QUESTION BANK

Long Question:

Define SEBI. Explain the role of SEBI in protecting the

investors.

Enumerate the non-security forms of investment in detail.

Explain different kinds of money market and capital market

instruments available to investors.
Describe the meaning of Portfolio Management. Discuss the
effects of combining securities.
Why Return is an important consideration for investment? Can
it be measured?
What is Economic analysis? Describe the factors of the
investment process in economic analysis.
How is a fundamental analysis useful to a prospective
investor?
What is meant by Security analysis & portfolio management?
How does fundamental analysis differ from technical analysis?
How we can differentiate the capital Market & Money Market in
detail?
Explain the Technical & Fundamental Anlaysis.
What do you mean by Risk? Discuss the types of Risks involved
during an Investment.
Describe the meaning of Portfolio Management. Discuss its
objectives and significance also.

Short Question:

Define the Relative Strength Analysis.

What is the meaning of Industry Analysis?

Write a short note on the Mutual Fund Industry.

Define the role of the Investor in the Equity

Market.

Explain the types of investment alternatives.

Why there is a need for every company to

measure the Risk and Return?

Define Systematic and Unsystematic Risk.

What are the different forms of Efficient Market
Hypothesis.

Define the Moving Average and RSI applied in

technical analysis.

What is the meaning of risk? Explain the concept

of Systematic risk and Unsystematic risk.

Write a short note on SEBI.

What do you mean by a Risk-Return

Relationship?

Explain the concept of the Efficient Market

Hypothesis.

Why some of the investors don’t step into the

equity market for investment?

What is Portfolio management? Write the

elements of Portfolio management.

How will you differentiate the Industry and

Company Analysis?

Define the Company Analysis?

Define the meaning of Fundamental Analysis?

Explain the advantages and disadvantages of

Mutual Funds?

Define the role of stock exchange in investor

protection?

Explain the concept of the Capital Asset Pricing

Model.

Why investors want to invest money?

Define Systematic and Unsystematic Risk?

What are the habits of a good investor?

MCQS
This type of risk can be avoided by diversifying properly.
A. Systematic Risk B. Unsystematic Risk C. Portfolio Risk D. Total Risk

2. Which of the following securities has the most possible risk as well as the highest potential
return?a) Preferred stock b) Commercial Paperc) Derivatives d)
Bonds

3. The ability to convert an asset rapidly and without influencing its price is referred to as
________.
a) Scalability b) Liquidity c) Marketability d) Minimal Risk
4. The process of holding an investment in shares in electronic form is _________.
a) Dematerialization b) Demutualisation c) Speculation d) None of the above

5. The ______ market assists existing investors in selling their stocks.

a) Primary Market b) Commodity Market c) Secondary Market d) Capital
Market

6. Which of the following securities is most likely to become virtually worthless if a company
declares bankruptcy?
a) Common stock b) Preferred stockc) Bond d) None of
these

7. A shareholder-funded investment program that trades in a variety of assets

a) Mutual Funds b) Dividendsc) Share Program d) None of the above

8. Amount of money paid to a company’s shareholders regularly.

a) Bond b) Profit c) Cashback d) Dividends
9. Buying low and selling high, making a large capital gain is associated with ________
a) Investment b)Speculation c) Gambling d) Arbitrage

10. Investment in which principal amount and the terminal value are known with certainty is
________
a) Fixed principal investment b) Variable principal investment
c) Non – security investment d) Indirect investment

11. Which one of the following is known as indirect investment alternatives?

a) Cash b) Equity shares c) Pension Fund d) Antiques

12. An Investor invests in assets known as :

a) Block of Assets b) Portfolio c) Securities d) None of the above

13. The main objective of the portfolio is to reduce _______ by diversification

a) Return b) Risk c) Uncertainty d) Percentage

14. The fundamental analysis approach has been associated with

a. Uncertainties b. Certainties c. Ratios d. Balance sheet

15. The fundamental analysis is a method of finding out

a. Ratio b. Value of shares c. Tips d. Future price of a security

16. What is the primary goal of security analysis?

o A) To predict future stock prices
o B) To determine the intrinsic value of an investment
o C) To assess the impact of marketing strategies
o D) To evaluate the performance of mutual funds
Answer: B) To determine the intrinsic value of an investment.
 17. Which of the following is a fundamental analysis tool?
o A) Technical charts
o B) Price-to-earnings (P/E) ratio
o C) Moving averages
o D) Bollinger Bands
Answer: B) Price-to-earnings (P/E) ratio.
18. What does a high P/E ratio generally indicate about a stock?
o A) It is undervalued
o B) It has low growth prospects
o C) Investors expect high future growth
o D) It pays high dividends
Answer: C) Investors expect high future growth.
19. In technical analysis, which of the following concepts is used to identify
trends?
o A) Fundamental ratios
o B) Moving averages
o C) Discounted cash flow
o D) Earnings reports
Answer: B) Moving averages.
20. Which formula is used to calculate the expected return of an asset using
the Capital Asset Pricing Model (CAPM)?
o A) Return = Risk-free rate + (Beta × Market return)
o B) Return = Dividend / Price
o C) Return = Earnings / Price
o D) Return = Price - Cost
Answer: A) Return = Risk-free rate + (Beta × Market return).
Portfolio Management
21. What is diversification in the context of portfolio management?
o A) Holding only one asset to minimize risk
o B) Spreading investments across various financial instruments to reduce risk
o C) Investing in high-risk securities to maximize returns
o D) Concentrating investments in a single industry
Answer: B) Spreading investments across various financial instruments to reduce risk.
 22. What does the Sharpe Ratio measure?
o A) The potential return of an investment relative to its risk
o B) The total return of a portfolio
o C) The correlation between two assets
o D) The percentage of stocks in a portfolio
Answer: A) The potential return of an investment relative to its risk.
23. Which portfolio management strategy involves adjusting a portfolio by
changing asset allocations based on market conditions?
o A) Buy and hold
o B) Tactical asset allocation
o C) Strategic asset allocation
o D) Indexing
Answer: B) Tactical asset allocation.
24. What is the purpose of Modern Portfolio Theory (MPT)?
o A) To find the best time to sell stocks
o B) To create portfolios that maximize returns for a given level of risk
o C) To predict future stock prices accurately
o D) To evaluate the performance of individual stocks
Answer: B) To create portfolios that maximize returns for a given level of risk.
25. Which of the following best describes a market order?
o A) An order to buy or sell a stock at a specific price
o B) An order to buy or sell a stock at the best available price
o C) An order that remains active until filled
o D) An order that is executed at the end of the trading day
Answer: B) An order to buy or sell a stock at the best available price.