Mock Test - 1 - Quiz, Flashcards & Trivia

1. Government Bond is best described by which one of the following statements?

It has no voting privileges

It receives no cash dividends

It may be resold at any time

All of the above

2. What ails the Indian Housing Society?

Lack of clear titles in most cases

High stamp duty rates

Obsolete tenancy & rental control laws

All of the above

3. Immovable property must be held for minimum of ________ years in order to qualify as a Long Term Capital Asset

1

2

3

4

4. The returns on Stock A and Stock B have a correlation coefficient of –1. When the price of Stock A appreciates by 12%, how will Stock B's price perform?

Appreciate by 12%.

Depreciate by 12%

Stay unchanged

Depreciate by 6.0%.

5. Equity Linked Savings Schemes eligible for Sec. 80 C benefits have a lock-in period of ________ years

2

3

4

5

6. Which of the following statements best describe corporate bonds?

Bond investors are creditors of the corporation

The majority of bonds make coupon interest payment once per annum.

Both (a) and (b) are true

None of the above are true

7. Mutual Funds have to pay capital gains tax @ ---------- % on the profit on sale of equity shares.

5%

No Tax

10% (without indexation)

20 % (with Indexation)

8. Mr. Babitabh Achhan is a well established business man. His only daughter Kaishwaria is married to Tabishek Rai. Babitabh wants to include Tabishek as a member in his HUF. Is it possible?

Yes

Yes, If Tabishek’s father in law gives in writing and his mother in law approves it he can be included

Yes but prior approval of IT department is to be taken

No

9. Which of the following costs best describes the cost of foregone income that results from making an economic decision to use funds to purchase a piece of equipment?

Cost of Capital

Fixed Cost

Marginal Cost

Opportunity Cost

10. The risk free return of Security A is 8%. In addition to it, you expect that the return on market would be 14%. The expected return of Security A with beta of 0.70 is

12.2%.

15.4%.

17.8%.

18.2%.

11. Public Issue through the book building process is better than I.P.O at fixed price because__________

High fixed price will result in under subscription leading to loss to the investor

It helps the issuer to ascertain the exact price at which the investor is willing to subscribe

Low fixed price will result in over subscription leading to loss to the issuer

All of the above

12. In case of fixed income securities, which of the following statements is not true?

Current yield includes only the coupon if the security is sold immediately

Current yield includes both coupon & capital gain/loss if the security is sold immediately

YTM is the return an investor would receive if the security were held to maturity

All are true

13. A basis point is which one of the following?

One Rupee, Re.1

One percentage point, 1percent

One paisa, Re.0.01

One one-hundredth of one percentage point, 0.01 of 1percent

14. Abhishek Joshi's parents are Senior Citizens. They have no other source of income other than what they get from Abhishek per month. Abhishek wants to ensure a separate source of cash inflow for them thereby ending their dependency upon him. For this purpose he wants to deposit Rs 5 Lacs each in the name of his parents in the Senior Citizen Savings scheme 2004. Is the same allowed?

No, any deposit in the said scheme has to be made from the retirement benefits of the concerned depositor

No, any deposit in the said scheme has to be sourced from Self Funds only

Yes, after 60 years of the age of the depositor, the source of deposit is immaterial

Yes, any person not having any source of income can make a deposit in the said scheme

15. The CAPM is a model that

Determines the geometric return of a security

Determines time-weighted return

Explain return in terms of risk

Explains systematic risk

16. Kuresh Salmadi is the nominee of existing PONSC investments of his mother Rira Nadia. Kuresh wants to know in case these NSC's are pledged to a bank to avail a loan. What impact will happen to the nomination

His nomination will stand still

His nomination stands cancelled as soon as any pledge is made

No pledge is permitted for NSC

The decision will be under the discretion of the master of Post Office Concerned

17. If a bond is selling at a premium

Its coupon rate is higher market rate

It is an attractive investment

Its current yields is lower than the coupon rate

Its realized compound yield will be less than the yields to maturity

18. Intervention by RBI in the money market through buying of government securities has resulted in MIBOR rates falling across the board. If a unit trust bond fund marks to market all its bonds, the price of the unit trust fund should _____________

Remain unchanged

Declare a dividend

Appreciate

Depreciate

19. If a new issue was offered to the public at 15 times earnings but the market was pricing similar shares at 19 times, this would be _____________

Appalling proposition to the investor

The investor cannot take a position

An example of low gearing

Bargain not to be missed

20. Which statement is true

In a Vanilla IPO , price discovery is better than in a book building issue

In a Vanilla IPO, price discovery is less efficient than in a book building issue

In a Vanilla IPO ,price discovery is throughout the issue

In Book building, price discovery is non-existent

21. The Managing Director of Ms Prudent Corporate Ltd wants to float an IPO. He has come to know about Book Building and is favorably inclined. However he is also concerned about the retail investors. He does an analysis of the merits and demerits of Plain Vanilla IPO and Book Building methods. Which of the following statement is true?

In book building demand for the IPO is known at the end of the issue

In book building demand for the IPO is known at the beginning of the issue

In book building demand for the IPO is known throughout the issue

In book building demand for the IPO Is not known

22. DevD pays a premium of Rs 12,000 annually for his medical insurance policy and Rs 17,000 for his father both through cash. What deduction would DevD get under the section 80D of the IT Act

12000

29000

27000

No Deduction

23. Which of the following are major reasons for making real estate investments? I. Reasonably liquid. II. Comparatively higher leverage. III. Good hedge against inflation. IV. Higher capital gains.

I, II

II, III

III, IV

I, IV

24. For listing, the company must submit to------audited balance sheets for the past----years

NSE;3

SEBI;3

CLB;2

ROC;2

25. Company A has announced a 20% increase in net profit over the previous year. The stock price however fails to respond to the news and remains unchanged. This phenomenon reflects

Weak form of market efficiency

Semi-strong form of market efficiency

Strong form of market efficiency

Investors are selling on fact