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MIDTERM EXAMINATION
Spring 2009
FIN630- Investment Analysis & Portfolio Management (Session - 2)Question No: 1 ( Marks: 1 ) - Please choose one
Which one of the following financial instruments represents an ownership share
in a corporation?
► Common stock
► Bond
► Preferred stock
► Term Finance certificates
(Handout page 24) common shares represent an ownership interest in the company
(page173)
http://books.google.com/books?id=YqBzDH1rBZMC&pg=PA173&dq=financ
ial+instruments+represents+an+ownership+share+in+a++corporation?&hl=
en&ei=mR52TcroEcnhrAf167G_Cg&sa=X&oi=book_result&ct=result&resnu
m=2&ved=0CCwQ6AEwAQ#v=onepage&q=financial%20instruments%20rep
resents%20an%20ownership%20share%20in%20a%20%20corporation%3F
&f=false
Question No: 2 ( Marks: 1 ) - Please choose one
There are ____ broad categories of financial assets.
► 2
► 3
► 4
► 5
(page82)http://books.google.com/books?id=bjEhstGJAMC&pg=PA82&dq=broad+categories+of+financial+assets&hl=en&ei=st5
5TeP2HY2nrAea5YDBBQ&sa=X&oi=book_result&ct=result&resnum=2&ved
=0CDAQ6AEwAQ#v=onepage&q=broad%20categories%20of%20financial%
20assets&f=false
(page1-10)
http://books.google.com/books?id=HUX-y4oXl04C&pg=SA1-
PA10&lpg=SA1-
PA10&dq=There+are+3+broad+categories+of+financial+assets&source=bl&
ots=qdm6kaAasY&sig=9HdQYSc9coWKc6EUF0hgD6dNHs&hl=en&ei=Uw99TbSrEpDqrQfn4v23BQ&sa=X&oi=book_result&ct=result&
resnum=10&ved=0CFwQ6AEwCQ#v=onepage&q=%20three%20broad%20c
ategories%20of%20financial%20assets&f=false
Question No: 3 ( Marks: 1 ) - Please choose one
Shares of McDonald Corporation are an example of a (n):
► Standardized financial instrument
► Non-standardized financial instrument since their prices can differ over time
► Standardized financial liability instrument
► Open-end investment
(question6)http://highered.mcgrawhill.com/sites/0073523097/student_view0/chapter3/quiz_1.html
Question No: 4 ( Marks: 1 ) - Please choose one
_____________ promotes investment education and ethical behavior among
those
involved in the investment business.
► Licensed International Financial Analyst (LIFA) ► Securities Investor Protection Corporation (SIPC)
► Chartered Financial Analyst Institute (CFAI)
Securities and Exchange Commission (SEC)
(page669)http://books.google.com/books?id=fkrYsLrekAC&pg=PA670&lpg=PA670&dq=promotes+investment+education+
and+ethical+behavior&source=bl&ots=MPpAvYfw7B&sig=A4E_HII5lEVqsKAJgsNXbRfwbo&hl=en&ei=Qel8TeznBsLsrQfvtdHRBQ&sa=X&oi=
book_result&ct=result&resnum=4&ved=0CDIQ6AEwAw#v=onepage&q&f=f
alse
(Another) ch25.ppt - www.swlearning.com
The CFA program began in 1959 when the Institute of Chartered
Financial Analysts (ICFA) was formed
– Promotes investment education and ethical behavior
– Awarded the first charter in 1963
Question No: 5 ( Marks: 1 ) - Please choose one
Which of the following function removes the fear of buying or selling at rip off
price?
► Fair pricing function
► Continuous pricing function
► Economic function
► Exchange function
(page 7) The fair price function removes the fear of buying or selling at rip off price
Question No: 6 ( Marks: 1 ) - Please choose one
The trading of listed securities in the NASDAQ market is known as:
► Primary market
► Third market
► Secondary market
► Fourth market
(page 12) The trading of listed securities in the NASDAQ market is known as the
third market.
Question No: 7 ( Marks: 1 ) - Please choose one
Stocks of well-established companies that have stable earnings and no extensive
liabilities are known as _______.
