Chap 5

D.an investment decision first determines what assets the firm will invest in,
1 An investment decision differs from a financing decision in that: while a financing decision considers how the investments under consideration
are to be funded.
When a company decides to issue an unsecured note to pay for a new machine, it has made
2 C. financing decision
a/an:
3 The finance required by a company to fund its day-to-day operations is called: D. working capital
Which of the following statements is correct for an investment proposal with a positive
4 B. The IRR is greater than the required rate of return
NPV?
5 Problems associated with calculating an internal rate of return include: D. All of the given answers.
When a company decides to pay for an investment project using a short-term bank loan, this
6 is best C. financing decision
described as a/an:
When a company's project results in a return and profits that exceed the cost of its debt
7 B. only the shareholders may share in the profits
borrowing:
8 Financial risk refers to the: C. risk faced by the shareholders when debt is used
Increasing the financial leverage of a company will _______ shareholders' expected returns
9 C. increase; increase
and ______ their risk.
B. If a corporation imports goods from oversea then an appreciation in the
10 Which of the following statements about financial risk is correct?
exchange rate will adversely affect the company profit.
C. When a business fall equity holders rank ahead of providers of debt due to
11 Which of the following statements about financial risk is incorrect?
their higher financial risk.
12 A company's business risk depends on: B. the risk of the company's operations and assets
13 Restrictions placed on borrowers by lenders in the loan agreement are called loan: A. covenants
14 An increase in a firm's level of debt will: B. increase the variability in earnings per share
15 Compared with retail sector companies, banks have a: C. high debt-to-equity ratio
16 The claims of the equity holders on the assets of the firm have priority over those of: D. no other holder
17 Who are sometimes referred to as the residual owners of the corporation? C. The common share holders
18 What is the function of a proxy statement for a shareholder? A. It gives them the right of a vote for each share they own.
19 Which of the following statement is NOT a feature of ordinary shares: D. Dividends of ordinary shares are always tax deductible
A. an offering to potential investors of ordinary shares to newly list a company
20 Generally, an initial public offering is
on a stock exchange
21 Holder of equity captal B. own the company
 D. not guaranteed a periodic distribution or a distribution on the wond-up of
22 Common shareholers are
the company
Which of the following statement best describes the role or function of the promoter of a
23 C. The party seeking the flotation of the company
flotaion?
Potential investors learn of the information concerning the company and its new issue by
24 B. Prospectus
being sent a ____ by the broker
As part of the listing process for an unlisted organisation, a document that provides detailed
25 B. Prospectus
information on the past and forecast performance for it is a:
26 When a company undertakes an initial public offering (JPO) it may: C. issue and list shares in the primary share market.
Compared with raising debt through a bank, the raising of equity through an IPO is
27 B.dearer
generally:
A financial institution involved in underwriting the sale of new securities by buyi ng them
28 from the issuing firms and then reselling them to the public in the primary capital market is D.investment banker
an:
29 Which of the following is NOT a role of an underwriter in a public offering of shares? C.To invest the funds raised in the offering
30 If, for an IPO, circumstances change and the issue becomes unattractive, the underwriters: C.may purchase unsubscribed shares.

