Post on 20-Dec-2021
Dnyan Ganga Education Trust’s
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Kasarvadavli , G.B. Road, Thane (W) - 400615.
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Course Name: BBI
Class Name : TYBBI
Semester: VI
Exam Pattern Marks: 75:25
Subject: Security Analysis and Portfolio Management
Examination: Multiple Choice Questions
MODEL QUESTION PAPER
1. According to the Dow Theory, daily fluctuations and secondary movements in the
stock market are used to identify the _____ trend.
a. short term
b. long term
c. primary
d. seasonal
2. As per _____ form of efficient market hypothesis all public or private information is
reflected in the current market prices in stock markets.
a. weak
b. strong
c. semi-strong
d. market
3. Efficient market hypothesis advocates _____ investment strategy.
a. active
b. buying
c. passive
d.strong
Dnyan Ganga Education Trust’s
Degree College of Arts, Commerce and Science.
Kasarvadavli , G.B. Road, Thane (W) - 400615.
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4. Definition of _____ differs under various forms of efficient market hypothesis.
a. efficiency
b. information
c. prices
d. returns
5. The daily high price is represented on a candlestick chart by the _____.
a. real body
b. trend-line
c. channel
d. shadow
6. A _____ average of a stock index is the average level of the index over a given interval
of time.
a. static
b. moving
c. gross
d. net
7. Triple tops and triple bottoms are indicators of _____.
a. role reversal
b. trend reversal
c. both (a) & (b)
d. high volumes
8. One of the following is not an assumption of capital structure theories :
a. These are capital structure sources of funds, i.e. debt and equity.
b. There are no corporate taxes.
c. Dividend Payout ratio varies between 0% and 100%
Dnyan Ganga Education Trust’s
Degree College of Arts, Commerce and Science.
Kasarvadavli , G.B. Road, Thane (W) - 400615.
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d. Firm’s business risk is constant overtime
9. Ability of a firm with high gearing to meet fixed interest payment out of current
earnings.
a. Reduces
b. Remains unaffected
c. Increases
d. Does not change
10. The non-produce projects should be financed by
a. Debt and Equity
b. Debt
c. Equity
d. Retained Earnings
11. An appropriate capital structure is
a. Flexible
b. Conservator
c. Minimum risk of loss of control
d. (a), (b), (c)
12. Following is not the assumption of MM Approach
a. Investors behave rationally
b. Investors are free to buy & sell securities
c. There is a transaction cash
d. Investors can borrow without restriction
13. Current ratio is a _____ ratio.
a. activity
b. solvency
Dnyan Ganga Education Trust’s
Degree College of Arts, Commerce and Science.
Kasarvadavli , G.B. Road, Thane (W) - 400615.
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c. profitability
d. liquidity
14. High asset turnover & high operating profit will lead to high _____.
a. debt equity
b. ROI
c. leverage
d. liquidity
15. Stock Turnover ratio is a _____ ratio.
a. activity
b. solvency
c. profitability
d. liquidity
16. Return on Net Worth is a _____ ratio.
a. unlevered
b. levered
c. solvency
d. liquidity
17. Earning before interest and tax is used as numerator for _____ profit ratio
a. net
b. gross
c. operating
d. current
18. Income statements are thoroughly analysed under _____ analysis.
a. Economy
Dnyan Ganga Education Trust’s
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Kasarvadavli , G.B. Road, Thane (W) - 400615.
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b. Industry
c. Company
d. Technical
19. Fundamental analysis assumes that the stock price of a company depends on _____.
a. Emotions of stock markets
b. Capacity to generate income in future
c. Tips and rumors about the company
d. (a) & (c)
20. _____ model is sectoral analysis of Gross National Product model building.
a. Barometric
b. Opportunistic
c. Econometric
d. (a) & (c)
21. _____ is/are the measures of economic activity of a country.
a. Inflation
b. Fiscal & Monetary policy
c. Monsoon & Agriculture
d. (a), (b), (c)
22. Under Barometric approach, Nifty and sensex stock price changes is an example of
_____ indicator.
a. Lagging
b. Coincidental
c. Leading
d. (a) & (b)
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Degree College of Arts, Commerce and Science.
Kasarvadavli , G.B. Road, Thane (W) - 400615.
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23. The expected rate of return on a bond if bought at its current market price and held till
maturity is known as ______.
a. Current Yield
b. Yield to call
c. Yield to put
d. Yield to maturity
24. At a given required rate of return ______ the maturity of a bond, lower will be its
value.
a. higher
b. lower
c. constant
d.direct
25. YTM and bond values are ______ related.
a. directly
b. inversely
c. not
d.always
26. Reward to total risk ratio is also known as _____ measure.
a. Shape’s
b. Jensen’s
c. Treynor’s
d. CAPM
27. Difference between expected returns and returns as per CAPM is also known as _____
measure.
a. CAPM
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Kasarvadavli , G.B. Road, Thane (W) - 400615.
