inefficient stock hypothesis
Q.14
Growth in earnings per share is primarily resultant of growth in
dividends
asset value
fundamental value
yearly value
Q.15
In expected rate of return for constant growth, capital gains is divided by capital gains yield to calculate
returning price
ending price
beginning price
regular price
Q.16
A formula such as an original investment plus an expected capital gain is used to calculate
final stock
expected stock
expected final stock price
final stock price
Q.17
Standard deviation of tighter probability distribution is
long-termed
short-termed
risky
smaller
Q.18
An opposite of perfect positive correlation + 1.0 is called
negative correlation
multiple correlation
divisor correlation
none of above
Q.19
An amount invested is Rs 1500 and an amount received is Rs 2000 then return would be
Rs 500.00
-Rs 500.00
Rs 3,500.00
-Rs 3,500.00
Q.20
External factors such as expiration of basic patents and industry competition effect
patents premium
competition premium
company's beta
expiry premium
Q.21
An inflation free rate of return and inflation premium are two components of
quoted rate
unquoted rate
steeper rate
portfolio rate
Q.22
In an individual stock, relevant risk is classified as
alpha coefficient
beta coefficient
stand-alone coefficient
relevant coefficient
Q.23
Risk affects any firm with factors such as war, recessions, inflation and high interest rates is classified as
diversifiable risk
market risk
stock risk
portfolio risk
Q.24
Stock which has fixed payments and failure of payments which do not lead to bankruptcy is classified as
common stock
preferred stock
bonds equity
common shares
Q.25
An efficient market hypothesis states all public information which is reflected in current market prices is classified as
weak form efficiency
strong form efficiency
market efficiency
semi strong efficiency
Q.26
A technique of lowering risk for multinational companies and globally designed portfolios is classified as
national diversification
behavioral diversification
global diversification
behavioral finance
Q.27
Risk which is caused by events such as strikes, unsuccessful marketing programs and other lawsuits is classified as
stock risk
portfolio risk
diversifiable risk
market risk
Q.28
Required return is 11% and premium for risk is 8% then risk free return will be
3.00%
19.00%
0.72%
1.38%
Q.29
Type of risk in which beta is equal to one is classified as
multiple risk stock
varied risk stock
total risk stock
average risk stock
Q.30
A portfolio consists of all stocks in a market is classified as
market portfolio
return portfolio
correlated portfolio
diversified portfolio
Q.31
Beta coefficient is used to measure market risk which is an index of
coefficient risk volatility
market risk volatility
stock market volatility
portfolio market portfolio
Q.32
Risk on a stock portfolio which cannot be eliminated or reduced by placing it in diversified portfolio is classified as
diversifiable risk
market risk
stock risk
portfolio risk
Q.33
In investment returns, a received amount is subtracted from an invested amount which is used to calculate
dollar received
dollar return
dollar invested
return percentage
Q.34
Past realized rate of return in period t is denoted by
t bar r
t hat r
r hat t
r bar t
Q.35
Rational traders immediately sell stock when price is
conditional
inefficient portfolio
too low
too high
Q.36
Stock issued by company have lower rate of return because of
high market to book ratio
low book to market ratio
low market to book ratio
high book to market ratio
Q.37
Riskless rate in addition with risk premium is multiplied by standard deviation of portfolio for using to calculate expected return rate on
efficient portfolio
inefficient portfolio
attributable portfolio
non-attributable portfolio
Q.38
Dollar return is divided by invested amount which is used for calculating the
rate of return
return amount
investment rate
received amount
Q.39
An analysis of decision making of investors and managers is classified as
risky finance
behavioral finance
premium finance
buying finance
Q.40
Yield on bond is 7% and market required return is 14% then market risk premium would be
2.00%
21.00%
0.50%
7.00%
Q.41
For investors, steeper slope of indifference curve shows more
risk averse investor
risk taker investor
in differential investor
ineffective investment
Q.42
Positive minimum risk portfolio of any security shows that market security sold
equal to original price
equal to sum of stocks
less than original price
greater than original price
Q.43
A line which shows relationship between an expected return and risk on efficient portfolio is considered as
efficient market line
attributable market line
capital market line
security market line
Q.44
Relationship between total risk of stock, diversifiable risk and market risk is classified as
total risk
standard deviation
standard alpha
treynor alpha
Q.45
Realized and required return for individual stocks are classified as function of fundamental
arbitrage factors
economic factors
portfolio factors
realized theory factors
Q.46
First factor in Fama French three factor model is
CAPM stock beta
economic stock beta
CAPM portfolio beta
CAPM realized beta
Q.47
An expected rate of return is denoted by
e-bar
r-bar
r-hat
e-hat
Q.48
In expected future returns, tighter probability distribution shows risk on given investment which is
smaller
greater
less risky
highly risky
Q.49
Third factor in Fama French three factor model is ratio which is classified as
book to market ratio
market to book ratio
company to industry ratio
stock to portfolio ratio
Q.50
In capital asset pricing model, assumptions must be followed including
no taxes
no transaction costs
fixed quantities of assets
all of above
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