MULTIPLE CHOICE QUESTIONS on Fixed Income Securities
1. A __________ is also known as a fixed- income security. a. Mutual Funds b. Bond c. Shares d. Real Estate
2. The fixed- income securities are issued at a __________.
a. Premium b. Par c. Discount d. All of the above
3. Which among the following is not the type of fixed- income securities? a. Preferred stock b. Bonds c. Common stock d. Debt
4. The volatility of fixed- income security is _________ than other assets.
a. Lower b. Higher c. Equal d. Greater
5. A debt instrument issued by a government, corporation or other entity to finance and expand their operations is known as: a. Fixed income securities b. Variable- income securities c. Deferred- income securities d. Rigid income securities
6. The overall risk of an asset allocation or investment strategy is reduced by which of the following? a. Fixed income securities b. Variable income securities c. Deferred income securities d. Rigid income securities
7. The simplest fixed- income securities is:
a. Zero coupon bonds b. Mortgage bonds c. Convertible bond d. Municipal bond 8. The bond which is fully backed by credit and faith of issuer is classified as a. General obligation tax b. General obligation savings c. General obligation bonds d. General obligation notes
9. Which of the following is not the importance of investing in fixed income securities? a. Well- diversified portfolio b. Lower volatility c. Stable returns d. Locked money
10. Which of the following is not the disadvantage of fixed income securities? a. Lower returns b. Locked money c. Not actively traded d. Well- diversified portfolio
11. Debt securities are often called fixed income securities because a. The government fixes the maximum rate that can be paid on bonds. b. They are held predominantly by older people who are living on fixed incomes. c. They pay a fixed amount at maturity. d. They promise a fixed stream of income.
12. A bond could be thought of as an IOU between the lender and borrower. What does this word IOU represent? a. A signed document acknowledging a debt. b. A signed contract acknowledging a property. c. Both a and b d. A signed contract acknowledging a gold.
13. Fixed income securities have fixed maturity period ranging from a. As low as 60 days to 1 year b. As high as 99 days to 30 years c. As low as 91 days to 30 years d. As high as 60 days to 1 year
14. Which among the following is the characteristic of fixed- income securities? a. It is a debt issuing security. b. It has specific coupon or interest rate. c. It pays interest in intervals over life of security or at maturity. d. All of the above. INTERPRETATION OF FINANCIAL MARKET DATA 1. Fundamental analysis is concerned with ___________________ of the company. a. Book value b. Closing value c. Intrinsic value d. Depreciated value
2. Technical analysis of a security may also be explained as the study and trend analysis of __________ in respect of a particular security. a. Historical data b. Market data c. Primary data d. Present data
3. A ________ is the price of a stock as quoted on an exchange.
a. Stock quote b. Bid price c. Ask price d. P/E
4. ________ is a graphical depiction of the closing prices prevailing on consecutive days.
a. Line chart b. Bar chart c. Point Charts d. Candlestick charts
5. _______ consist of a chain of vertical/ horizontal bars, each of which reflects price movement for a day. a. Line chart b. Bar chart c. Candlestick chart d. Point charts
6. Which charts are used not only for predicting price movements of common stock, but also for forecasting their reverse trend? a. Line chart b. Bar chart c. Candlestick chart d. Point & figure chart
7. _____________ highlights the range between the opening and closing price of that stock. a. Line chart b. Bar chart c. Candlestick chart d. Point & figure chart VALUATION OF ASSET 1. Capitalization of cash flow method takes a single benefit stream and assumes that it grows at a steady rate into __________. a. Perpetuity b. Deferred c. Annuity d. Rigidity
2. The cash flows, in an investment are expected to be an annuity of Rs 5,000 per year for 5 years, and the required rate of return, is 5%. Using the capitalization of cash flow method, find the value of this investment? a. Rs 21,647.3 b. Rs 21,667.5 c. Rs 21,645.5 d. Rs 21,645.5
3. The cash flows, in an investment are expected to be an annuity of Rs 15,000 per year for 4 years, and the required rate of return is 8%. Using the capitalization of cash flow method, find the value of this investment? a. Rs. 49,682.5 b. Rs 49,688 c. Rs 49,000 d. Rs 49,681.90
4. The book value of asset is based on
a. Future cost b. Historic cost c. Fixed cost d. Variable cost
5. The _______ of an asset represents the accounting value.
a. Face Value b. Market Value c. Intrinsic value d. Book value
6. The value of any asset is based on
a. Book value of an asset b. Market equilibrium c. Expected future benefits d. Risk- free assets
7. Which is the primary determinant of the value of the various types of long- term securities? a. Liquidation value of the firm’s assets b. Market value c. Capitalization of cashflows d. None of these 8. The capitalization of Cash Flow Method is an ____________ approach. a. Income- based b. Asset based c. Market based d. Economic based
9. The valuation which determines the value of an asset as the present value of the stream of future cash flows discounted at an appropriate required rate of return. a. Book value of asset b. Valuation of shares c. Capitalization of cash flow method d. Net present value
10. The market value of asset is determined by
a. Internationally b. Outside industry c. Within same industry d. Industry to different industry
11. Market value is normally related to
a. Expected future cash flows b. Demand schedule c. Supply schedule d. Both b & c
12. The value placed on the asset by the marginally satisfied buyer and seller who exchange assets in the marketplace is considered as a. Market price of an asset b. Capitalization of cashflow c. Book value of an asset d. Face value of an asset