If, for an IPO, market prices have fallen, then underwriters with an out-clause that gives a
31 C.the underwriters may be released from their obligations.
level of a specified price index that the index cannot fall below, then:
Ordinary shares in limited liability companies are the major source of external equity funding
for D.No liability company can issue shares only on a fully paid basis because of
32
Australian companies. Wh ich of the following statements regarding the issuance of ordinary the risk
shares by a newly listed limited liability company is incorrect?
33 Companies can raise equity capital through: C.retailed earnings and the share market
34 A person who is authorized to vote on a sharehol.der's behalf is called B.a proxy
C.A no liability company may also offer shareholders an option to sell shares
35 Which of the following statements about a no liability company is incorrect? back to the company if
the company exploration is not successful.
36 Financing for high -risk companies is often in the form of: B.no-liability shares.
Which of the following requirements does NOT apply to a company seeking a public listing
37 C. The company must issue a prospectus that is to be lodged with the ASX
on the Australian Securities Exchange (ASX)
38 Most compan ies raise funds by selling their securities in a A.public float.
 A company may seek to raise further funds by issuing additional ord inary shares. The terms
and conditions of the new share issue are determined by the board of directors in consultation
39 A. The discount to current market price that can be offered to shareholders.
with its financial advisers and others,... LEAST likely to be a determinant of the price that is
eventually struck?
D.security holders must be consulted on matters of significance except for
40 Some of the main principles that form the basis of a stock exchange's listing rules are
agreements between the entity and related parties
41 A rights offering is the issue of C. an option to purchase shares directly to the shareholders
42 A company may raise additional equity capital through D.all of the given answers.
43 A right that can only be exercised by the shareholder and not sold is called a C.non-renounceable right.
Before making a rights issue, a company's management must consider several important
44 D.The effect on the firm's profits
variables. Which of the following is NOT one of these variables?
45 The subscription price in a rights offering is generally A.below the current share price.
46 Which of the following is generally NOT a characteristic of rights? A.No expiration date
C.must be made to shareholders on the basis of the num ber of shares already
47 A pro-rata share rights offer means that the offer
held.
48 A pro-rata share rights offer of I :5 gives existi ng shareholders C.the right to purchase one share for every 1/5 shares held.
49 For a share placement, the Australian authority ASIC requires C.a memorandum of information to be sen t to aill participating institutions.
50 For a share placement , the Australian authority ASIC or ASX listing rules require C.the discount from market price must not be above 50 percen t.
Share placements may, subject to compliance wi th certain regulations , be made to
institutional C.Under no circumstances should placements be in excess of I0% of the issued
51
investors. Which of the following conditions is NOT a requirement of the Australian shares permitted.
authority ASIC for share placements
If a company raises equity funds by issuing shares to a selected number of institutional
52 B.a placement.
investors, this is known as
53 Compared with a pro-rata issue of shares, placements usually B.can be carried out much more quickly.
The main advantage of placements to raise additional equity funds compared to a rights issue
54 D.it reduces the proportion of ownership by existing shareholders.
is
When a takeover company issues additional shares to fund the acquisition of the shares in a
55 B.an equity-fu nded takeover.
target company this is called
C.Companies have encouraged shareholders to use dividend reinvestment
56 Which of the following does NOT apply to a dividend reinvestment plan
plans.

57 Which of the following is NOT a feature of a dividend reinvestment scheme for a company? D.The shareholders can redeem shares for dividends.
58 A dividend reinvestment plan generally on the security B.increases the return
 Dividend reinvestment schemes are a significant source of equity for many Australian
C.Such schemes allow dividends to be paid while retaining cash for future
59 companies. Which of the following advantages of dividend reinvestment schemes may, at
growth.
times, also be regarded as a disadvantage
_______are promised a fixed periodic dividend, the payment of which must be paid before
60 B.Preferred shareholders
that of ordinary shares
Any unpaid dividends that must be paid before payment of dividends to ordinary
61 B. cumulative
shareholders are called _____ preference shares
62 A company is likely to issue ____ if i t has reached its optimal gearing level D.preference shares
Holders of preference shares are entitled to dividend payments beyond the stated dividend
63 A.participating
rate
64 A preference share issue offers all of the following advantages to a company except D.an indefinite maturity.
65 Which of the following is NOT a feature of preference shares D.An important source of company funding
66 Preference shares: A.have their dividend fixed at the issue date.
67 Convertible preference shares are normally converted into C.shares.
68 Compared with ordinary shares, preference shares usually B.have dividends set at issue.
C.debt instrument that the holder has the option to convert into an initially
69 A convertible note is a/an
specified number of shares.
C.Maturity of convertible notes is usually shorter than straight debt instru
70 Which of the following statements is NOT a feature of convertible notes
ments.

71 Which of the following statements is NOT a feature of convertible notes C.Convertible notes offer a higher interest rate than straight debt instruments.

An advantage of a convertible security for a company is that it can generally be sold with
72 C.lower than
interest rates_____ other non-convertible debt securities
73 The buyer of a convertible security accepts a lower rate of interest because of D.the possibility of becoming a shareholder in the future.
When a convertible security is issued, the issue price is usually ____ the current market price
74 B.close to
of the company's share

75 Which of the following is NOT an advantage for a company that issues a convertible note D.There is an increase in financial leverage upon conversion.

