Institute of Chartered Financial Analysts of India (ICFAI) University 2006 Certification Finance Security Analysis – I - Question Paper

Reason: Expected change in stock price = 2.5 + 1.6(12) = 21.7;

Abnormal change = 20-21.7 = –1.7%

Therefore, choice (c) is the accurate ans.
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5.
ans : (a)

cause : Statement II and III are accurate with respect to securities transaction tax. For transaction relating to ‘option in securities’, value shall be the aggregate of the strike price and the choice premium.

Therefore, choice (a) is the accurate ans.
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6.
ans : (b)

cause : All the trade whose obligations, the trading member proposes to pass on to the custodian is forwarded to the custodian by NSCCL for their confirmation. The custodian is needed to confirm these trades on T + one days basis.

Therefore, choice (b) is the accurate ans.
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7.
ans : (c)

cause : choice (a), (b), (d) and (e) are the characteristics of z group of shares at BSE. choice (c) is accurate with regard to B2 group of shares.

Therefore, choice (c) is the accurate ans.
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8.
ans : (c)

cause : Control over raw material is an artificial barrier and not a natural. All other are the natural entry barriers.

Therefore, choice (c) is the accurate ans.
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9.
ans : (a)

cause : Of the forecasting methods, Econometric model building approach has limited relevance in a planned economy.

Therefore, choice (a) is the accurate ans.
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10.
ans : (c)

cause : Presence of Numerous or equally balanced competitors ensures high competition in a industry. Slow growth rate and high fixed or storage cost increase the rivalry among industry players. Lack of differentiation or switching cost also enhances the competition in a particular industry. Hence, (I) and (III) are accurate whereas (II) and (IV) are wrong.

Therefore, choice (c) is the accurate ans.
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11.
ans : (a)

cause : This would decrease current liabilities and therefore increase the quick ratio. Inventory is excluded from the quick ratio so restarting inventory at LIFO will have no impact. Paying off long term debt will decrease quick ratio, and persuading a customer to pay earlier will have zero impact on quick ratio.

Earning:   Approval pending.