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

I. Market Value Added serves as a proxy for a firm’s stock performance.

II. Economic Value Added can be applied to capital budgeting decisions.

III. Future Growth value to Market value ratio is used for performing sanity test.

IV. Market Value Added serves as a measure of firm’s external performance.

(a)
Only (II) above

(b)
Only (IV) above

(c)
Both (II) and (IV) above

(d)
(I), (II) and (III) above

(e)
(II), (III) and (IV) above.


< ans >

25.
Which of the subsequent statement(s) is/are actual regarding the entry/exit barriers in an industry?

I. When entry barriers are high and exit barriers are low, profit potential is high but is associated with more risk.

II. Labour agreements, resettlement costs, maintaining capabilities for spare parts, switching costs, etc., are the few fixed costs of exit.

III. Learning curve and economies of scale are few entry barriers to a firm in a particular industry.

IV. Exit barriers are economic, strategic and emotional factors that drive companies to be in business despite earning low returns.

(a)
Only (I) above

(b)
Both (I) and (II) above

(c)
Both (II) and (III) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


< ans >

26.
Which of the subsequent statements is actual regarding mutual funds?

(a)
The shares of close-ended funds are redeemable at their NAV

(b)
Open-ended funds can sell unlimited number of units

(c)
The fund units are sold to the public at the NAV

(d)
Real estate fund is an open-ended fund

(e)
Specialized funds carry low risk.


< ans >

27.
Which of the subsequent statements is not true?

(a)
All market orders are day orders only and give immediate liquidity to the market

(b)
A stop order to sell becomes a market order if the market price goes beneath the spot order price

Earning:   Approval pending.