► Growth stocks
► Income stocks
► Defensive stocks
► Blue chip stocks
Ref: A blue chip stock is the stock of a well-established company having stable
earnings and no extensive liabilities. http://en.mimi.hu/stockmarket/blue_chip.html
Question No: 8 ( Marks: 1 ) - Please choose one
Which of the following statement regarding short sales is NOT true?
► Short sales are done with the expectation that prices will rise (not sure)► Short sales can be executed only on an uptrend
► Short sales are all done on margin
► Short sales may be executed by both individuals and market makers
Question No: 9 ( Marks: 1 ) - Please choose one
Companies that have capitalization amounts between $500 million and $2billion
are known as _________.
► Small cap companies
► Mid cap companies
► Growth companies
► Large cap companies
(Handout page 52)
(page278)
http://books.google.com/books?id=J7flQ2HaOPEC&pg=PA278&dq=Mid+ca
p+Companies+that+have+capitalization+amounts+between+$500+million+a
nd+$2billion+are+known+as&hl=en&ei=BvB8TbrPJIPwrQf3_OGzBQ&sa=X&
oi=book_result&ct=result&resnum=8&ved=0CEoQ6AEwBw#v=onepage&q&
f=false
Question No: 10 ( Marks: 1 ) - Please choose one
A procedure for valuing the price of a stock by using predicted dividends and
discounting them back to present value is known as.
► Capital Asset Pricing Model
► Dividend Discount Model
► The Residual Earning Model
► None of the given options
A procedure for valuing the price of a stock by using predicted dividends and
discounting them back to present value. The idea is that if the value obtained from
the DDM is higher than what the shares are currently trading at, then the stock is
undervalued. http://www.investopedia.com/terms/d/ddm.asp
Question No: 11 ( Marks: 1 ) - Please choose one
In bar chart, which colour indicates share prices are going up?
► Black
► White
► Blue
► Red
• Blue color indicates market or share price is going up.
• Red color indicates market or share price is going down.
Question No: 12 ( Marks: 1 ) - Please choose one
In candlestick chart, what does white body candle depict?
► Prices are moving down
► Prices are moving up
► Prices are constant
► Prices are fluctuating
• White body candle depicts when prices are moving up.• Black body candle will depicts when prices are moving down.
Question No: 13 ( Marks: 1 ) - Please choose one
On Balance Volume technique of technical analysis was developed by:
► Charles Dow
► Joseph Granville
► John Bollinger
► Welles Wilder
(Page 150)
http://books.google.com/books?id=AmQh8Zm34zgC&pg=PA150&dq=introduced+t
he+On+Balance+Volume+technique+of+technical+analysis&hl=en&ei=JgV1TemZ
MYPprQe1iaH9Bg&sa=X&oi=book_result&ct=result&resnum=1&ved=0CC0Q6A
EwAA#v=onepage&q&f=false
(PAGE 416)
http://books.google.com/books?id=I5SgX5q5sQEC&pg=PA416&dq=introduced+th
e+On+Balance+Volume+technique+of+technical+analysis&hl=en&ei=JgV1TemZM
YPprQe1iaH9Bg&sa=X&oi=book_result&ct=result&resnum=4&ved=0CD0Q6AE
wAw#v=onepage&q&f=false
Question No: 14 ( Marks: 1 ) - Please choose one
Which of the following is relevant to market breadth?
► Specialist inventory
► Advance/declining ratio
► Fundamental analysis
► Ticker tape
(page 71) The Advance-Decline Line (Breadth of the Market):
Ref: A technique used in technical analysis that attempts to gauge the
direction of the overall market by analyzing the number of companies
advancing relative to the number declining. Positive market breadth occurs
when more companies are moving higher than are moving lower, and it is
used to suggest that the bulls are in control of the momentum. Conversely,
a disproportional number of declining securities is used to confirm bearish
momentum.
Question No: 15 ( Marks: 1 ) - Please choose one
The Elliot Wave Theory is based on repeating ___________ waves cycle.
