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Advanced Wealth Management Course (IIBF) - Paper 3

Part III: Ch 3: Introduction to Fundamental and Technical Analysis

Q1.

(I) Technical Analysis determines the worth of a business by its future expected earnings potential. (II) A Fundamental Analyst believes that the intrinsic value depends on the underlying business strength of the company.

Both the statements are correct
Only statement (I) is correct
Only statement (II) is correct
Both the statements are wrong

Q2.

(I) Technical Analysis is the study of past price movements of the stock market and individual stocks to try and predict their future course. (II) Technical Analysis is based on an investor’s perception of the future of a company.

Both the statements are correct
Only statement (I) is correct
Only statement (II) is correct
Both the statements are wrong

Q3.

Fundamental analysis suggests an economically rational methodology of buying an asset at a perceived discount to its intrinsic value.

True
False

Q4.

(I) Intrinsic Value > Market Price = Investment/Stock is Over Valued (II) Intrinsic Value < Market Price = Investment/Stock is Under Valued

Both the statements are correct
Only statement (I) is correct
Only statement (II) is correct
Both the statements are wrong

Q5.

The required rate of return on an investment is determined by:

The time value of money
The expected rate of inflation
A risk premium
All of the above

Q6.

All investments are affected by:

Risk-free rate of return
Expected rate of inflation
Risk premium
Both (a) & (b)

Q7.

The estimate of stream of expected returns would include:

Time pattern
Size
Uncertainty of returns
Both (a) & (b)
All of the above

Q8.

(I) For an investor, Intrinsic Value of any investment today is the present value of the total expected returns, discounted at his required rate of return. (II) The risk-free rate of return and the expected rate of inflation determine the Nominal risk-free rate.

Both the statements are correct
Only statement (I) is correct
Only statement (II) is correct
Both the statements are wrong

Q9.

The Bottom-Up approach is about believing that both the economy and the industry play a significant role in the total returns one would get from individual companies and stocks.

True
False

Q10.

(I) The Top-Down approach is about a belief that one can find companies and stocks that are undervalued compared to their market price. (II) The intrinsic value of an investment represents that value of the investment at which an investor would get his required rate of return.

Both the statements are correct
Only statement (I) is correct
Only statement (II) is correct
Both the statements are wrong

Q11.

The lesser the discount at which the stock price is quoting to his estimate of the intrinsic value of the stock, greater would be his perception of the under-valuation of the stock.

True
False

Q12.

(I) A Technical Analyst would study the prospects for sustained and profitable growth for the company. (II) Fundamental Analysts believe that stock prices move in trends that tend to persist.

Both the statements are correct
Only statement (I) is correct
Only statement (II) is correct
Both the statements are wrong

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