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Quiz 19
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Q.1
A theory which states that assets are traded at price equal to its intrinsic value is classified as
efficient money hypothesis
efficient market hypothesis
inefficient market hypothesis
inefficient money hypothesis
Q.2
In capital asset pricing model, characteristic line is classified as
regression line
probability line
scattered points
weighted line
Q.3
According to capital asset pricing model assumptions, quantities of all assets are
given and fixed
not given and fixed
not given and variable
given and variable
Q.4
In arbitrage pricing theory, higher required rate of return is usually paid on stock
higher market risk
higher dividend
lower dividend
lower market risk
Q.5
Formula written as market risk premium divided by standard deviations of returns on market portfolio is used to calculate
capital market line
security market line
fixed market line
variable market line
Q.6
Two alternative expected returns are compared with help of
coefficient of variation
coefficient of deviation
coefficient of standard
coefficient of return
Q.7
All assets are perfectly divisible and liquid in
tax free pricing model
cost free pricing model
capital asset pricing model
stock pricing model
Q.8
Relationship between risk free asset and a single risky asset are always
linear
non-linear
efficient
effective
Q.9
Betas tend to move towards 1.0 with passage of time are classified as
standard betas
varied betas
historical betas
adjusted betas
Q.10
Stock issued by company have higher rate of return because of
low market to book ratio
high book to market ratio
high market to book ratio
low book to market ratio
Q.11
Stock portfolio with lowest book for market ratios is considered as
S portfolio
B to M portfolio
H portfolio
L portfolio
Q.12
A measure which is not included in Fama French Three-Factor model is
realized risk free rate
rate of return on market
random error
risk premium
Q.13
According to Fama French Three-Factor model, market value of company equity is used to calculate
size of portfolio
size of industry
size of market
size of company
Q.14
Negative minimum risk portfolio of any security shows that market security sold
less than original price
greater than original price
equal to original price
equal to sum of stocks
Q.15
In capital asset pricing model, covariance between stock and market is divided by variance of market returns is used to calculate
sales turnover of company
risk rate of company
beta coefficient of company
weighted mean of company
Q.16
In capital asset pricing model, investors assume that buying and selling activity will
affect stock prices
not affect stock prices
have high taxes
high transaction cost
Q.17
Gross domestic product, world economy strength and level of inflation are factors which is used to determine
market realized return
portfolio realized return
portfolio arbitrage risk
arbitrage theory of return
Q.18
Type of stock which have characteristics of bonds and common stock is classified as
bonds equity
common shares
common stock
preferred stock
Q.19
Process in which stockholders transfer right to vote to any other person is classified as
proxy
transfer process
voting process
assigning right process
Q.20
Right of common stockholders to purchase additional stock issued by company is classified as
common right
pre-emptive right
purchase right
selling right
Q.21
Betas that are constantly adjusted to reflect changes in capital structure and firms operations are classified as
fundamental structure
fundamental adjustment
fundamental betas
fundamental operations
Q.22
Type of relationship exists between an expected return and risk of portfolio is classified as
non-linear
linear
fixed and aggregate
non-fixed and non-aggregate
Q.23
Capital market line reflects an attitude of investors towards risk which is considered as an/a
non-aggregate
effective
ineffective
aggregate
Q.24
In calculation of betas, an adjusted betas are highly dependent on historical
unadjusted betas
adjusted historical betas
fundamental historical betas
fundamental varied betas
Q.25
A curve which shows attitude towards risk just way reflected in return trade-off function is classified as
difference curve
indifference curve
efficiency curve
affectivity curve
Q.26
In capital market line, risk of efficient portfolio is measured by its
standard deviation
variance
aggregate risk
ineffective risk
Q.27
All points lie on line if degree of dispersion is
four
one
Two
five
Q.28
A high portfolio return is subtracted from low portfolio return to calculate
HML portfolio
R portfolio
subtracted portfolio
ML portfolio
Q.29
Second step in determining efficient portfolios is to consider efficient subset from set of
attainable portfolios
unattainable portfolios
attributable portfolios
non-attributable portfolio
Q.30
An average return of portfolio divided by its standard deviation is classified as
Jensen's alpha
Treynor's variance to volatility ratio
Sharpe's reward to variability ratio
Treynor's reward to volatility ratio
Q.31
According to capital asset pricing model assumptions, variances, expected returns and covariance of all assets are
identical
not identical
fixed
variable
Q.32
Sum of market risk and diversifiable risk are classified as total risk which is equivalent to
Sharpe's alpha
standard alphas
alpha's variance
variance
Q.33
Stocks which has high book for market ratio are considered as
more risky
less risky
pessimistic
optimistic
Q.34
Type of stock in which dividends are tied to any particular part of a firm is classified as
dividend stock
firm part stock
tied stock
tracking stock
Q.35
Rate of return which considers riskiness and an available returns on investments is classified as
constant dividend
constant rate
maximum rate of return
minimum acceptable rate of return
Q.36
Stocks which has lower book for market ratio are considered as
optimistic
more risky
less risky
pessimistic
Q.37
An individual stock required return is equal to risk free rate plus bearing risk premium is an explanation of
security market line
capital market line
aggregate market line
beta market line
Q.38
Current price is Rs 40 and dividend paid is Rs 10 then dividend yield will be
Rs 25.00
25.00%
Rs 4.00
4.00%
Q.39
Capital gains yield is multiplied for beginning price to calculate
capital gain
growth gain
regular yield
variable yield
Q.40
Shares or stocks which are protected against withdrawals of funds by an original stock owners are classified as
protected shares
founders shares
withdrawal shares
original shares
Q.41
Method of stock valuation which is multiple of earning per share, book value and net income is classified as
stock multiple analysis
dividend multiple analysis
market multiple analysis
stock and multiple analysis
Q.42
Formula written as 0.67(Historical Beta) + 0.35(1.0) is used to calculate
historical betas
adjusted betas
standard betas
varied betas
Q.43
A model which regresses return of stock against return of market is classified as
regression model
market model
error model
risk free model
Q.44
If market value is greater than book value then investors for future stock are considered as
experienced
inexperienced
pessimistic
optimistic
Q.45
According to capital asset pricing model assumptions, investors will borrow unlimited amount of capital at any given
identical and fixed returns
risk free rate of interest
fixed rate of interest
risk free expected return
Q.46
Future beta is needed to calculate in most situations is classified as
historical betas
adjusted betas
standard betas
varied betas
Q.47
An efficient set of portfolios represented through graph is classified as an
attained frontier
efficient frontier
inefficient frontier
unattained frontier
Q.48
Constant growth rate is 9.5% and an expected rate of return is 13.5% then expected dividend yield would be
23.00%
1.42%
4.00%
14.50%
Q.49
Paid dividend is Rs 20 and current price is Rs 50 then dividend yield will be
40.00%
20.00%
30.00%
50.00%
Q.50
Stock in small companies, owned by few people but not actively traded is classified as
closely held stock
largely held stock
attributed stock
successful stock
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