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10. Ajay has invested only in PPF A/c. which matures in 2016. For his short term goals, what
kind of risk does he face?
a) Investment Risk
b) Liquidity Risk
c) Regulatory Risk
d) Default Risk
11. Anita is a conservative investor and puts her money only in Fixed Deposits which she rolls
over every year. In a falling interest rate scenario, which risk can be of most concern to her?
a) Re-investment Risk
b) Default Risk
c) Inflation Risk
d) Taxation Risk
12. Standard Deviation of a security in a given period measures________.
a) The deviation of returns from the security from their mean value in the period
b) The range between lowest and highest return given by the security in the period
c) The deviation of return on security from market return in the period
d) The extent of lower return on security than the market in the period
13. For a portfolio of two securities to achieve diversification, the
a) Correlation between the securities needs to be positive
b) Correlation between the securities needs to be zero
c) Correlation between the securities needs to be negative
d) Correlation coefficient between the securities needs to be 0.5
14. A retired person is depending on a monthly annuity income to finance his expenses. The
greatest risk faced by his cash flows is
a) Business risk
b) Exchange rate risk
c) Interest rate risk
d) Inflation risk
15. Investment in a government security issued at a fixed interest rate is subject to
a) Credit risk
b) Business risk
c) Interest rate risk
d) Liquidity risk
16. An investor purchases equity shares of a cement manufacturing company. The returns
from his investment do not face
a) Credit risk
b) Inflation risk
c) Liquidity risk
d) Unsystematic risk
18. By investing Rs. 1 Lac in a security today, the maturity proceeds after 10 years will be Rs.
2.80 Lac. What return is expected from the security over the period of investment?
a. 6.05% p.a.
b. 0.84% p.a.
c. 18% p.a.
d. 9.49% p.a.
19. Rajan wishes to obtain a return of 10% p.a. over a period of 8 years from a security. What
investment should he make in the security to get Rs. 2 Lac over this period?
a) Rs. 93,300
b) Rs. 1,00,600
c) Rs. 85,800
d) Rs. 1,03,100
20. A bank charges 8.5% p.a. interest on loan on a monthly reducing balance basis. What is
the yearly effective rate of interest?
a) 8.50% p.a.
b) 9.06% p.a.
c) 8.84% p.a.
d) 8.71% p.a.
21. A retired person needs inflation adjusted annuity in his post-retirement period. If inflation
is assumed at 4% p.a. and rate on annuity is 7.5% p.a., what should be the real rate of return?
a) 4.05% p.a.
b) 7.50% p.a.
c) 3.36% p.a.
d) 11.5% p.a.
22. Investment A appreciates in value by 20% after one year. Investment B appreciates by
40% after three years. Which gives a higher return?
a)Absolute return
b) Annualized return
c) Holding Period Return
d) IRR
25. An investment in 7% tax free bonds is compared with an investment in a 9% bank deposit
where interest is taxable. Both have a one year investment horizon. Which of the following is
true?
26. Which of the following account cannot be opened under PPF scheme?
a) Account in the name of Mr. X who is a resident
b) Account on behalf of Mr. Y who is resident minor
c) Account in the name of Mr. and Mrs. X (both are resident)
d) Account in the name of Mr. Z who is resident
27. For how many years an account under senior citizen scheme can be extended?
a) 5 years
b) 3 years
c) 1 year
d) 6 years
28. The Price at which option is exercised is known as ___________.
a) Market Price
b) Book Price
c) Strike Price
d) All of the above
29. If a PPF account is opened in FY 2005-2006, the same will normally mature on .
a) 31st March, 2021
b) 1st April, 2020
c) 1st April, 2021
d) 31st March, 2020
30. What is the range of period for which Treasury Bills (T-Bills) are issued?
a) 91days to 364 days
b) 90 days to 180 days
c) 1 year to 3 years
d) 2 years to 25 years
31. Interest on a NSC
a) shorter term securities that mature before the tenor of the fund
b) floating rate securities with reset tenor less than six months
c) securities whose maturity matches that of the fund
a) Equity
b) Cash and equivalents
c) Debt
40. Which of these asset classes is primarily used to meet regular needs for liquid cash?
a) Debt
b) Cash and equivalents
c) Equity
41. The long term goal of an investor is to build a corpus that is adequate to serve his income
needs after retirement. The portfolio when constructed, should have a higher allocation to
a) Debt
b) Cash equivalents
c) Equity
42. An investor who seeks a high level of return and is willing to bear the risks of such
investments is likely to be recommended
a) Aggressive portfolio
b) Conservative portfolio
c) Moderate portfolio
a) ULIP
b) Money back policy
c) Term insurance policy
d) Whole life policy
47. In which of the following situations will the insured not have insurance cover?
a) Surrendered policy
b) Paid-up policy
c) Term policy
d) Both (a) and (b)
48. The premium payable on a ULIP is higher for the same sum assured as a term policy
because
55. Growth-oriented investments are suitable for which stage of retirement savings?
a) Accumulation stage
b) Distribution stage
c) Income stage
d) Investment stage
56. Inflation does which of the following to retirement planning?
a) Every year
b) Every time there is a significant change in financial situation
c) Closer to the distribution period
d) Not at all
58. Which of the following is a solution to manage inadequacy of retirement corpus closer to
retirement?
a) 100%
b) 50%
c) 40%
d) 60%
61. For a person to be qualified as a NRI, he must have stayed outside India for a minimum
period of _____ days in a previous financial year.
a) 365
b) 280
c) 182
d) 150
62. Registration and regulation of securities market intermediaries is the function of _____.
a) AMFI
b) SEBI
c) PFRDA
d) SRO
63. A person who has a complaint against an insurance company must lodge his complaint
with___.
a) SCORES
b) IGMS
c) CGMS
d) RBI