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Question 1 of 10
1. Question
Which of the following statements is/are true in regards of Range?
I. Small range is an indication of positive correlation in portfolio.
II. A small range is the sign of negative correlation in portfolio.
III. Range is the difference between highest return and lowest return of the portfolio.
IV. A large range is the sign of positive correlation in portfolio.Correct
Range is the difference in the highest return of the portfolio and the lowest return of the portfolio. A large range may also be a sign of negative correlation in the portfolio, whereas a smaller range tends to indicate positive correlation.
Incorrect
Range is the difference in the highest return of the portfolio and the lowest return of the portfolio. A large range may also be a sign of negative correlation in the portfolio, whereas a smaller range tends to indicate positive correlation.
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Question 2 of 10
2. Question
Which of these statements is/are true in regards of standard deviation?
I. Higher standard deviation represents a higher amount of volatility and risk.
II. Standard deviation is calculated based on the mean.
III.Standard deviation is a useful tool in investing and trading strategies,as it helps measure market and security volatility and predict performance trends.
IV. The more spread apart the data, the higher the deviation.Correct
Standard deviation measures the distance each of the returns in the portfolio falls from the mean. The further spread the data is, the higher the measure of standard deviation. A higher standard deviation then indicates a high degree of volatility and thus risk. It is a very useful metric in determining the suitability of an investment for a client, risk averse or otherwise.
Incorrect
Standard deviation measures the distance each of the returns in the portfolio falls from the mean. The further spread the data is, the higher the measure of standard deviation. A higher standard deviation then indicates a high degree of volatility and thus risk. It is a very useful metric in determining the suitability of an investment for a client, risk averse or otherwise.
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Question 3 of 10
3. Question
Which of the following statements hold true in regards of Beta?
I. A beta of greater than 1 indicates that the security’s price is theoretically more volatile than the market.
II. A beta of 1 indicates that the security’s price moves with the market.
III.Beta is a measure of the volatility of a security or a portfolio in comparison to the market as a whole.
IV. A beta of less than 1 means that the security is theoretically less volatile than the market.Correct
Beta’s measurement works the same for measurements less than or greater than 1. A measurement above 1 indicates higher volatility and larger value swings. A measurement below 1 indicates lower volatility and lesser value swings.Beta is a metric showing a security’s or portfolio’s correlation to market movement.
Incorrect
Beta’s measurement works the same for measurements less than or greater than 1. A measurement above 1 indicates higher volatility and larger value swings. A measurement below 1 indicates lower volatility and lesser value swings.Beta is a metric showing a security’s or portfolio’s correlation to market movement.
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Question 4 of 10
4. Question
On December 31, 2016, the balance sheet of Marshal company shows the total current assets of $1,100,000 and the total current liabilities of $400,000. Your are required to compute current ratio of the company?
I. 2.75
II. 2.57
III.1.05
IV. 3.25Correct
Current ratio = (Current Assets)/(Current Liabilities)
Incorrect
Current ratio = (Current Assets)/(Current Liabilities)
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Question 5 of 10
5. Question
Which of the following statements is /are regarding current ration?
I. Current ratios are least required when used to compare companies that are in the same industry.
II. Current ratios are most useful when used to compare companies that are in the same industry.
III Current ratio can be used to make a rough estimate of a company’s financial health.
IV. The current ratio is called liquidity ratio.Correct
Current ratios are most useful when used to compare companies that are in the same industry.The current ratio, also known as the liquidity ratio.
Incorrect
Current ratios are most useful when used to compare companies that are in the same industry.The current ratio, also known as the liquidity ratio.
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Question 6 of 10
6. Question
Which of the following statement is/are true in regards of quick ratio?
I. Its a useful inter-industry analytical tool.
II. Quick ratio should only be utilized in analyzing companies that are in the same industry.
III. Quick ration can be used for analyzing diversified industries.
IV. The quick ratio is an indication whether the company has adequate liquidity to meet its current debts and obligations.Correct
It is a metric by which an investor may determine if a company has adequate liquidity to meet its current debts and obligations. Like the current ratio, the quick ratio should only be utilized in analyzing companies that are in the same industry.
Incorrect
It is a metric by which an investor may determine if a company has adequate liquidity to meet its current debts and obligations. Like the current ratio, the quick ratio should only be utilized in analyzing companies that are in the same industry.
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Question 7 of 10
7. Question
ABC company has the following transaction in its financial statements for the period ended 1st January 2017 to 31st December 2017?
Current Asset
Cash = $100,000
Advance =$10,000
Marketable Security = $50,000
Account Receivable= $60,000
Inventories = $70,000
Total Current Asset = $290,000
Current Liabilities:
Account Payable =$160,000
Accural Expenses =$60,000
Interest Payable= $50,000
Short Term Debt= $50,000
Total Current Liabilities= $320,000
Evaluate the quick ratio of ABC company
I. 0.69
II. 1.2
III. 3.5
IV. 5.2Correct
(Current Assets – Inventories)/(Current Liabilities).
Incorrect
(Current Assets – Inventories)/(Current Liabilities).
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Question 8 of 10
8. Question
Calculate debt-to-equity ratio of a business which has total liabilities of $3,423,000 and shareholders’ equity of $5,493,000?
I. 1.62
II. 0.62
III. 0.75
IV. 3.4Correct
(Total Liabilities)/(Shareholders Equity)
Incorrect
(Total Liabilities)/(Shareholders Equity)
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Question 9 of 10
9. Question
Which of the following statements stands true for debt to equity ratio?
I. A company with a high debt- to-equity ratio maybe attractive to a young investor.
II. It is most effective when used to analyze companies within the same industry.
III. A company with a high debt- to-equity ratio maybe attractive to an investor seeking stability.
IV. The D/E ratio indicates how much debt a company is using to finance its assets relative to the value of shareholders’ equity.Correct
A company with a high debt- to-equity ratio may not be attractive to an investor seeking stability, but it may be a suitable investment for a younger investor who is seeking growth and is able to withstand losses because of a long investment time horizon.The debt-to-equity ratio is a measurement of the amount of debt that a company uses to finance its operations.
Incorrect
A company with a high debt- to-equity ratio may not be attractive to an investor seeking stability, but it may be a suitable investment for a younger investor who is seeking growth and is able to withstand losses because of a long investment time horizon.The debt-to-equity ratio is a measurement of the amount of debt that a company uses to finance its operations.
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Question 10 of 10
10. Question
Company XYZ that currently trades at $100.00 and has an earnings per share (EPS) of $5.00. Can you calculate that XYZ’s price-to-earnings ratio?
I. 5
II. 10
III. 25
IV. 20Correct
market value per share/earnings per share
Incorrect
market value per share/earnings per share