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Security Analysis and Investment Management Practice Test
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Security Analysis, Portfolio Management, and Financial Derivatives covers the many topics of modern investment analysis.

In finance, Security analysis is the evaluation and assessment of stocks or securities to determine their investment potential.

Investment management is the handling of financial assets and other investments. It is more than buying and selling investments. The management part includes devising a short- or long-term strategy for acquiring and disposing of portfolio holdings. It can also include banking, budgeting, and tax services and duties, as well.

Security Analysis and Investment Management Practice Test
Time left 00:00
25 Questions

1. __________ is defined as the nth root of the product resulting from multiplying a series of returns together.
2. What should be the investment decision When CAPM < Expected Return ?
3. The objective of fundamental analysis for a security in a market is to identify either it is:
4. Which of the following statements is/are true with respect Capital Market Line (CML)? I. It is the line passing from risk-free rate through market portfolio. II. The slope of CML is called market price of risk. III. CML fails to express equilibrium pricing relationship between expected return and standard deviation for all efficient portfolios lying along the line.
5. A group of mutual funds with a common management are known as:
6. Which of the following statements pertaining to the Efficient Market Hypothesis (EMH) is/ are true?
7. Ms. Kiran wrote a European call option on a stock. The premium was Rs.5 per share and the market price and exercise price of the share were Rs.39 and Rs.45 respectively. If on expiry date, the price of the share was Rs. 42, the profit/loss to Ms. Kiran was
8. Fundamental analysis focuses on predicting the future price of a security and Technical analysis on estimating the intrinsic value of a security.
9. According to the Capital Asset Pricing Model (CAPM), the expected rate of return on any security is equal to
10. The most widely used monetary tool is ___________.
11. Stock A has a beta of 1.0 and very high unique risk. If the expected return on the market is 20%, then according to the CAPM the expected return on Stock A will be:
12. Merrill Lynch estimates the index model for a stock using regression analysis involving total returns. They estimated the intercept in the regression equation at 6% and the β at 0.5. The risk-free rate of return is 12%. The true β of the stock is ________.
13. The return expected = ……….+ Beta portfolio (Return of Market - Risk Free Return)
14. Which of the following patterns is the most reliable and widely used for indicating trend reversal?
15. The ability of the investor to convert an investment into cash in a short period of time is called
16. Information processing errors consist of I. forecasting errors II. overconfidence III. conservatism IV. framing
17. If the risk free rate of return (Rf) is 7%, expected return on the market [E(Rm)] is 15%, and the return on stock X is 16%, the beta for the stock X using CAPM is
18. The intercept calculated by Merrill Lynch in the regression equations is equal to
19. Tracking error is defined as
20. An investment in common stock carries a higher return than a bank certificate of deposit. The difference in returns is called
21. A direct equity claim arises through investment in
22. If the dispersion around a security's return is larger
23. Market risk is also called:
24. Which of the following is not a characteristic of a risk averter?
25. In a factor model, the return on a stock in a particular period will be related to _________.

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