Quick Revision – Chapter 8 Crash Course

1. How is PE Ratio calculated?

2. What will a Fundamental Analyst study to determine price target of a share?

3. Which issuing authority issues Certificate of Deposit?

4. How will increase in the yield in the market affect the value of existing debt securities?

5. If the fund manager expects interest rates to rise where should he invest?

6. Real estate prices rise when the economy is unstable. True or False?

7. A portfolio has Beta of more than 1. What does that mean?

8. Which measure of risk is relevant only for debt schemes?

9. Which index is better suited to diversified equity fund which invests in large cap stocks?

10. _______________ measures how closely an index fund tracked benchmark returns.

11. What is a driver of return and risk in a scheme?

12. What will be evaluated in the Fundamental Analysis of a security?

13. Which portfolio building approach involves evaluating first the economy then the industries and finally the companies?

14. Which debt security has lowest default risk?

15. As per SEBI, which returns should be considered to check the performance of a scheme over the years?

16. What is the most important factor that should concern the investor when he invests in debt security?

17. Which type of scheme can own higher percentage of illiquid assets?

18. Mutual funds can hedge their portfolio on weighted average modified duration basis by investing in Interest Rate Futures (IFRs). Correct or Incorrect?

19. Though debt securities do not give as much return as equity but at least there is no chance of loss of principal if invested in debt fund. Correct or incorrect?

20. From income tax point of view, returns of arbitrage funds are treated as returns of -

21. What is the formula of Treynor Ratio?

22. Which of the following is a good benchmark for a long term debt fund?

23. Which category of schemes would use 'CRISIL Composite Bond Fund Index [25% allocation] + S&P BSE 200 (TRI) [75% allocation]' as their benchmark?

24. What affects the choice of benchmark of a debt scheme?

25. Which index is most suitable for Overnight Fund?

26. A scheme invests in Government securities of 2 year tenure. Which index is the most suitable?

27. Which debt mutual fund schemes hold their value despite fluctuation in interest rates?

28. Which index would be most suitable for a short term money market scheme?

29. Which type of funds carry the highest risk of wrong sector selection?

30. What is relevant while deciding which benchmark should be chosen for an equity scheme?

31. Who carries out credit rating of the securities in which mutual fund schemes invest?

32. As per CAPM, which risk can be diversified and why?

33. Risk of inflation, political turmoil and recession is systematic risk. True or False?

34. Which type of investment performs the best when there is financial or political turmoil?

35. Which type of mutual fund scheme buys and sells the same security at the same time in different markets and takes advantage of price difference?

36. Which issuing authority issues debenture?

37. G-Secs are guaranteed by Government, hence, they are not prone to fluctuation in value like non-Government securities. Correct or incorrect?

38. What is the PE ratio if the market price of share is Rs. 200 and EPS is Rs. 20?

39. SEBI has made regulations about the outside liabilities of mutual fund schemes. Which of the following is False?

40. What is the CAGR's formula?

41. What is the key factor that determines returns in debt mutual fund schemes?

42. Under which situation will a fund manager keep scheme's funds in liquid form?

43. Under which investment style will the investor buy stocks which are priced lower than their intrinsic value?

44. Which asset class will be impacted the most because of a bull run in stock market?

45. Which of the following risks affect debt securities?

46. Money market securities mature within one year. Correct or incorrect?

47. Which security has lower price risk because of fluctuation in NAV - Bonds or Liquid?

48. What is credit spread?

49. An investor wants to invest in the investment option which carries least credit risk. Which of the following options is least risky?

50. When the interest rate in the market rise, value of a debt security will _________

51. A portfolio is less risky than the market, when -

52. What is the Price to Book Value if - Net Worth =Rs. 25 Crore, Number of Equity Shares Outstanding = 10 Lakhs, Market Price of a Share = Rs. 1,250?

53. Which of the following statement is correct as far as it pertains to scheme's liabilities?

54. What do the technical analysts study to arrive at buy/ hold/ sell recommendation?

55. What does EIC Framework stand for?

56. Which portfolio building approach involves evaluating the company first and industry later?

57. If the investor wants to take low risk and earn only interest income from a debt scheme, where should he invest?

58. Conservative Hybrid Fund is basically an equity scheme with only a small proportion of debt and large proportion of equity. True or False?

59. Which measure of risk compares the fluctuation in periodic returns of the scheme with its own average return?

60. If an investor wants to compare returns from two schemes, where the investment period was different and less than one year, which return would he compare?

61. What does CAPM stand for?

62. Which among the following suitably defines the Risk -

63. Role of Credit rating agencies is highest in debt funds.

64. Mutual fund pay taxes on their income at the rate of -

65. Once the asset allocation is decided---------------- can help us to select the good debt and equity Schemes.

66. The P/E ratio is an important measure of -

67. Which of the following is done through technical analysis?

68. An investor holds 1200 units of a scheme , scheme declares 1:3 bonus. How many units the investor will get?

69. What is the market price of a share if its PE Ratio is 20 and EPS is ₹12.5?

70. When will a company pay high dividend yield?

71. Under which investment style will the investor buy stocks which are priced lower than their intrinsic value?

72. Which asset class will be impacted the most because of a bull run in stock market

73. Which credit rating means lowest credit risk?

74. When the interest rate in the market rise, value of a debt security will _________ -

75. What does modified duration of security indicate?

76. If the fund manager expects interest rates to fall where should he invest?

77. Weakening of rupee will lead to increase in price of gold. True or False?

78. How are interest rate and real estate prices related?

79. What is the basic assumption of CAGR?

80. Investments in mutual funds are subject to market risks. Therefore the fund –

81. Which factors lead to difference between scheme returns and investor returns?

82. Which of the following statement is correct as far as it pertains to scheme’s liabilities?

83. Mutual funds can invest in derivatives. However, investment for one of the following purposes is disallowed by SEBI. Which one is it?

84. SEBI has stipulated that every scheme should have at least _____ investors and no investor should represent more than _________ percent of net assets of a scheme.

85. Fixed Maturity Plans align the maturity of their portfolio to the maturity of the scheme. Correct or incorrect?

86. Fluctuations in returns of a security does not make it riskier than any other security if over a long period the average returns of both are same. Correct or incorrect?

87. Which measure of risk is used to identify total risk in an investment?

88. Which measure of risk compares the fluctuation in periodic returns of the scheme with its own average return?

89. A portfolio is less risky than the market, when -

90.   Which measure of risk is relevant only for equity schemes ?

91. Which measure of risk measures the sensitivity of value of debt security to change in interest rate?

92. To which variant of index are the mutual fund schemes benchmarked?

93. Which index is most suitable for Dynamic Bond Fund?

94. An investor who wants to invest in foreign markets, he should invest in –

95. Can Indian mutual funds invest in Gold?

96. Which of the following is a good benchmark for a short term debt fund?

97. Which of the following ratio measures risk -adjusted performance?

98. Mutual Funds are permitted to participate in Exchange Traded Commodity Derivatives through Gold ETFs subject to prescribed regulations.