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ABA CTFA Practice Test - Questions Answers, Page 75

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In which of the following approaches the capitalization of an income is done?

A.
Present value approach
A.
Present value approach
Answers
B.
Multiple of earning approach
B.
Multiple of earning approach
Answers
C.
Communicative approach
C.
Communicative approach
Answers
D.
Integrated eclectic approach
D.
Integrated eclectic approach
Answers
Suggested answer: B

Which of the following is formula of earning per share?

A.
EPS=IRR/ market value per share
A.
EPS=IRR/ market value per share
Answers
B.
EPS=ROE*Net asset value per share
B.
EPS=ROE*Net asset value per share
Answers
C.
EPS= NPV* Retained earning value per share
C.
EPS= NPV* Retained earning value per share
Answers
D.
EPS=ROE* Book value per share
D.
EPS=ROE* Book value per share
Answers
Suggested answer: A

Which of the following necessary in order to reduce the huge number of possible investments to a smaller number that can investigate carefully?

A.
Securing
A.
Securing
Answers
B.
Saving
B.
Saving
Answers
C.
Discounting
C.
Discounting
Answers
D.
None of these
D.
None of these
Answers
Suggested answer: D

Which of the following equations assume a linear relationship between price and yield?

A.
Yield to maturity equation
A.
Yield to maturity equation
Answers
B.
Duration equation
B.
Duration equation
Answers
C.
Convexity equation
C.
Convexity equation
Answers
D.
Immunization equation
D.
Immunization equation
Answers
Suggested answer: B

Which of the following index is known as value weighting?

A.
Price weighting
A.
Price weighting
Answers
B.
Equal weighting
B.
Equal weighting
Answers
C.
Base weighting
C.
Base weighting
Answers
D.
Capitalization weighting
D.
Capitalization weighting
Answers
Suggested answer: D

A form of EMH which states that security prices fully reflect all publicly available information is known as:

A.
Strong form
A.
Strong form
Answers
B.
Week form
B.
Week form
Answers
C.
Semi strong form
C.
Semi strong form
Answers
D.
None of these
D.
None of these
Answers
Suggested answer: C

Which of the following moves inversely to each other?

A.
Interest rate and debt to equity ratio
A.
Interest rate and debt to equity ratio
Answers
B.
Discount rate and P/E ratio
B.
Discount rate and P/E ratio
Answers
C.
Coupon rate and leverage ratios
C.
Coupon rate and leverage ratios
Answers
D.
Interest rate and activity ratios
D.
Interest rate and activity ratios
Answers
Suggested answer: B

In bottom up approach of fundamental analysis investors begin with:

A.
Industry
A.
Industry
Answers
B.
Economy
B.
Economy
Answers
C.
Market
C.
Market
Answers
D.
Company
D.
Company
Answers
Suggested answer: D

Which of the following is the difference between an expected return and actual return on an investment?

A.
Expected return
A.
Expected return
Answers
B.
Normal return
B.
Normal return
Answers
C.
Tax return
C.
Tax return
Answers
D.
None of these
D.
None of these
Answers
Suggested answer: D

Which of the following is the characteristic of a cyclic stock?

A.
Their value is tied with the overall state of national economy
A.
Their value is tied with the overall state of national economy
Answers
B.
They are low priced, speculative and risky securities
B.
They are low priced, speculative and risky securities
Answers
C.
They have stable earning and no extensive liabilities
C.
They have stable earning and no extensive liabilities
Answers
D.
They have irregular earning and extensive liabilities too
D.
They have irregular earning and extensive liabilities too
Answers
Suggested answer: A
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