Question 1

Typically,a large stock exchange has ________ listed on it.

Accepted Answer

A)  preference shares 
B)  shares 
C)  exchange-traded funds 
D)  all of the given choices 
A)  preference shares 
B)  shares 
C)  exchange-traded funds 
D)  all of the given choices

Question 2

In modern portfolio theory,an investor should not be concerned with unsystematic risk when calculating expected rates of return because:

Accepted Answer

A)  there is no way to measure unsystematic risk. 
B)  unsystematic risks are assumed to be removed by diversification. 
C)  unsystematic risks are generally insignificant. 
D)  beta includes a portion to compensate for unsystematic risk. 
A)  there is no way to measure unsystematic risk. 
B)  unsystematic risks are assumed to be removed by diversification. 
C)  unsystematic risks are generally insignificant. 
D)  beta includes a portion to compensate for unsystematic risk.

Question 3

The higher the value of the _______ ratio,the better able the firm is to meet its short-term financial obligations.

Accepted Answer

A)  debt to equity 
B)  liquidity 
C)  earnings per share 
D)  EBIT to long-term funds 
A)  debt to equity 
B)  liquidity 
C)  earnings per share 
D)  EBIT to long-term funds

Question 4

The ________ ratio is an indicator of the longer term viability and stability of a company.

Accepted Answer

A)  shareholders' interest 
B)  P/E 
C)  EBIT/total funds 
D)  liquidity 
A)  shareholders' interest 
B)  P/E 
C)  EBIT/total funds 
D)  liquidity

Question 5

Which ratio is a measure of liquidity that excludes inventories?

Accepted Answer

A)  Current 
B)  Liquid 
C)  Debt to gross cash flow 
D)  Interest cover 
A)  Current 
B)  Liquid 
C)  Debt to gross cash flow 
D)  Interest cover

Question 6

Which of the following statements regarding the debt servicing capacity of a company is incorrect?

Accepted Answer

A)  The debt to gross cash flow ratio is an indicator of debt servicing capacity. 
B)  The debt to gross cash flow ratio indicates years required for cash flows to repay total debt. 
C)  The interest cover ratio is an indicator of a company's capacity to service debt. 
D)  The lower the interest cover ratio, the greater the company's ability to cover interest commitments. 
A)  The debt to gross cash flow ratio is an indicator of debt servicing capacity. 
B)  The debt to gross cash flow ratio indicates years required for cash flows to repay total debt. 
C)  The interest cover ratio is an indicator of a company's capacity to service debt. 
D)  The lower the interest cover ratio, the greater the company's ability to cover interest commitments.

Question 7

A company's ability to meet short-term financial obligations is an important financial performance indicator for an investor.

Accepted Answer

A) True 
 B)False

Question 8

Major differences between a discount stockbroker and a full-advisory stockbroker lie in:

Accepted Answer

A)  the level of fees. 
B)  the amount of advice given. 
C)  the quantity of share recommendations. 
D)  all of the given answers. 
A)  the level of fees. 
B)  the amount of advice given. 
C)  the quantity of share recommendations. 
D)  all of the given answers.

Question 9

Investors buy listed shares:

Accepted Answer

A)  to obtain fixed dividend payments. 
B)  to obtain fixed capital growth. 
C)  for the chance of capital growth only. 
D)  for the chance of dividend payments and capital growth. 
A)  to obtain fixed dividend payments. 
B)  to obtain fixed capital growth. 
C)  for the chance of capital growth only. 
D)  for the chance of dividend payments and capital growth.

Question 10

When a share is trading for a period with a cash dividend entitlement,then the share is said to trade:

Accepted Answer

A)  bonus dividend. 
B)  pro dividend. 
C)  cum-dividend. 
D)  ex-dividend. 
A)  bonus dividend. 
B)  pro dividend. 
C)  cum-dividend. 
D)  ex-dividend.

Question 11

Which of the following does NOT apply to full-advisory stockbrokers?

Accepted Answer

A)  Full-advisory stockbrokers provide investment advice on listed securities. 
B)  Full-advisory stockbrokers monitor investors' financial plans. 
C)  Full-advisory stockbrokers accept buy and sell orders from clients. 
D)  Full-advisory stockbrokers' fees are competitive with discount brokers. 
A)  Full-advisory stockbrokers provide investment advice on listed securities. 
B)  Full-advisory stockbrokers monitor investors' financial plans. 
C)  Full-advisory stockbrokers accept buy and sell orders from clients. 
D)  Full-advisory stockbrokers' fees are competitive with discount brokers.

Question 12

The decision to pay cash dividends to shareholders is made by the:

Accepted Answer

A)  company management. 
B)  shareholders at the annual meeting. 
C)  board of directors. 
D)  bond holders. 
A)  company management. 
B)  shareholders at the annual meeting. 
C)  board of directors. 
D)  bond holders.

Question 13

The higher the beta of a share the:

Accepted Answer

A)  greater the systematic risk. 
B)  lower the systematic risk. 
C)  lower the expected return. 
D)  less responsive it is to changing share market movements. 
A)  greater the systematic risk. 
B)  lower the systematic risk. 
C)  lower the expected return. 
D)  less responsive it is to changing share market movements.

Question 14

A company with a _____ ratio of equity to debt is _________ dependent on external financing.

Accepted Answer

A)  lower; less 
B)  lower; not 
C)  higher; less 
D)  higher; more 
A)  lower; less 
B)  lower; not 
C)  higher; less 
D)  higher; more

Question 15

When an investor purchases units in a unit trust,this is known as ________ investing.