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b. Shape’s
c. Jensen’s
d. Treynor’s
28. _____ is used as denominator in Treynor’s ratio.
a. Alpha
b. Beta
c. Gamma
d. Theta
29. Jensen’s measure provides _____ of a security.
a. beta
b. Alpha
c. Gamma
d. Theta
30. _____is not a principle of active portfolio strategy
a. Market timing
b. Security rotation
c. Security selection
d. Portfolio selection
31. Treynor’s measure of an overpriced security will be _____ as compared to Treynor’s
measure of market.
a. Lower
b. Higher
c. Same
d. free
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Degree College of Arts, Commerce and Science.
Kasarvadavli , G.B. Road, Thane (W) - 400615.
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32. According to APT, returns earned by a security if there is no change in risk levels of
macro economic variables is known as _____ returns.
a. Risk premium
b. Risk free returns
c. Both (a) & (b)
d. Factor
33. As per APT, extra returns due to change in risk factor is known as _____.
a. Risk free returns
b. Risk premium
c. Both (a) & (b)
d. Direct
34. As per APT, the value of firm-specific risk factor is _____.
a. Positive
b. Negative
c. Zero
d. Theta
35. _____ theory stipulates relationship between expected return and risk.
a. CAPM
b. APT
c. Both (a) & (b)
d. Treynor’s
36. An arbitrage opportunity exists if an investor can construct a _____ investment
portfolio that will yield a guranteed profit.
a. Small
b. Large
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Degree College of Arts, Commerce and Science.
Kasarvadavli , G.B. Road, Thane (W) - 400615.
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c. Zero
d. negative
37. Inputs required for Single Index model for a portfolio consisting of ‘n’ securities are
______.
a. 3n + 2
b. n + 2
c. 3n + 3
d. 3n + 1
38. For a portfolio consisting of 50 securities, inputs required for Single Index model
would be ______.
a. 150
b. 151
c. 152
d. 153
39. An undervalued security will have _____ alpha.
a. Zero
b. Positive
c. Negative
d. Non positive
40. Single index model is based on _____ concept.
a. Regression
b. Interpolation
c. Extrapolation.
d. Corelation
Dnyan Ganga Education Trust’s
Degree College of Arts, Commerce and Science.
Kasarvadavli , G.B. Road, Thane (W) - 400615.
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41. Portfolio alpha is _____ of security alpha.
a. Total
b. Difference
c. Simple average
d. Weightage average
42. If the risk-free rate is 3%, the beta of APL is 1.2, and the rate of return of the market
portfolio is 12%, what is the expected return on APL as per CAPM will be _____%.
a. 12.8
b. 10.8
c. 13.8
d. 14.8
43. Mr. X is a risk-averse investor. Mr. Y is a less risk-averse investor as compared to Mr.
Y, therefore, _____.
a. for the same risk, Mr. Y requires a higher rate of return as compared to Mr. X.
b. for the same returns, Mr. X tolerates higher risk as compared to Mr. Y.
c. for the same returns, Mr. Y tolerates higher risk as compared to Mr. X.
d. for the same risk, Mr. X requires a lower rate of return as compared to Mr. Y.
44. Data for Y ltd is as follows
Particulars Amount
Equity share capital (FV = Rs 10) 200
12% Preference Shares 80
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Degree College of Arts, Commerce and Science.
Kasarvadavli , G.B. Road, Thane (W) - 400615.
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Profit After tax 50
Proposed Dividend 35
Market price per share 100
Calculate Dividend per share
a. 1.75
b. 1.60
c. 2.02
d. 2.32
45. Data for A ltd is as follows
Particulars Amount
Equity share capital (FV = Rs 10) 250
12% Preference Shares 100
Profit After tax 70
Proposed Dividend 40
Market price per share 35
Calculate Return on equity shares
a. 20.2%
b. 86.63%
Dnyan Ganga Education Trust’s
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Kasarvadavli , G.B. Road, Thane (W) - 400615.
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c. 23.2%
d. 68.97%
46. Calculate Expected return for the Portfolio
Particulars Initial Price End Price Beta
P 13 19 1.25
Q 20 25 1.00
R 24 30 1.33
a. 34.78%
b. 36.36%
c. 33.65%
d. 29.82%
47. If average return is 20%, risk free rate is 9%, Standard deviation is 0.50, beta is 1.80. What is the Expected return as per CAPM.
a. 22
b. 6.11
c. 28.8
d. 29
48. Return as per Sharpers’s index is
a. (R-Rf)/ ᵝ
b. (R-Rf)/ σ
c. Expected return – Actual Return
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Degree College of Arts, Commerce and Science.
Kasarvadavli , G.B. Road, Thane (W) - 400615.
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d. Rf + ᵝ(Rm – Rf)
49. Proprietary ratio =
a. Total Equity/ Total Assets
b. Debt/ Equity
c. Debt/ Assets
d. Total Assets/ Total Equity
50. From the following calculate Co-variance
Year Return on Security (%) Return on Market (%)
1 8 10
2 12 9
3 10 12
4 16 14
5 14 15
a. 11.5
b. 5.5
c. 9.2
d. 4.4