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ABA CTFA Practice Test - Questions Answers, Page 78

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In which of the following cases the buy decision be taken?

A.
Where the intrinsic value is greater than the current market price as the asset is overvalued
A.
Where the intrinsic value is greater than the current market price as the asset is overvalued
Answers
B.
Where the intrinsic value is lesser than the current market price as the asset is overvalued
B.
Where the intrinsic value is lesser than the current market price as the asset is overvalued
Answers
C.
Where the intrinsic value is equivalent than the current market price as the asset is acquired
C.
Where the intrinsic value is equivalent than the current market price as the asset is acquired
Answers
D.
Where the current market price has doubled than the intrinsic value as the asset is distributed
D.
Where the current market price has doubled than the intrinsic value as the asset is distributed
Answers
Suggested answer: B

Which of the following index is price weighted?

A.
New York stock exchange composite
A.
New York stock exchange composite
Answers
B.
Dow Joes industrial average
B.
Dow Joes industrial average
Answers
C.
Standard and poor's index
C.
Standard and poor's index
Answers
D.
Rusells 3000 index
D.
Rusells 3000 index
Answers
Suggested answer: B

Which of the following is the ratio that shows that how much a company pays out in dividends each year relative to its share price?

A.
Dividend per share
A.
Dividend per share
Answers
B.
Dividend coverage ratio
B.
Dividend coverage ratio
Answers
C.
Dividend earned ratio
C.
Dividend earned ratio
Answers
D.
None of these
D.
None of these
Answers
Suggested answer: D

Which of the following statements hold true for spread?

A.
It is a price asked by seller of securities from buyers
A.
It is a price asked by seller of securities from buyers
Answers
B.
It is a quoted price in order to buy shares of a company
B.
It is a quoted price in order to buy shares of a company
Answers
C.
It is the rate at which a dealer will buy the base currency
C.
It is the rate at which a dealer will buy the base currency
Answers
D.
It is the difference between bid and ask price
D.
It is the difference between bid and ask price
Answers
Suggested answer: D

Which of the following statements takes into account some non-cash accounting items such as depreciation?

A.
Income statement
A.
Income statement
Answers
B.
Cash flow statement
B.
Cash flow statement
Answers
C.
Balance sheet
C.
Balance sheet
Answers
D.
Statement of Owner's equity
D.
Statement of Owner's equity
Answers
Suggested answer: B

In which of the following cases the sell decision be taken?

A.
Where the intrinsic value is greater than the current market price as the asset is overvalued
A.
Where the intrinsic value is greater than the current market price as the asset is overvalued
Answers
B.
Where the intrinsic value is lesser than the current market price as the asset is overvalued
B.
Where the intrinsic value is lesser than the current market price as the asset is overvalued
Answers
C.
Where the intrinsic value is equivalent than the current market price as the asset is acquired
C.
Where the intrinsic value is equivalent than the current market price as the asset is acquired
Answers
D.
Where the current market price has doubled than the intrinsic value as the asset is distributed
D.
Where the current market price has doubled than the intrinsic value as the asset is distributed
Answers
Suggested answer: B

All of the following is required to calculate the present value figure Except:

A.
The amount of future cash flows
A.
The amount of future cash flows
Answers
B.
The length of time
B.
The length of time
Answers
C.
The discount rate
C.
The discount rate
Answers
D.
The retained earnings
D.
The retained earnings
Answers
Suggested answer: D

___________ are financial intermediaries that hold portfolio of securities on the behalf of their shareholders.

A.
Growth companies
A.
Growth companies
Answers
B.
Value companies
B.
Value companies
Answers
C.
Investment companies
C.
Investment companies
Answers
D.
Banking companies
D.
Banking companies
Answers
Suggested answer: C

Which of the following ratios would not be used to draw a conclusion about a company's managerial effectiveness?

A.
Net margin
A.
Net margin
Answers
B.
Price-earning ratio
B.
Price-earning ratio
Answers
C.
Return on equity
C.
Return on equity
Answers
D.
Return on investment
D.
Return on investment
Answers
Suggested answer: D

Insurance policies may be classified in which of the following categories?

A.
By policy planning
A.
By policy planning
Answers
B.
By type of risks coverage
B.
By type of risks coverage
Answers
C.
By kind of insurance underwritten
C.
By kind of insurance underwritten
Answers
D.
All of the above
D.
All of the above
Answers
Suggested answer: C
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