Question 1

Discuss what is meant by the interest rate role of a stock exchange.

Accepted Answer

Not only may a stock exchange have a mar

Question 2

The major supervisors of the Australian share market are:

Accepted Answer

A)  RBA and ASX. 
B)  ASIC and ASX. 
C)  APRA and ASX. 
D)  EFIC and ASIC. 
A)  RBA and ASX. 
B)  ASIC and ASX. 
C)  APRA and ASX. 
D)  EFIC and ASIC.

Question 3

Discuss briefly the different types of equity capital involved in a modern stock exchange such as the ASX.

Accepted Answer

The different types of equity capital fo

Question 4

The reason for the requirement by the ASX for companies to abide by the Corporations Act 2001 (Cwlth)is to:

Accepted Answer

A)  ensure that there will be an active market in the company's shares. 
B)  maintain investor confidence in the company's creditworthiness. 
C)  ensure a minimum number of shareholders in the company. 
D)  ensure that information which may have a material effect on the share price is provided to the market. 
A)  ensure that there will be an active market in the company's shares. 
B)  maintain investor confidence in the company's creditworthiness. 
C)  ensure a minimum number of shareholders in the company. 
D)  ensure that information which may have a material effect on the share price is provided to the market.

Question 5

The listing of new companies on an exchange such as the ASX is known as:

Accepted Answer

A)  share buybacks. 
B)  initial public offerings. 
C)  share issues. 
D)  rights issues. 
A)  share buybacks. 
B)  initial public offerings. 
C)  share issues. 
D)  rights issues.

Question 6

The Clearing House Electronic Subregister System (CHESS)is operated by the ASX.Which of the following statements regarding CHESS is incorrect?

Accepted Answer

A)  The system allows settlement of transactions within three working days. 
B)  A shareholder must conduct a CHESS transaction with a sponsor. 
C)  Shareholders can still hold traditional share certificates. 
D)  The clearing house issues holding statements to uncertified shareholders. 
A)  The system allows settlement of transactions within three working days. 
B)  A shareholder must conduct a CHESS transaction with a sponsor. 
C)  Shareholders can still hold traditional share certificates. 
D)  The clearing house issues holding statements to uncertified shareholders.

Question 7

Discuss what is meant by the derivative role of a share market.

Accepted Answer

Stock exchanges may provide a market for

Question 8

The writer of a put option expects the share price to:

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain unchanged. 
D)  pay a dividend. 
A)  decrease. 
B)  increase. 
C)  remain unchanged. 
D)  pay a dividend.

Question 9

When a corporation continues to operate regardless of changes in ownership,this is known as:

Accepted Answer

A)  the right of perpetual succession. 
B)  perpetual shares. 
C)  perpetual trading. 
D)  unlimited succession. 
A)  the right of perpetual succession. 
B)  perpetual shares. 
C)  perpetual trading. 
D)  unlimited succession.

Question 10

Which of the following is incorrect?

Accepted Answer

A)  A real estate investment trust may purchase industrial property. 
B)  An infrastructure fund may hold investments in power stations. 
C)  The units of a listed REIT purchases property are generally illiquid. 
D)  An investor may use a CFD to go long in a rising market. 
A)  A real estate investment trust may purchase industrial property. 
B)  An infrastructure fund may hold investments in power stations. 
C)  The units of a listed REIT purchases property are generally illiquid. 
D)  An investor may use a CFD to go long in a rising market.

Question 11

The risk that arises from the failure of parties to complete and resolve a transaction is called:

Accepted Answer

A)  Herstatt risk. 
B)  default risk. 
C)  settlement risk. 
D)  market risk. 
A)  Herstatt risk. 
B)  default risk. 
C)  settlement risk. 
D)  market risk.

Question 12

The owners of _______ face unlimited liability.

Accepted Answer

A)  sole proprietorships only 
B)  sole proprietorships and partnerships only 
C)  corporations only 
D)  partnerships and corporations only 
A)  sole proprietorships only 
B)  sole proprietorships and partnerships only 
C)  corporations only 
D)  partnerships and corporations only

Question 13

When a no-liability company defaults on its loans with its creditors,this means the:

Accepted Answer

A)  creditors have a legal claim against the directors only. 
B)  creditors have a legal claim against the CEO only. 
C)  creditors have a legal claim against the chairman of the company. 
D)  shareholders do not have to meet any remaining payment on shares. 
A)  creditors have a legal claim against the directors only. 
B)  creditors have a legal claim against the CEO only. 
C)  creditors have a legal claim against the chairman of the company. 
D)  shareholders do not have to meet any remaining payment on shares.

