Quiz for Chapter 3:

Terminology in equity
and debt markets
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Details:

Total Number of Questions = 24

Total Marks for Quiz = 24
This is the practice questions with 1 marks each
This quiz has no negative marking and no time
limit.

Disclaimer:

1. In the real/actual exam there will be 100

questions with 1 mark each from all the chapters
weightage wise.The structure of the exam is as
follows:
i. Multiple Choice Questions [ 92 Questions of 1
mark each ] which results in 92 marks &
ii. Case-based Questions [ 2 cases (each case with
4 questions of 1 marks each )] which results in 8
marks.

2. In the real/actual exam there will be a negative

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 marking of 25% of the marks assigned to the
question for each wrong answer which is 0.25 mark
per wrong answer. So please keep that in mind !!

3. In the real/actual exam the questions are not

mandatory to solve and you can skip the questions.
There is no negative marking for un-attempted
questions.

4. The time duration of the real/actual exam is 2

hours and the passing marks is 60.

5. This quiz is just for practice purpose and it

doesn't hold the fact that the same questions
appear in the real examination.

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 A bond with a face value Rs. 1000 has a 1 point

coupon rate of 9%. The excepted rate of

return is 13%. The value for this bond will
be ______

Equals to face value

None of them

Lower than face value

Higher than face value

1 point
What is true about investing in equity?

The success of equity investments is

independent of the behavioral and cognitive
limitations of individuals.

Equity investing requires identifying and

exploiting inefficiencies and is amenable to
mathematical formulation.

Equity investing is solely based on luck and

speculation.

It involves a blend of art and science,

requiring both qualitative and quantitative
analysis.

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 1 point
When the market price of a stock
exceeds its intrinsic value, it can be
described as:

Overvalued

Fairly valued

Price taker

Undervalued

1 point
Which financial instrument provides a
fixed income stream over a specified
period?

Equity shares

Cryptocurrencies

Derivatives

Corporate bonds

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 1 point
Under which category of bonds do
housing loans, auto loans, and consumer
loans fall?

Floating rate bonds

Callable bonds

Amortization bonds

Zero coupon bonds

1 point
Given a net profit of Rs. 21crores, a share
price of Rs. 802.5, and 25,00,000
outstanding shares, what is the P/E
ratio?

5.25

10.75

9.55

20.50

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 1 point
A company with a P/S ratio of 0.9 has
annual sales of Rs. 1 billion. What is its
market capitalization?

Rs. 800 million

Rs. 950 million

Rs. 900 million

Rs. 1.1 billion

1 point
If a company's share price is Rs. 80, P/E
ratio is 15, and it has 1,000,000
outstanding shares, what is its total net
profit?

Rs. 10 million

Rs. 7.50 million

Rs. 5.33 million

Rs. 12 million

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 1 point
Purchasing a long-dated high coupon
bond is a good safeguard against a
decline in which of the following?

Interest rates

Currency depreciation

None of the above

Deflation

1 point
Bond prices rises more than its fall with
respect to interest rate movement, this is
explained by __________

Covexity

YTM

Modified duration

Duration

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 1 point
Inverse floaters bonds have coupons rate
which moves along with the benchmark
rates. True or False?

True

False

1 point
A bond with a coupon rate of 6.5% is
trading at Rs. 110. Calculate the current
yield.

5.95%

5.91%

6.36%

7.27%

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 1 point
An investor purchased a stock for rs 50
and sold it after one year for rs 62,
receiving a dividend of rs 2 during the
holding period. Calculate the holding
period return.

30%

22%

28%

20%

1 point
Which bond provides inflation
protection?

Payment in kind

Principal protected note

Warrant

Inflation index

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 1 point
What is the primary characteristic of
Perpetual Bonds?

No Maturity Date

Redeemed at Premium

Fixed Maturity Period

Convertible into Equity

1 point
What is the term for the return earned on
a bond based on its purchase price,
coupon payments, and any capital gain
or loss upon selling?

Duration Return

Yield to Maturity

Current Yield

Holding Period Return

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 1 point
Calculate the Enterprise Value of
Company XYZ with the given details:

Market Price per Share: Rs. 30

Total Outstanding Shares: 75,000

Total Debt: Rs. 4,50,000

Cash in Hand: Rs. 2,50,000

Rs. 24,50,000

Rs. 16,50,000

Rs. 19,50,000

Rs. 21,50,000

1 point
Investors can ask for their money earlier
than maturity in case of __________ if
interest rates rise.

Callable bonds

Putable bonds

Warrant

None of the above

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 1 point
Bonds that do not pay interest during the
entire term are called _______________.

Putable

Zero coupon

Floating rate

Callable

1 point
What type of bond typically features
variable interest rates that adjust
periodically according to prevailing
market rates?

Putable

Floating rate

Callable

Zero coupon

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 1 point
Global Depository Receipts (GDR) are
issued in several countries together and
listed on a stock exchange outside the
US. True or False?

True

False

1 point
Mr. B purchases MF units at NAV of Rs.
10. After 2 years, he redeems them at
NAV of Rs. 14. What is his closest
compounded rate of return?

20%

12.5%

40%

18.32%

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 1 point
How does convexity enhance the
understanding of a bond's price change?

It calculates the maturity period of a bond

It provides a measure of absolute bond price

It adjusts the predicted price change from

duration to reflect curvature

It measures interest rate risk

1 point
Which type of bond is likely to have
higher convexity?

Bonds with lower coupon rates

Short-term bonds

Long-term bonds

Bonds with higher coupon rates

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