Finance and Valuation Quiz

Preference shares that allow the holder to receive a fixed dividend and an additional dividend based on specific conditions, giving them a share in the company's profits.

Preference shares that provide the holder with the right to convert their shares into a specified number of equity shares, offering the potential for future capital appreciation.

Shares that have special voting rights, either higher or lower than regular equity shares, allowing different levels of influence on company decisions.

Preference shares where unpaid dividends accumulate and must be paid in full at a later time, ensuring that shareholders are eventually compensated for missed payments.

Preference shares that have no entitlement to past unpaid dividends; if dividends are omitted in any year, they are not carried forward.

Preference shares where the dividend is only paid at a fixed rate, regardless of the company's earnings performance. These shares offer a consistent income stream but don't participate in increased profits.

Preference shares that allow the holder to receive a fixed dividend, regardless of company profits or losses, providing a predictable income flow.

Preference shares that continue to exist indefinitely unless specifically redeemed or liquidated, providing the holder with long-term ownership and potential income.

A type of security issued by companies that gives investors ownership in the company.

A type of security issued by companies that represents a loan from investors. The company agrees to repay the debt with interest.

The right of equity investors in a company to receive the remaining profits after all liabilities have been paid.

The right of equity investors to vote on company decisions based on the number of shares they own.

The increase in the value of an equity share over time.

A payment made by a company to its shareholders, usually based on profits earned.

The potential for earning a higher return on investment with equity compared to debt, due to the higher risk involved.

The trade-off between the risk and potential return associated with equity and debt investments.

Art investment is more difficult than investing in traditional financial assets due to a higher risk of information asymmetry and adverse selection. This means there's more uncertainty about the value of art and a greater chance of being sold a piece that's worth less than you paid.

Investment funds specifically designed to invest in art and paintings. Investors can gain exposure to this art market through these funds.

The Liberalised Remittance Scheme (LRS) allows individuals to invest up to $250,000 abroad annually. This provides opportunities for global diversification and currency hedging.

Direct investments involve purchasing securities issued by companies or government bodies, as well as commodities like gold and silver.

Financial intermediaries, such as brokers, depositories, and advisors, facilitate direct investments for a fee. They assist investors in buying or selling securities.

A SEBI Registered Investment Advisor (RIA) is a qualified professional licensed by SEBI to provide investment advice for a fee. They focus on creating financial plans, managing risk, and helping investors make informed decisions.

RIAs are accountable to their clients and are required to follow a strict code of conduct. They must disclose any potential conflicts of interest and prioritize their clients' best interests.

RIAs create financial plans, assess investors' risk tolerance, and help them develop an investment portfolio that aligns with their financial goals.

The market where borrowers issue new debt securities and investors buy them, or where existing debt securities are traded.

A country's economic development depends on a strong debt market. It helps shift resources from savers to investors, enabling economic growth.

Unlike equity markets, debt markets expose lenders to moderate risk because the company's assets are typically secured against the debt.

The debt market is less transparent than the equity market, with institutions often trading directly with each other rather than through brokers.

Corporate governance influences both company shareholders and people who work with, purchase from, or are indirectly affected by them.

Analysts and investors play a crucial role in promoting good governance practices and exposing companies with poor governance practices.

The qualifications, experience, and meeting attendance of independent directors contribute to a company's good governance.

Good governance practices can be incorporated into investment strategies by using them as screening criteria for choosing companies to invest in.

A valuation technique that compares a company's stock price to its financial performance indicators such as earnings, cash flow, book value, and sales.

A measure of how much investors are willing to pay for each dollar of a company's earnings. Calculated by dividing the stock price by the company's earnings per share.

The intrinsic value of a company can be derived from its future earnings potential, taking into account the risk associated with those earnings.

A valuation technique that projects future cash flows and discounts them back to their present value, ultimately arriving at the intrinsic value of a company.

The relationship between P/E ratio and DCF is that both are based on expected future returns and the risk associated with those returns, both of which are influenced by the same variables.

The rate of return investors expect to earn from investing in a company's stock. It is influenced by factors including risk-free rate, risk premium, and company-specific risk.

The rate at which a company's earnings are projected to grow over time. This is often closely linked to the growth and profitability of the industry and the company's ability to invest and expand.

A valuation technique that relies on the historical price patterns and trends of a stock to predict future price movements, independent of company fundamentals. Often employed by short-term investors and traders.

A financial instrument that obligates the issuer to pay a fixed amount of interest (coupon) periodically and repay the principal (face value) at maturity.

The interest payment made by the issuer of a bond to the bondholder.

The face value of a bond, which represents the amount the issuer will repay at maturity.

Bonds that make no interest payments but are sold at a discount to their face value, and the difference between the purchase price and face value represents the return.

The date on which the issuer of a bond is obligated to repay the principal amount to the bondholder.

A market where bonds are traded between investors, allowing for buying and selling of bonds after they have been initially issued.

The risk that a bond issuer may not be able to repay its obligations.

A market where investors can buy insurance against the risk of a company defaulting on its debt.