Question 14

The number of listed companies in the ASX is approximately:

Accepted Answer

A)  1000 
B)  1200 
C)  2000 
D)  2200 
A)  1000 
B)  1200 
C)  2000 
D)  2200

Question 15

If a growing organisation wanted to set itself up so it had greater access to a wider range of capital,it would become a:

Accepted Answer

A)  sole proprietorship. 
B)  partnership. 
C)  general partnership. 
D)  listed corporation. 
A)  sole proprietorship. 
B)  partnership. 
C)  general partnership. 
D)  listed corporation.

Question 16

Compared with an over-the-counter derivative product,exchange-traded derivative products:

Accepted Answer

A)  are standardised. 
B)  involve margin calls. 
C)  are not negotiated between the buyer and seller of the contract. 
D)  include all of the given answers. 
A)  are standardised. 
B)  involve margin calls. 
C)  are not negotiated between the buyer and seller of the contract. 
D)  include all of the given answers.

Question 17

The liability of shareholders in 'limited liability' companies means:

Accepted Answer

A)  creditors of a company can call upon the shareholders in the case of company default to contribute an amount based only on the current market price of the shares. 
B)  shareholders are only liable for any amount that is unpaid on the shares of a company. 
C)  in the event of company default, the creditors have no claim on the shareholders for any contribution. 
D)  shareholders do not have a right to participate directly in the day-to-day management of a company. 
A)  creditors of a company can call upon the shareholders in the case of company default to contribute an amount based only on the current market price of the shares. 
B)  shareholders are only liable for any amount that is unpaid on the shares of a company. 
C)  in the event of company default, the creditors have no claim on the shareholders for any contribution. 
D)  shareholders do not have a right to participate directly in the day-to-day management of a company.

Question 18

Which of the following are incorrect?

Accepted Answer

A)  On completion of a trade each stock broker will send a contract note to the buyer and settle. 
B)  Overlapping bids and offers for shares are executed at each price level in the order they are recorded in the system. 
C)  ASX Trade provides a fair, efficient trading system, developing latency down to the 1 second. 
D)  Shares listed on the ASX are known as uncertified securities. 
A)  On completion of a trade each stock broker will send a contract note to the buyer and settle. 
B)  Overlapping bids and offers for shares are executed at each price level in the order they are recorded in the system. 
C)  ASX Trade provides a fair, efficient trading system, developing latency down to the 1 second. 
D)  Shares listed on the ASX are known as uncertified securities.

Question 19

An initial public share offering represents the share market's _____ role.

Accepted Answer

A)  interest rate 
B)  information 
C)  primary 
D)  secondary 
A)  interest rate 
B)  information 
C)  primary 
D)  secondary

Question 20

The primary market role of a stock exchange is:

Accepted Answer

A)  to trade the shares of the largest corporations. 
B)  to ensure the sale of new-issue securities. 
C)  to ensure deep trades in listed securities. 
D)  to ensure that information about listed companies is quickly reflected in share prices. 
A)  to trade the shares of the largest corporations. 
B)  to ensure the sale of new-issue securities. 
C)  to ensure deep trades in listed securities. 
D)  to ensure that information about listed companies is quickly reflected in share prices.

Exam 4: The Share Market and the Corporation

Discuss what is meant by the interest rate role of a stock exchange.

The major supervisors of the Australian share market are:

Discuss briefly the different types of equity capital involved in a modern stock exchange such as the ASX.

The reason for the requirement by the ASX for companies to abide by the Corporations Act 2001 (Cwlth)is to:

The listing of new companies on an exchange such as the ASX is known as:

The Clearing House Electronic Subregister System (CHESS)is operated by the ASX.Which of the following statements regarding CHESS is incorrect?

Discuss what is meant by the derivative role of a share market.

The writer of a put option expects the share price to:

When a corporation continues to operate regardless of changes in ownership,this is known as:

Which of the following is incorrect?

The risk that arises from the failure of parties to complete and resolve a transaction is called:

The owners of _______ face unlimited liability.

When a no-liability company defaults on its loans with its creditors,this means the:

The number of listed companies in the ASX is approximately:

If a growing organisation wanted to set itself up so it had greater access to a wider range of capital,it would become a:

Compared with an over-the-counter derivative product,exchange-traded derivative products:

The liability of shareholders in 'limited liability' companies means:

Which of the following are incorrect?

An initial public share offering represents the share market's _____ role.

The primary market role of a stock exchange is:

A Modern Financial System: An Overview

Commercial Banks

Non-Bank Financial Institutions

Corporations Issuing Equity in the Share Market

Investors 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