A company is advised to issue convertible notes. They are advised of the conditions A.The holder of the note has the right to convert the note into preference
76
applicable to the convertible note issue. Which of the following conditions is incorrect shares.

77 Compared with straight debt, convertible notes may offer a company A.lower borrowing costs.
78 When a company wants to increase the marketability of a rights issue, it may offer B.options attached.
79 When warrants are converted by a holder C.only the number of shares increases.
 Which of the following is NOT an advantage for a company that sells a company-issued D.There is no certainty that the future funds from the exercise of the option
80
option with a rights issue will eventuate.
81 Which of the following about equity warrants is NOT correct D.Dividends for warrants are usually lower than for ordinary shares.
Which financial instrument gives the holder an option to purchase a specified number of
82 A.An equity warrant
shares at a predetermined price over a given period
Which one of the following conditions for an equity warrant that isgenerally attached to a
83 B.A warrant holder receives dividend payments over the life of the warrant.
bond issue is NOT correct
84 Which of the following about equity warrants is NOT correct? D.A warrant holder receives a dividend, unlike a rights holder.
C.Because company-issued equity warrants are attached to a bond they have
85 Which of the following statements about company-issued equity warrants is incorrect?
no value.
86 Which of the following is NOT a similarity between a right and a warrant D. A right and a warrant both have similar maturities.
Which of the following requirements does NOT apply to a company seeking a public listing
87 C.The company must lodge a prospectus with the ASX on an annual basis.
on the ASX
The internal relationship between shareholders, the board of directors and the managers of a
88 B. corporate governance.
company is called
89 A princi pal objective of a business organisation is the maximisation of its profits F
The investment decision for a corporation involves the types of securities it is going to issue
90 F
or inves
If the calculated TR R on an investment proposal is greater than the req uired rate of return ,
91 T
the company should proceed with the project
Business risk is determined in part by a corporation's choice of business activity and the man
92 F
ner in which it has financed those activities
A low debt-to-equity ratio for a company means that a rise in interest rates will not affect the
93 F
variable­rate debt issued by the company
Financial risk refers to ri sks arising from the different types of debt securities issued by a
94 F
company
A company 's debt-to-equity ratio is determined in practice with reference to four main
95 T
criteria and not by finance theory
In consultation with a company, the promoter (an investment bank) will seek flotation of the
96 F
company shares
97 Limited liability shares are generally sold to investors on a fully paid basis T
98 A pro-rata offer of rights to existing shareholders must be accompanied by a prospectus T
Chap 6
1 Passive investment means building a portfolio of shares based on the strategy of B.replicating a market index.
2 Investors buy listed share D.for the chance of dividend payments and capital growth.
3 Typically, a large stock exchange has listed on it D.all of the given choices
4 Compared with fixed interest securities, shares offer D. periodic dividends and capital gains at higher risk.
5 A diversified portfolio generally includes D.10-25 stocks.
6 According to the text, an investment portfolio that is well-diversified contains D.a large range of shares, fixed-interest securities and properties.
7 Systematic risk means: D. risks that have an impact on the majority of shares in the market.
8 The risk that impacts specifically on the share price of a particular company is called D.unsystematic risk.
9 Which of the following is an example of systematic risk exposures for a company D.Introduction of new company legislation
10 Which of the following is an example of an unsystematic risk exposure for a company? D.Change in future performance forecast for a company