► 4
► 5
► 7
► 8
Technical Analysis
R.N. Elliot formulated this idea in a series of articles in Financial World in 1939.
Elliot believed that the market has a rhythmic regularity that can be used to
predict future prices.
The Elliot Wave Principle is based on a repeating 8-wave cycle, and each cycle is
made up of similar shorter-term cycles (“Big fleas have little fleas upon their
backs to bite 'em - little fleas have smaller fleas and so on ad infinitem”).Elliot Wave adherents also make extensive use of the Fibonacci series
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following is correct formula for calculating short interest ratio?
► Average shares sold short / Average daily trading volume
► Total shares sold short / Average daily trading volume
► None of the given options
► Total shares sold short / Total daily trading volume
(page 72) Short interest ratio = Total shares sold short / Average daily trading volume
Question No: 17 ( Marks: 1 ) - Please choose one
ABC Furniture’s worth $51 million. What is another term for this?
► Book value
► Earning per share
► Market value
► Cost per share
Question No: 18 ( Marks: 1 ) - Please choose one
Which of the following is TRUE regarding price per earning ratio?
► P/E=Earnings available to common stockholders/outstanding shares
► P/E=Market price per share/dividend per share
► P/E=Market price per share/earning per share
► P/E=Dividend per share/earning per share
Question No: 19 ( Marks: 1 ) - Please choose one
When inflation and interest rates are low, Price per Earning (P/E) ratio tend to be:
► High
► Low
► Minimum
► Average
(Page 94) P/E ratios are generally depressed when the interest rates and the rates of
inflation are high,
such as around 1980-81. P/E ratios tend to be high when inflation and interest rates are
low,
such as the period of the mid –to-late-1990s, when P/E ratios were at quite high levels
by
historical standards.
Question No: 20 ( Marks: 1 ) - Please choose one
Which of the following industry is sensitive to business cycle and price changes?
► Growth industry
► Cyclical industry
► Defensive industry
► Interest sensitive industry
Cyclical Industry
A term describing an industry that is sensitive to the business cycle and price
changes. Many cyclical industries produce durable goods such as raw materials and
heavy equipment.
http://www.proz.com/kudoz/english/management/1498272-
cyclical_industries.html
Question No: 21 ( Marks: 1 ) - Please choose one
Which of the following items will reduce stockholders' equity? ► Purchase of equipment
► Purchase of supplies
► Receiving a loan
► Payment of salaries
(Q#14)http://highered.mcgrawhill.com/sites/0073136484/student_view0/chapter3/multiple_choice_quiz.ht
ml
Question No: 22 ( Marks: 1 ) - Please choose one
Mutual funds pool the funds of savers and can be used to buy
► Shares in mutual savings banks only
► A variety of financial instruments
► Shares in the Federal Reserve System
► None of the given options
(Q#6)http://highered.mcgrawhill.com/sites/0073523097/student_view0/chapter1/quiz_2.html
(page20)http://books.google.com/books?id=jEaWCReqZkC&pg=PA20&lpg=PA20&dq=variety+of+financial+instruments++use
d+to+buy+Mutual+funds+pool+the+funds+of+savers&source=bl&ots=eD0-
vuEiwC&sig=pLuh8Ym3_dM7PUvwjp6K2TRB1KI&hl=en&ei=fhh9TdiyNYeGr
AfBoZ2_BQ&sa=X&oi=book_result&ct=result&resnum=5&ved=0CDUQ6AE
wBA#v=onepage&q=variety%20of%20financial%20instruments%20%20use
d%20to%20buy%20Mutual%20funds%20pool%20the%20funds%20of%20sa
vers&f=false
Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following is defined as an investment company whose capitalization
constantly changes as new shares are sold and outstanding shares are
redeemed?
► Unit investment trust
► Closed-end investment company
► Exchange traded fund company
► Open-end investment company
Ref: An open-ended mutual fund continuously issues and redeems units,
so the number of units outstanding varies from day to day. Most mutual
funds are open-ended.