Accepted Answer

A)  absolute 
B)  direct 
C)  indirect 
D)  value 
A)  absolute 
B)  direct 
C)  indirect 
D)  value

Question 16

If two assets are negatively correlated this means their prices move in opposite directions.

Accepted Answer

A) True 
 B)False

Question 17

Passive investment involves building an investment portfolio based on shares that are less risky than the overall share market.

Accepted Answer

A) True 
 B)False

Question 18

If investors alter the mix of shares in their portfolios as the share market suddenly falls they are using a strategic asset allocation approach to investing.

Accepted Answer

A) True 
 B)False

Question 19

A company whose shares are currently trading at $3.60 proposes to have a 25% split; that is,four new shares for one existing share.At the commencement of the next business day,a dividend of 25 cents is paid on existing shares,followed immediately by the share split.What is the theoretical price of the new shares?

Accepted Answer

A)  $0.72 
B)  $0.90 
C)  $2.70 
D)  $3.35 
A)  $0.72 
B)  $0.90 
C)  $2.70 
D)  $3.35

Question 20

Which of the following are current assets?

Accepted Answer

A)  Accounts payable 
B)  Bank overdraft facility 
C)  Commercial paper 
D)  Inventories 
A)  Accounts payable 
B)  Bank overdraft facility 
C)  Commercial paper 
D)  Inventories

Typically,a large stock exchange has ________ listed on it.

In modern portfolio theory,an investor should not be concerned with unsystematic risk when calculating expected rates of return because:

The higher the value of the _______ ratio,the better able the firm is to meet its short-term financial obligations.

The ________ ratio is an indicator of the longer term viability and stability of a company.

Which ratio is a measure of liquidity that excludes inventories?

Which of the following statements regarding the debt servicing capacity of a company is incorrect?

A company's ability to meet short-term financial obligations is an important financial performance indicator for an investor.

Major differences between a discount stockbroker and a full-advisory stockbroker lie in:

Investors buy listed shares:

When a share is trading for a period with a cash dividend entitlement,then the share is said to trade:

Which of the following does NOT apply to full-advisory stockbrokers?

The decision to pay cash dividends to shareholders is made by the:

The higher the beta of a share the:

A company with a _ ratio of equity to debt is _____ dependent on external financing.

When an investor purchases units in a unit trust,this is known as ________ investing.

If two assets are negatively correlated this means their prices move in opposite directions.

Passive investment involves building an investment portfolio based on shares that are less risky than the overall share market.

If investors alter the mix of shares in their portfolios as the share market suddenly falls they are using a strategic asset allocation approach to investing.

Which of the following are current assets?

A Modern Financial System: An Overview

Commercial Banks

Non-Bank Financial Institutions

The Share Market and the Corporation

Corporations Issuing Equity in the Share Market

Forecasting Share Price Movements

Mathematics of Finance: An Introduction to Basic Concepts and Calculations

Short-Term Debt

Medium-To-Long-Term Debt

International Debt Markets

Government Debt, monetary Policy and the Payments System

An Introduction to Interest Rate Determination and Forecasting

Interest Rate Risk

Foreign Exchange: The Structure and Operation of the Fx Market

Foreign Exchange: Factors That Influence the Exchange Rate

Foreign Exchange: Risk Identification and Management

An Introduction to Risk Management and Derivatives

Future Contracts and Forward Rate Agreements

Options

Interest Rate Swaps, Cross-Currency Swaps and Credit Default

Filters

Exam 6: Investors in the Share Market

Typically,a large stock exchange has ________ listed on it.

In modern portfolio theory,an investor should not be concerned with unsystematic risk when calculating expected rates of return because:

The higher the value of the _______ ratio,the better able the firm is to meet its short-term financial obligations.

The ________ ratio is an indicator of the longer term viability and stability of a company.

Which ratio is a measure of liquidity that excludes inventories?

Which of the following statements regarding the debt servicing capacity of a company is incorrect?

A company's ability to meet short-term financial obligations is an important financial performance indicator for an investor.

Major differences between a discount stockbroker and a full-advisory stockbroker lie in:

Investors buy listed shares:

When a share is trading for a period with a cash dividend entitlement,then the share is said to trade:

Which of the following does NOT apply to full-advisory stockbrokers?

The decision to pay cash dividends to shareholders is made by the:

The higher the beta of a share the:

A company with a _____ ratio of equity to debt is _________ dependent on external financing.

When an investor purchases units in a unit trust,this is known as ________ investing.

If two assets are negatively correlated this means their prices move in opposite directions.

Passive investment involves building an investment portfolio based on shares that are less risky than the overall share market.

If investors alter the mix of shares in their portfolios as the share market suddenly falls they are using a strategic asset allocation approach to investing.

Which of the following are current assets?

A Modern Financial System: An Overview

Commercial Banks

Non-Bank Financial Institutions

The Share Market and the Corporation

Corporations Issuing Equity in the Share Market

Forecasting Share Price Movements

Mathematics of Finance: An Introduction to Basic Concepts and Calculations

Short-Term Debt

Medium-To-Long-Term Debt

International Debt Markets

Government Debt, monetary Policy and the Payments System

An Introduction to Interest Rate Determination and Forecasting

Interest Rate Risk

Foreign Exchange: The Structure and Operation of the Fx Market

Foreign Exchange: Factors That Influence the Exchange Rate

Foreign Exchange: Risk Identification and Management

An Introduction to Risk Management and Derivatives

Future Contracts and Forward Rate Agreements

Options

Interest Rate Swaps, Cross-Currency Swaps and Credit Default

Filters

A company with a _ ratio of equity to debt is _____ dependent on external financing.