When investors buy and sell shares based on receiving new information on shares and
11 A.. acttive investment.
markets, this is known as
12 To crack the S&PSOO, a fund manager can buy D. all of the given answers.
13 Which of the following about share market indices is NOT correct? D.The Dow Jones tracks 50 shares in the USA.
14 The correlation of pairs of securities within a portfolio is called C.covariance.
15 The correlation between two shares D.includes all of the given answers.
16 For a portfolio of stocks, portfolio risk is heavily based on: C. a weighted average of the covariance of the stocks in the porfolio.
When an investor alters lhe mix of their portfolio 10 reflect market changes or their circu
17 D.tactical
mstances, this is called asset allocation
For an investor, the mix of shares that satisfies their known cash-tlow requirements, risk
18 B.strategic asset allocation.
tolerance and future life cycle positions is called
19 Stockbrokers act as for an exchange. A . agents
20 Major differences between a discount stockbroker and a full-advisory stockbroker lie in D. all of the given answers.
21 Which of the following does NOT apply to full-advisory stockbrokers D. Fu lI-advisory stockbrokers' fees are competitive with discount brokers.
22 When an investor purchases units in a unit trust, this is known as investing. C. indirect
When. a share investor puts an order to buy shares through their stock broker via their
23 B.direct investment.
internet share account, this is called
C.An investor is generally required to pay taxation on the final dividend
24 Which of the following statements regarding dividends is incorrect
payment.

C.In relation to divide imputation,a shareholder whose marginal tax is lower

25 Which of the following statements is NOT correct?
than the company tax rate will pay their marginal tax on the dividend received.
 The capital structure of a company is one of the important indicators of performance. Which D.The capital ratios of companies, and industry groupings, are generally
26
of the following statements regarding capital structure is incorrect similar.
27 When using indicators for a company's performance D. all of the given answers are correct.
Compared with a company's current ratio, the sh areholders' interest ratio gives information
28 C.long-term viability.
about a company's
29 Which of the following are current assets D.inventories
30 Which of the following arc current liabilities of a company C.Bank overdraft facility
The greater the proportion of debt financing compared with equity financing for a company
31 C. greater the degree of financial risk for the company.
the
32 A company with a ratio of equity to debt is dependent on external financing C.higher; less
33 The ratio measures the proportion of total assets provided by the company 's owners A.shareholders' interest
The indicator ratio that should be used to assess a company 's ability to meet its short-term
34 A.Liquidity.
obligations is its
35 Which ratio is a measure of liquidity that excludes inventories? B.Liquid
36 An example of a liquidity ratio for a company is B.current ratio.
A company has a higher current ratio than the industry average. This implies that the B. is more likely to avoid insolvency in the short term than other companies in
37
company: the industry.
If a company has a current ratio of 2, which of the following measures will i increase the
38 D. Paying off a short-term bank advance with long-term debt
current ratio
39 If a company has a current ratio of 0.9, in order to improve its current ratio it might B. use more long-term debt to decrease current liabilities.
40 If a company has a liquid ratio of 0.9, in order to improve its liquid ratio it might A . increase its current assets by increasing its inventory.
41 The rat io is an ind icator of the longer term viability and stability of a company A.shareholders' interest
42 For a ·company, a rule of thumb for the interest cover financial ratio is in the range B. 1 to 2.
Which financial ratio provides information essential for assessing the long-run operation of
43 A. Debt
the company
The financial ratio that indicates the number of years required for a company to repay its
44 C.debt to gross cash flow.
total debt is
45 The financial ratio that measures operating profit after tax to shareholders funds is B.Return on equity.
Compared with a company's interest cover ratio, earnings before interest and tax measures
46 C. profitabi lity.
its:
Which of the following groups of financial ratios provide information on the short-run
47 D.Liquidity and profitability
operation of the company
Which financial ratio links long-term funds provided by the company's owners and those of
48 B.Debt to equity
the creditors
49 Which financial ratio is used to measure a company's ability to meet its short-term financing? B. Liquidity
50 Which financial ratio measures a company's ability to service its interest commitments D.Interest cover
The higher the value of the ratio, the better able the firm is to meet its short-term financial
51 B.liquidity
obligations
52 The is an indicator of investors' evaluation of a company's future earnings potential. B. price/earnings ratio
Which of the following statements regarding the debt servicing capacity of a company is D. The lower the interest cover ratio, the greater the company 's ability to
53
incorrect cover interest commitments.
54 The ratio is an indicator of the share market's evaluation of a company B. price/earnings
55 Systematic risk is also referred to as C. market risk.
56 The risk that affects the whole market is called B.systematic risk.