(page78)http://books.google.com/books?id=ZtJXlvNDSc4C&pg=PA78&dq=
Openend+investment+company++investment+company+whose+capitalization+c
onstantly+changes+as+new+shares+are+sold+and+outstanding+shares+ar
e+redeemed&hl=en&ei=Ah19TZbSNcnsrAeVp8DDg&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCwQ6AEwAA#v=o
nepage&q=Openend%20investment%20company%20%20investment%20company%20whos
e%20capitalization%20constantly%20changes%20as%20new%20shares%2
0are%20sold%20and%20outstanding%20shares%20are%20redeemed&f=fal
se
Question No: 24 ( Marks: 1 ) - Please choose oneWhich of the following is defined as the total market value of securities in an
investment company’s portfolio divided by the number of investing company fund
shares currently outstanding?
► Discounted value
► Present value
► Future cash flow value
► Net asset value
http://en.wikipedia.org/wiki/Net_asset_value
Ref: Net asset value may represent the value of the total equity, or it may
be divided by the number of shares outstanding held by investors and,
thereby, represent the net asset value per share.
http://www.google.com/search?tbm=bks&tbo=1&q=Net+asset+value++the+
total+market+value+of+securities+in+an+investment+company%E2%80%9
9s+portfolio+divided+by+the+number+of+investing+company+fund+shares
+currently+outstanding&btnG=Search+Books#sclient=psy&hl=en&tbs=bks
:1&q=Net+Asset+Value+%28NAV%29+The+total+market+value+of+the+sec
urities+in+an+investment+company%27s+portfolio+divided+by+the+numb
er+of+investment+company+fund+shares+currently+outstanding+Owners+
of+fund+shares+can+sell+them+back+to+the+company+...&aq=f&aqi=&aql
=&oq=&pbx=1&bav=on.2,or.r_gc.r_pw.&fp=fdd35f689f495207
Question No: 25 ( Marks: 1 ) - Please choose one
Which of the following would be considered as the most bullish indicator?
► A price decrease with heavy volume
► A price increase with small volume
► A price increase on heavy trading
► No change in price but an increase in volume
Technician looks for price increase on heavy volume relative to the stocks normal trading volume
as an indication of bullish activity
http://www.scribd.com/doc/50577686/UNIT-2-
3?query=price+increase+on+heavy+volume+
Question No: 26 ( Marks: 1 ) - Please choose one
Stocks can be purchased for a combination of cash and borrowed funds in:
► Margin account
► Cash account
► IRA account
► Option account
BUSINESS 751 (Q#17)
Question No: 27 ( Marks: 1 ) - Please choose one
The average price of a security or currency over a specified time period used to
spot
pricing trends by smoothing out the large fluctuations is known as:
► Moving Average
► Standard deviation ► Variance
► Beta
The average price of a security or currency over a specified time period used to spot
pricing trends by smoothing out the large fluctuations. The exponential variety
assigns more value or weight to the most recent data.
http://www.metaglossary.com/meanings/248146/
Question No: 28 ( Marks: 1 ) - Please choose one
The use of the earnings multiplier model requires the use of forecast company
earnings. How do investors obtain forecasts of company earnings?
► Public companies are required to issue forecasts of quarterly earnings, going
out three years
► Securities analysts develop and publish earnings forecasts, based on
their understanding of the company, its industry, and the overall economy
(not sure )
► Securities analysts develop and publish earnings forecasts, based on
sophisticated statistical techniques
► Because these earnings will be announced in the future, no one can forecast
them
The earnings multiplier approach is the most popular approach to forecasting the
overall stock market.
Question No: 29 ( Marks: 1 ) - Please choose one
Which of the following is an intangible asset with an identifiable useful life?
► Patent
► Timber
► Goodwill
► Trademark
(Q#2)http://highered.mcgrawhill.com/sites/0073526789/student_view0/chapter9/multiple_choice_quiz.ht
ml
Question No: 30 ( Marks: 1 ) - Please choose one
Which of the following categories is NOT a financial statement element?
► Cash flow
► Contributed capital
► Assets
► Distributions
(q#3)https://highered.mcgrawhill.com/sites/0073526770/student_view0/chapter1/online_quizzes.html http://www.ysapak.com/YSAforum/index.php/topic,4417.new.html#new
Spring 2009
FIN630- Investment Analysis & Portfolio Management (Session - 2)Question No: 1 ( Marks: 1 ) - Please choose one
Which one of the following financial instruments represents an ownership share
in a corporation?
