FIN630 Final Term 6 Past Papers

Fin630 Final Term 6 Papers · :”:”:”:”:”:Solved by:”:”:”:”:” · Anam Aslam, Fariha Maqbool, Chanda Rehman, · Ahmed And Kamran Haider · Paper 1 · FINALTERM EXAMINATION · Spring 2009

FIN630- Investment Analysis & Portfolio Management (Session - 2)

Marks: 81

Q1. Shares of McDonald Corporation are an example of a (n): (1 marks)

Standardized financial instrument

Non-standardized financial instrument since their prices can differ over time Standardized financial liability instrument Open-end investment

Q2. Which of the following includes fixed income securities? (1 marks)

Bonds

Shares Derivatives Options

(lesson #1 slide )Fixed Income Securities: e.g. bonds, preferred stock

Q3. Companies that have capitalization amounts of less than $500 million are known as (1 marks)

Small cap companies

Mid cap companies Growth companies Large cap companies (lesson #6 slide) Small-cap stocks : A firm with capitalization less than $500 million.

Q4. In bar chart, which color indicates share prices are going down? (1 marks)

Blue Black White

Red

(lesson # 7 slide) Blue color indicates market or share price is going up.

Red color indicates market or share price is going down

Q5. What will be the resulting figure,when gross profit is divided by net sales? (1 marks)

Gross margin

Operating margin Net margin Profit margin (lesson # 12 slide) Gross Margin is the resulting percentage when Gross Profit is divided by Net Sales.

Gross Margin = Gross Profit/Net Sales

Q6. In bottom-up approach of fundamental analysis, investors begin their analysis with: Industry (1 marks)

Economy Market

Company

(page 90 )With the bottom-up approach, investors focus directly on a company’s basics, or fundamentals. Analysis of such information as the company’s products, its competitive position, and its financial status leads to an estimate of the company’s earnings potential and, ultimately, its value in the, market.

Q7. Which of the following is EXCLUDED from Porter's competitive factors? (1 marks)

Substitute products or services

Changes in the economy

Bargaining power of buyers Rivalry between existing competitors

Q8. Which of the following is defined as the gradual loss in value of equipment and other tangible assets over the course of its useful life? (1 marks)

Appreciation

Depreciation

Revaluation Amortization Depreciation is the gradual loss in value of equipment and other tangible assets over the course of its useful life.

Q9. On which of the following financial statements, revenues and expenses can be found? Balance sheet (1 marks)

Income statement

Statement of cash flows Statement of changes in equity

Income statement: prepared from the revenue, expenses, gains, and losses.

Q10. Which of the following is an example of brokerage fee charged by a stockbroker? Margin profit (1 marks)

Insurance premium

Transaction cost

Capital expenditure

Q11. Technical analysis is NOT applicable in which form of efficient market hypothesis? (1 marks)

Weak form efficiency

Semi-strong form efficiency Strong-form efficiency Weak and strong form of efficiency (Lesson # 23 slide # 23) Technical analysis: Not valuable if the weak form holds. Fundamental analysis of intrinsic value. – Not valuable if semi-strong form holds. – Experience average results.

Q12. Which of the following suggests that people express a different degree of emotion towards gains than towards losses? (1 marks)

Prospect theory

Illusion of control Anchoring Loss aversion Prospect theory suggests people express a different degree of emotion towards gains than towards losses. Individuals are more stressed by prospective losses than they are happy from equal gains.

Q13. LSE 25 index was last reconstituted on_______ in line with regular review policy. 20th December, 2002 (1 marks)

1st July, 2006

25th July, 2007 1st July, 2008

(Lesson # 25 , Slide # 25 )

LSE launched a new 25-Index on December 20, 2002, which replaced the 101Index. The Index has a Base Figure of 1000. (The Index closed at 5442.69 on 24th April, 2006).

LSE 25-Index includes the top 25 traded companies at LSE and captures 53% of the market capitalization and 98% of the total trading volume of LSE.

The Index was last reconstituted on July 1st 2006, in line with the regular review policy.

Q14. Which of the following is considered to be a characteristic of an equity security? Fixed income (1 marks)

Debt Price

Ownership

An equity security is described as a security representing an ownership interest such as common, preferred, or other capital stock.