Security Analysis & Portfolio Management – Financial and Strategic Management MCQ

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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?

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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 –

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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?

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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?

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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?

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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?

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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?

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

Year |
Return |

1 | 15.06% |

2 | 10.12% |

3 | 12.28% |

4 | 13.26% |

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.

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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?

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

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

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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 –

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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?

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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?

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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?

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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 –

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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 –

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

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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?

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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 –

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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.

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

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

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

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You have been given the following data for Security X:

Probability |
Return |

0.05 | 7% |

0.20 | 10% |

0.50 | 13.5% |

0.20 | 17% |

0.05 | 20%Calculate the standard deviation of security. |

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

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

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____ 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.

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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 –

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Dow Jones theory was formulated by-

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

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

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

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

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

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The efficient frontier –

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

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

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

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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:

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Correlation Coefficient supple¬ments and upgrades the –

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Liquidity risk:

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Positive Covariance indicates that –

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Expected worth is the –

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Covariance is a measurement of –

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

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Investment with a lower standard deviation carries

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The market price of a bond depends on _____

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Standard deviation is expressed –

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Standard deviation is a deviation from –

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

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

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Return from listed security is in two forms ____

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___ 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.

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Financial Assets are –

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Standard deviation determine____

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Security Analysis is a process of estimating individual securities.

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