► Common stock
► Bond
► Preferred stock
► Term Finance certificates
(Handout page 24) common shares represent an ownership interest in the company
(page173)
http://books.google.com/books?id=YqBzDH1rBZMC&pg=PA173&dq=financ
ial+instruments+represents+an+ownership+share+in+a++corporation?&hl=
en&ei=mR52TcroEcnhrAf167G_Cg&sa=X&oi=book_result&ct=result&resnu
m=2&ved=0CCwQ6AEwAQ#v=onepage&q=financial%20instruments%20rep
resents%20an%20ownership%20share%20in%20a%20%20corporation%3F
&f=false
Question No: 2 ( Marks: 1 ) - Please choose one
There are ____ broad categories of financial assets.
► 2
► 3
► 4
► 5
(page82)http://books.google.com/books?id=bjEhstGJAMC&pg=PA82&dq=broad+categories+of+financial+assets&hl=en&ei=st5
5TeP2HY2nrAea5YDBBQ&sa=X&oi=book_result&ct=result&resnum=2&ved
=0CDAQ6AEwAQ#v=onepage&q=broad%20categories%20of%20financial%
20assets&f=false
(page1-10)
http://books.google.com/books?id=HUX-y4oXl04C&pg=SA1-
PA10&lpg=SA1-
PA10&dq=There+are+3+broad+categories+of+financial+assets&source=bl&
ots=qdm6kaAasY&sig=9HdQYSc9coWKc6EUF0hgD6dNHs&hl=en&ei=Uw99TbSrEpDqrQfn4v23BQ&sa=X&oi=book_result&ct=result&
resnum=10&ved=0CFwQ6AEwCQ#v=onepage&q=%20three%20broad%20c
ategories%20of%20financial%20assets&f=false
Question No: 3 ( Marks: 1 ) - Please choose one
Shares of McDonald Corporation are an example of a (n):
► Standardized financial instrument
► Non-standardized financial instrument since their prices can differ over time
► Standardized financial liability instrument
► Open-end investment
(question6)http://highered.mcgrawhill.com/sites/0073523097/student_view0/chapter3/quiz_1.html
Question No: 4 ( Marks: 1 ) - Please choose one
_____________ promotes investment education and ethical behavior among
those
involved in the investment business.
► Licensed International Financial Analyst (LIFA) ► Securities Investor Protection Corporation (SIPC)
► Chartered Financial Analyst Institute (CFAI)
Securities and Exchange Commission (SEC)
(page669)http://books.google.com/books?id=fkrYsLrekAC&pg=PA670&lpg=PA670&dq=promotes+investment+education+
and+ethical+behavior&source=bl&ots=MPpAvYfw7B&sig=A4E_HII5lEVqsKAJgsNXbRfwbo&hl=en&ei=Qel8TeznBsLsrQfvtdHRBQ&sa=X&oi=
book_result&ct=result&resnum=4&ved=0CDIQ6AEwAw#v=onepage&q&f=f
alse
(Another) ch25.ppt - www.swlearning.com
The CFA program began in 1959 when the Institute of Chartered
Financial Analysts (ICFA) was formed
– Promotes investment education and ethical behavior
– Awarded the first charter in 1963
Question No: 5 ( Marks: 1 ) - Please choose one
Which of the following function removes the fear of buying or selling at rip off
price?
► Fair pricing function
► Continuous pricing function
► Economic function
► Exchange function
(page 7) The fair price function removes the fear of buying or selling at rip off price
Question No: 6 ( Marks: 1 ) - Please choose one
The trading of listed securities in the NASDAQ market is known as:
► Primary market
► Third market
► Secondary market
► Fourth market
(page 12) The trading of listed securities in the NASDAQ market is known as the
third market.
Question No: 7 ( Marks: 1 ) - Please choose one
Stocks of well-established companies that have stable earnings and no extensive
liabilities are known as _______.
