Security Analysis & Portfolio Management – Financial and Strategic Management MCQ

Following details are made available to you for particular security:The beta of security: 0.5
Expected return on portfolio: 15%
The risk-free rate of return: 0.06
In another security has an expected rate of return of 18%, what would be its beta?

Following details are gathered by the investor:Standard deviation 2.8%
Market standard deviation 2.3%
The risk-free rate of return 8%
Expected rate of return on market portfolio 18%
The correlation coefficient of the portfolio with a market of 0.8
The required return on a security is –

Stocks A & B have the following historical returns:
Assume that someone held a portfolio consisting of 70% of Stock A and 30% of Stock B. What would have been the realized rate of return on the portfolio in each year from 2015 to 2019?

The following details are made available to you for security.Beta (P): 1.4
The risk-free rate of return: 6.396
The market rate of return: 13.296
If the alpha value is negative i.e. – 2.82 what investment action would you suggest?

The following details are made available to you for security.Beta (p) : 1.4
Risk-free rate of return: 6.3%
Market rate of return: 13.2%
If the alpha value is zero what investment action would you suggest?

The following details are made available to you for security.Beta (β): 1.4
The risk-free rate of return: 6.3%
The market rate of return: 13.2%
If the alpha value is + 1.2 what investment action would you suggest?

The following details are made available to you for security.Beta (β): 1.4
The risk-free rate of return: 6.3%
The market rate of return: 13.2%
If the alpha value is + 1.8 what investment action would you suggest?

The actual return of T Ltd. for the last four year is as follows:

T Ltd. has a beta of 1.15. Return on the market portfolio is 11.2%. The risk-free rate of return is 4%. Compute Alpha value and decide whether to hold, buy, or sell the security.

The expected return of Security A is 20% while that of Security B is 25%. The beta of Security A is 0.85 while that of Security B is 1.25. What is the market rate of return?

The following data is available for the Security P & Q.Correlation Coefficient for the above two securities is –

From the following data, you are required to calculate the covariance of Security G and Security K and interpret the result.

Given the probability of 0.1,0.4,0.3 & 0.2 estimated returns of the security are 36%, 26%, 20% & 15% respectively. Risk free rate is 6% and cost of capital is 13%. Total risk of security is –

Dividend for the last 4 years of Tara Ltd. was ₹ 7, ₹ 5, 12.8 & ₹ 10, and the market price was ₹ 120, ₹ 80, ₹ 130 & ₹ 150 respectively. What is the average return of the last 3 years considering capital gain and dividend?

Return of last 5 years of listed security is 16.2%, 19.8%, 18%, 15% & 21%. Five years ago the price of the security was 120 per share.What is its holding period return?

Return of last 5 years of listed security is 16.2%, 19.8%, 18%, 15% & 21%. Five years ago the price of the security was 120 per share. What is its average return?

The following data is available for two listed securities:Cov_rb = 37
σ_b = 8.49%
The correlation coefficient between security R and Security B is +0.8595. The standard deviation of Security R should have been –

Yogesh invests ₹ 1,25,000 in shares of BABA Ltd., a listed company. At the end of the period investment value is ₹ 1,32,000. He gets a dividend of ₹ 8,000. Return from investment is –

Suppose the risk-free rate is 4% and X is 2.5%. If an investor takes 13% risk, he can expect a return of –

X and Y are two securities in the portfolio for which the following information is available.Correlation coefficient is + 0.7.What weight you will assign to the Security Y so that portfolio risk is lowest?

An investor has invested in Security A & B in the ratio of 70:30. The standard deviation of Security A & B is 4.47 & 7.62 respectively. Covariance AB is 34. The Correlation Coefficient of Security A & B is 1. Risk of the portfolio is –

The covariance between Security P&Q § is 48.91. The standard deviation of Security P is 5.36 while that of Security Q is g 9.13. Compute the value of the correlation coefficient.

The covariance between Security X and security Y is – 42. This indicates that –

The covariance between Security X and Security Y is + 45.8. This indicates that –

Following details are available for EX Ltd. & FX Ltd. securities.Covariance between Security EX and Security FX is –

You have been given the following data for Security X:

The covariance between Security X and Security Y is zero. This indicates that –

According to the Sharpe single index model, the return for each security can be given by the –

____ suggests that stock price changes have the same distribution and are independent of each other, so the past movement or trend of a stock price or market cannot be used to predict its future movement.

According to Dow Jones theory, share prices demonstrate a pattern over 4 to 5 years. These patterns can be divided into three distinct cyclical trends –

Dow Jones theory was formulated by-

The EMH was developed by Professor Eugene Fama who argued that –

The advocates of the Efficient-market hypothesis (EMH) theory contend that securities markets are –

As per the ‘Efficient Frontier’ concept, if the security falls below the frontier –

The common stock of a company must provide a higher expected return than the debt of the same company because

A corporate bond is a corporation’s write undertaking that it will refund a specific amount of money plus –

The efficient frontier –

An attempt to make a correction by adjusting historical beta to make it closer to an average beta is classified as –

Which of the following is the correct formula for the Correlation Coefficient?

A risk associated with project and way considered by a well-diversified stockholder is classified as –

Consider a graph with standard deviation on the horizontal axis and expected return on the vertical axis. The line that connects the risk-free rate and the optimal risky portfolio is called:

Correlation Coefficient supple¬ments and upgrades the –

Liquidity risk:

Positive Covariance indicates that –

Expected worth is the –

Covariance is a measurement of –

Which of the following is on the horizontal axis of the Security Market Line?

Investment with a lower standard deviation carries

The market price of a bond depends on _____

Standard deviation is expressed –

Standard deviation is a deviation from –

If the probability of occurrence is assigned, then the expected return would be:

Which of the following is the correct formula to calculate returns of listed security?

Return from listed security is in two forms ____

___ is one who exercises any degree of discretion as to the investment or management of the portfolio of the securities or the funds of the client.

Financial Assets are –

Standard deviation determine____

Security Analysis is a process of estimating individual securities.