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

Therefore, choice (d) is the accurate ans.
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3.
ans : (c)

cause : 1. CovAB = (100) (1.53) (0.81) = 123.93 (%)2.

2. Systematic risk of stock B is relatively low, resulting in low beta.

Therefore, choice (c) is the accurate ans.
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4.
Answer: (c)

Reason: Statements I, II and III are accurate with respect to the utility theory described in the form of quadratic function. In statement IV, the 1st derivative with respect to return is positive whereas the 2nd derivative is negative.

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

Reason: An acquirer who has acquired with the provision of law, more than 15% but less than 75% of the shares or voting rights of the company shall acquire additional 5% of the share in any financial year, without making a public announcement to that fact.

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

Reason: All the statements are accurate other than choice (e) as allocational efficiency is stated to exist, if the market channelizes resources into projects where the marginal efficiency of capital adjusted for risk differences is highest.

Therefore, choice (e) is the accurate ans.
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7.
Answer: (a)

Reason: In limit order system, the price is determined by the maximum price, which a customer is willing to give, or the minimum price at which the customer is willing to sell the share. In market order, the customer will accept the price fixed by the auction. In auction market, active market makers do not exist and demand and supply of the securities is directly related to the transaction price.

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

cause : In the Pioneering stage, there is a rapid growth of demand but the number of companies within a growing industry will fail at this stage because they will not survive the competitive pressures.

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

cause :

Entry

barriers
Exit barriers


Low
High

Low
Low, stable returns

Earning:   Approval pending.