► Growth stocks
► Income stocks
► Defensive stocks
► Blue chip stocks
Ref: A blue chip stock is the stock of a well-established company having stable
earnings and no extensive liabilities. http://en.mimi.hu/stockmarket/blue_chip.html
Question No: 8 ( Marks: 1 ) - Please choose one
Which of the following statement regarding short sales is NOT true?
► Short sales are done with the expectation that prices will rise (not sure)► Short sales can be executed only on an uptrend
► Short sales are all done on margin
► Short sales may be executed by both individuals and market makers
Question No: 9 ( Marks: 1 ) - Please choose one
Companies that have capitalization amounts between $500 million and $2billion
are known as _________.
► Small cap companies
► Mid cap companies
► Growth companies
► Large cap companies
(Handout page 52)
(page278)
http://books.google.com/books?id=J7flQ2HaOPEC&pg=PA278&dq=Mid+ca
p+Companies+that+have+capitalization+amounts+between+$500+million+a
nd+$2billion+are+known+as&hl=en&ei=BvB8TbrPJIPwrQf3_OGzBQ&sa=X&
oi=book_result&ct=result&resnum=8&ved=0CEoQ6AEwBw#v=onepage&q&
f=false
Question No: 10 ( Marks: 1 ) - Please choose one
A procedure for valuing the price of a stock by using predicted dividends and
discounting them back to present value is known as.
► Capital Asset Pricing Model
► Dividend Discount Model
► The Residual Earning Model
► None of the given options
A procedure for valuing the price of a stock by using predicted dividends and
discounting them back to present value. The idea is that if the value obtained from
the DDM is higher than what the shares are currently trading at, then the stock is
undervalued. http://www.investopedia.com/terms/d/ddm.asp
Question No: 11 ( Marks: 1 ) - Please choose one
In bar chart, which colour indicates share prices are going up?
► Black
► White
► Blue
► Red
• Blue color indicates market or share price is going up.
• Red color indicates market or share price is going down.
Question No: 12 ( Marks: 1 ) - Please choose one
In candlestick chart, what does white body candle depict?
► Prices are moving down
► Prices are moving up
► Prices are constant
► Prices are fluctuating
• White body candle depicts when prices are moving up.• Black body candle will depicts when prices are moving down.
Question No: 13 ( Marks: 1 ) - Please choose one
On Balance Volume technique of technical analysis was developed by:
► Charles Dow
► Joseph Granville
► John Bollinger
► Welles Wilder
(Page 150)
http://books.google.com/books?id=AmQh8Zm34zgC&pg=PA150&dq=introduced+t
he+On+Balance+Volume+technique+of+technical+analysis&hl=en&ei=JgV1TemZ
MYPprQe1iaH9Bg&sa=X&oi=book_result&ct=result&resnum=1&ved=0CC0Q6A
EwAA#v=onepage&q&f=false
(PAGE 416)
http://books.google.com/books?id=I5SgX5q5sQEC&pg=PA416&dq=introduced+th
e+On+Balance+Volume+technique+of+technical+analysis&hl=en&ei=JgV1TemZM
YPprQe1iaH9Bg&sa=X&oi=book_result&ct=result&resnum=4&ved=0CD0Q6AE
wAw#v=onepage&q&f=false
Question No: 14 ( Marks: 1 ) - Please choose one
Which of the following is relevant to market breadth?
► Specialist inventory
► Advance/declining ratio
► Fundamental analysis
► Ticker tape
(page 71) The Advance-Decline Line (Breadth of the Market):
Ref: A technique used in technical analysis that attempts to gauge the
direction of the overall market by analyzing the number of companies
advancing relative to the number declining. Positive market breadth occurs
when more companies are moving higher than are moving lower, and it is
used to suggest that the bulls are in control of the momentum. Conversely,
a disproportional number of declining securities is used to confirm bearish
momentum.
Question No: 15 ( Marks: 1 ) - Please choose one
The Elliot Wave Theory is based on repeating ___________ waves cycle.
► 4
► 5
► 7
► 8
Technical Analysis
R.N. Elliot formulated this idea in a series of articles in Financial World in 1939.
