Worthy Reads

  Q1. Portfolio management primarily aims to: A. Maximize return only B. Minimize risk only C. Balance risk and return D. Track the index Answer: C ✔ The goal is optimal risk–return balance. Q2. Diversification reduces: A. Market risk B. Systematic risk C. Unsystematic risk D. Currency risk Answer: C ✔ Only company-specific risk is reduced via diversification. Q3. Asset allocation refers to: A. Choosing only equity stocks B. Splitting investment across asset classes C. Buying bonds after equities D. Booking profits periodically Answer: B ✔ Equities, bonds, gold, cash, etc. Q4. A conservative investor typically prefers: A. High-beta equity portfolio B. Corporate bonds & G-Secs C. Small-cap stocks D. Futures & options Answer: B ✔ Low-risk, stable-return assets. Q5. The Efficient Frontier shows: A. High-risk portfolios only B. Best possible portfolios for a given risk C. Worst portfolios D. Only equity portfolios Answer: B ✔ Repr...

  Q1. Return on an investment primarily measures: A. Market volatility B. Profit earned relative to investment C. Dividend payout only D. NAV of mutual fund Answer: B ✔ Return = gain/loss relative to initial investment. Q2. If a stock price rises from ₹100 to ₹120 and pays ₹5 dividend, the total return is: A. 20% B. 25% C. 15% D. 5% Answer: B ✔ Return = (120−100 + 5) / 100 = 25%. Q3. Risk-free rate typically refers to returns on: A. Corporate bonds B. Equity mutual funds C. Government securities D. Bank fixed deposits Answer: C ✔ Government securities considered nearly risk-free. Q4. Standard deviation measures: A. Average return B. Market capitalization C. Volatility of returns D. Amount of dividends Answer: C ✔ Higher SD = higher volatility. Q5. Higher variance in returns indicates: A. Lower volatility B. Higher volatility C. No change D. Better stability Answer: B ✔ Variance and volatility move together. Q6. Sharpe ratio evaluat...

Q1. Risk in equity analysis primarily refers to: A. Chance of dividend decrease B. Uncertainty in return outcomes C. Daily price fluctuations D. Increase in debt Answer: B ✔ Risk = variability of returns, not just loss. Q2. Beta measures: A. Business risk B. Systematic risk relative to market C. Credit risk D. Liquidity risk Answer: B ✔ Beta compares stock volatility vs market. Q3. A beta of 1.5 indicates the stock: A. Moves same as market B. Moves 50% less than market C. Moves 50% more than market D. Is risk-free Answer: C ✔ Stock is more volatile than overall market. Q4. The risk that cannot be diversified away is: A. Unsystematic risk B. Business-specific risk C. Industry risk D. Systematic risk Answer: D ✔ Systematic = market-wide, cannot be diversified. Q5. Credit risk arises from: A. Market volatility B. Failure of borrower to repay obligations C. Rising stock price D. Declining inflation Answer: B ✔ Credit risk = default risk. Q...

  Q1. A company reports rising revenues but consistently declining CFO (Cash Flow from Operations). This most likely indicates: A. Strong cash generation B. Aggressive revenue recognition C. Low sales growth D. Healthy working capital cycle Answer: B ✔ Earnings growing but cash not coming → accounting red flag. Q2. A firm has ROE of 25% but Debt-to-Equity ratio of 3.0. This means: A. High-quality returns B. ROE boosted by excessive leverage C. No financial risk D. Strong moat Answer: B ✔ Leverage artificially lifts ROE. Q3. Company A and Company B have similar product lines. Company A: P/E = 20, Growth = 10% Company B: P/E = 15, Growth = 15% Which appears undervalued? A. Company A B. Company B C. Both equal D. Cannot be assessed Answer: B ✔ PEG(A) = 2, PEG(B) = 1 → B is cheaper relative to growth. Q4. A company's current ratio rises sharply from 1.5 to 3.5. This may indicate: A. Strong liquidity only B. Excess inventory buildup C. Strong margins...

  Q1. Industry analysis primarily helps an analyst understand: A. Stock price movement B. Broader competitive environment C. Intraday volatility D. Dividend payout ratio Answer: B ✔ Industry analysis focuses on structure, competition, risks, and opportunities. Q2. Which framework is most commonly used for industry competitiveness? A. Maslow’s hierarchy B. Porter’s Five Forces C. SWOT analysis D. Alpha-beta model Answer: B ✔ Porter’s Five Forces assesses competitive pressure. Q3. High entry barriers in an industry generally lead to: A. Lower profitability B. Higher long-term profitability C. No impact D. Frequent new competitors Answer: B ✔ Hard-to-enter industries allow existing players to retain profits. Q4. The threat of substitutes increases when: A. Customers have few alternatives B. Switching costs are low C. Products are highly differentiated D. Substitutes are expensive Answer: B ✔ Low switching cost = easier to move to alternatives. Q...

  Q1. Company analysis begins with understanding: A. Share price movement B. Business model and revenue drivers C. Dividend history D. Stock volatility Answer: B ✔ Core of analysis = understanding how the company makes money. Q2. Which of the following is a key element of a business model? A. Promoter age B. Customer value proposition C. Bonus issue history D. Stock beta Answer: B ✔ Value proposition tells why customers choose the product. Q3. A company’s competitive advantage (moat) is best reflected by: A. High debt B. Consistent high ROE C. Frequent rights issues D. Low promoter holding Answer: B ✔ Strong moats produce sustained high returns. Q4. Which is NOT a part of company strategy analysis? A. Pricing policy B. Cost structure C. Product differentiation D. Intraday price movement Answer: D ✔ Day-to-day stock price is irrelevant in company analysis. Q5. Operating leverage refers to: A. Sensitivity of EPS to interest expense B. Propo...

  Q1. Quantitative research primarily deals with: A. Numerical data and statistical analysis B. Management interviews C. Customer attitudes D. Industry structure Answer: A ✔ Quantitative = numbers, measurable data, statistics. Q2. Which of the following is a qualitative method? A. Regression analysis B. Ratio analysis C. Management discussion D. Trend analysis Answer: C ✔ Qualitative = opinions, insights, management quality, governance. Q3. A limitation of quantitative analysis is that it: A. Ignores numerical data B. Cannot measure subjective factors like management integrity C. Requires no calculations D. Is always inaccurate Answer: B ✔ Management quality, culture, and brand strength are qualitative. Q4. A company with declining market share indicates: A. Improving competitive position B. Strong pricing power C. Weak business moat D. Exceptional growth Answer: C ✔ Shrinking market share usually signals weakening competitive strength. Q5. ...