Elliot believed that the market has a rhythmic regularity that can be used to
predict future prices.
The Elliot Wave Principle is based on a repeating 8-wave cycle, and each cycle is
made up of similar shorter-term cycles (“Big fleas have little fleas upon their
backs to bite 'em - little fleas have smaller fleas and so on ad infinitem”).Elliot Wave adherents also make extensive use of the Fibonacci series
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following is correct formula for calculating short interest ratio?
► Average shares sold short / Average daily trading volume
► Total shares sold short / Average daily trading volume
► None of the given options
► Total shares sold short / Total daily trading volume
(page 72) Short interest ratio = Total shares sold short / Average daily trading volume
Question No: 17 ( Marks: 1 ) - Please choose one
ABC Furniture’s worth $51 million. What is another term for this?
► Book value
► Earning per share
► Market value
► Cost per share
Question No: 18 ( Marks: 1 ) - Please choose one
Which of the following is TRUE regarding price per earning ratio?
► P/E=Earnings available to common stockholders/outstanding shares
► P/E=Market price per share/dividend per share
► P/E=Market price per share/earning per share
► P/E=Dividend per share/earning per share
Question No: 19 ( Marks: 1 ) - Please choose one
When inflation and interest rates are low, Price per Earning (P/E) ratio tend to be:
► High
► Low
► Minimum
► Average
(Page 94) P/E ratios are generally depressed when the interest rates and the rates of
inflation are high,
such as around 1980-81. P/E ratios tend to be high when inflation and interest rates are
low,
such as the period of the mid –to-late-1990s, when P/E ratios were at quite high levels
by
historical standards.
Question No: 20 ( Marks: 1 ) - Please choose one
Which of the following industry is sensitive to business cycle and price changes?
► Growth industry
► Cyclical industry
► Defensive industry
► Interest sensitive industry
Cyclical Industry
A term describing an industry that is sensitive to the business cycle and price
changes. Many cyclical industries produce durable goods such as raw materials and
heavy equipment.
http://www.proz.com/kudoz/english/management/1498272-
cyclical_industries.html
Question No: 21 ( Marks: 1 ) - Please choose one
Which of the following items will reduce stockholders' equity? ► Purchase of equipment
► Purchase of supplies
► Receiving a loan
► Payment of salaries
(Q#14)http://highered.mcgrawhill.com/sites/0073136484/student_view0/chapter3/multiple_choice_quiz.ht
ml
Question No: 22 ( Marks: 1 ) - Please choose one
Mutual funds pool the funds of savers and can be used to buy
► Shares in mutual savings banks only
► A variety of financial instruments
► Shares in the Federal Reserve System
► None of the given options
(Q#6)http://highered.mcgrawhill.com/sites/0073523097/student_view0/chapter1/quiz_2.html
(page20)http://books.google.com/books?id=jEaWCReqZkC&pg=PA20&lpg=PA20&dq=variety+of+financial+instruments++use
d+to+buy+Mutual+funds+pool+the+funds+of+savers&source=bl&ots=eD0-
vuEiwC&sig=pLuh8Ym3_dM7PUvwjp6K2TRB1KI&hl=en&ei=fhh9TdiyNYeGr
AfBoZ2_BQ&sa=X&oi=book_result&ct=result&resnum=5&ved=0CDUQ6AE
wBA#v=onepage&q=variety%20of%20financial%20instruments%20%20use
d%20to%20buy%20Mutual%20funds%20pool%20the%20funds%20of%20sa
vers&f=false
Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following is defined as an investment company whose capitalization
constantly changes as new shares are sold and outstanding shares are
redeemed?
► Unit investment trust
► Closed-end investment company
► Exchange traded fund company
► Open-end investment company
Ref: An open-ended mutual fund continuously issues and redeems units,
so the number of units outstanding varies from day to day. Most mutual
funds are open-ended.
(page78)http://books.google.com/books?id=ZtJXlvNDSc4C&pg=PA78&dq=
Openend+investment+company++investment+company+whose+capitalization+c
onstantly+changes+as+new+shares+are+sold+and+outstanding+shares+ar
e+redeemed&hl=en&ei=Ah19TZbSNcnsrAeVp8DDg&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCwQ6AEwAA#v=o
nepage&q=Openend%20investment%20company%20%20investment%20company%20whos
e%20capitalization%20constantly%20changes%20as%20new%20shares%2
0are%20sold%20and%20outstanding%20shares%20are%20redeemed&f=fal
se
Question No: 24 ( Marks: 1 ) - Please choose oneWhich of the following is defined as the total market value of securities in an
investment company’s portfolio divided by the number of investing company fund
shares currently outstanding?
► Discounted value
► Present value
► Future cash flow value
► Net asset value
http://en.wikipedia.org/wiki/Net_asset_value
Ref: Net asset value may represent the value of the total equity, or it may
be divided by the number of shares outstanding held by investors and,
thereby, represent the net asset value per share.
http://www.google.com/search?tbm=bks&tbo=1&q=Net+asset+value++the+
total+market+value+of+securities+in+an+investment+company%E2%80%9
9s+portfolio+divided+by+the+number+of+investing+company+fund+shares
+currently+outstanding&btnG=Search+Books#sclient=psy&hl=en&tbs=bks
:1&q=Net+Asset+Value+%28NAV%29+The+total+market+value+of+the+sec
urities+in+an+investment+company%27s+portfolio+divided+by+the+numb
er+of+investment+company+fund+shares+currently+outstanding+Owners+
of+fund+shares+can+sell+them+back+to+the+company+...&aq=f&aqi=&aql
=&oq=&pbx=1&bav=on.2,or.r_gc.r_pw.&fp=fdd35f689f495207
Question No: 25 ( Marks: 1 ) - Please choose one
Which of the following would be considered as the most bullish indicator?
► A price decrease with heavy volume
► A price increase with small volume
► A price increase on heavy trading
► No change in price but an increase in volume
Technician looks for price increase on heavy volume relative to the stocks normal trading volume
as an indication of bullish activity
http://www.scribd.com/doc/50577686/UNIT-2-
3?query=price+increase+on+heavy+volume+
Question No: 26 ( Marks: 1 ) - Please choose one
Stocks can be purchased for a combination of cash and borrowed funds in:
► Margin account
► Cash account
► IRA account
► Option account
BUSINESS 751 (Q#17)
Question No: 27 ( Marks: 1 ) - Please choose one
The average price of a security or currency over a specified time period used to
spot
pricing trends by smoothing out the large fluctuations is known as:
► Moving Average
► Standard deviation ► Variance
► Beta
The average price of a security or currency over a specified time period used to spot
pricing trends by smoothing out the large fluctuations. The exponential variety
assigns more value or weight to the most recent data.
http://www.metaglossary.com/meanings/248146/
Question No: 28 ( Marks: 1 ) - Please choose one
The use of the earnings multiplier model requires the use of forecast company
earnings. How do investors obtain forecasts of company earnings?
► Public companies are required to issue forecasts of quarterly earnings, going
out three years
► Securities analysts develop and publish earnings forecasts, based on
their understanding of the company, its industry, and the overall economy
(not sure )
► Securities analysts develop and publish earnings forecasts, based on
sophisticated statistical techniques
► Because these earnings will be announced in the future, no one can forecast
them
The earnings multiplier approach is the most popular approach to forecasting the
overall stock market.
Question No: 29 ( Marks: 1 ) - Please choose one
Which of the following is an intangible asset with an identifiable useful life?
► Patent
► Timber
► Goodwill
► Trademark
(Q#2)http://highered.mcgrawhill.com/sites/0073526789/student_view0/chapter9/multiple_choice_quiz.ht
ml
Question No: 30 ( Marks: 1 ) - Please choose one
Which of the following categories is NOT a financial statement element?
► Cash flow
► Contributed capital
► Assets
► Distributions
(q#3)https://highered.mcgrawhill.com/sites/0073526770/student_view0/chapter1/online_quizzes.html http://www.ysapak.com/YSAforum/index.php/topic,4417.new.html#new