In modern portfolio theory, investment risk is divided into two components: systematic risk
57 A.. Increase in the corporate tax rate
and unsystematic risk. Which of the following risks is an example of systematic risk

Increased competition, increased costs of labour, lawsuits, and unfavourable exchange rates
58 A.diversifiable risk.
arc all examples of
59 Which of the following is NOT an example of unsystematic risk for a company D. Changes occur in the level of company tax rates.
Estimating systematic risk involves comparing the price history of a particular share relative
60 A.an average
to movements on stock listed on an exchange
61 The higher the beta of a share the A.greater the systematic risk.
62 Which of the following about beta coefficient is incorrect C. A stock with a beta of 1 .25 will move more than a stock with a beta of 1.25
63 The majority of companies pay dividends twice a year to their C. shareholders.
64 When a share goes ex-rights, assuming everything else remains the same, its price should B. decrease, as the shareholder is losing an option.

After a company has made an announcement about a forthcoming dividend, then at a

65 C.the seller of the share will receive the next dividend payment.
specified date when the share begins to trade ex-dividen
When a share is trading for a period with a cash dividend entitlement, then the share is said
66 C. cum-dividend.
to trade
If a dividend is declared on 1 November, has a cum-dividend date of 19 November and a
67 record date of 26 November, which of the following shareholders will NOT receive the D. A buyer of the share on 29 November
dividend
68 On the day that a share goes ex-dividend, the price should theoretically B. decrease by the extent of the dividend.
69 The decision LO pay cash dividends Lo shareholders is made by the C. board of directors.
70 A rights issue differs from a bonus issue of shares in chat C.the purpose of a bonus issue for a company is not to raise more funding.
B. If a company offers a I for 4 bonus issue this means for every l share a
71 Which of the following statement about bonus shares is NOT correct shareholder owns they get
four extra shares
72 When shares are purchased cum-rights it means the purchaser of the share B. may take part in the rights offer.
C.they take it as a signal from the company of increased future profitability
73 Share market participants can regard a bonus issue favorably because
lity.
74 Which of the following is an aim of a stock split D. To try to improve the liquidity of shares
75 There is _____ change in the capital structure of a company after a share split. C. no
76 Share market participants can regard a rights issue favorably because B. a rights issue increases the equity/debt ratio, and so reduces financial risk.

When a share price of a company has increased hugely compared to the prices of most other
77 A.split the number of shares on issue.
shares on the exchange and its liquidity has decreased, the directors may decide to
78 The S&P/ASX All Ordinaries share price index represents A .changes in aggregate share market values of the largest 500 companies.
B. may be a performance benchmark index but with a narrower focus upon
79 According to the text, a tradable benchmark
which some derivative contracts are priced.
Continuous disclosure rules of a stock exchange mean that listed companies must disclose
80 F
any material information continuously every hour
Efficient price discovery means that share information is disclosed at the lowest possible
81 F
transaction s cost
A change in foreign exchange rates is a systematic risk that affects the bulk of shares listed
82 T
on a stock exchange

83 A share that has a beta of 0.5 is half as risky as the average share listed on the share market T

Passive in vestment involves building an investment portfolio based on shares that are less
84 F
risky than the overall share market

85 If two assets are negatively correlated this means their prices move i n opposite direction T

If investors alter the mix of shares in their portfolios as the share market suddenly falls they
86 F
are using a strategic asset allocation approach to investing
A company's ability 10 meet short-term financial obligation s is an important financial
87 T
performance indicator for an investor
Historically, Australian banks have had low EPS ratios compared with the retail sector
88 F
because of the amount of lending they do
 When a share is trading cum-dividend, this means the seller of the share will receive the
89 F
dividend payment
Chap 7
1 If investors __ a company's shares, the __supply is likely to lead to a __ in the share price C.sell; increased; fall

If a company's shares are expected to perform better than other companies in the same
2 A.increased demand; rise
industry, there will be __ for the company shares and a __ in the share price
The approach that seeks to identify factors that are likely to influence the growth rate and
3 C.fundamental analysis.
future profits of a company is called
When an investor makes their investment decision based on a company's accounting ratios,
4 C.fundamental analysis.
they are using
The investment approach that focuses on the underlying determinants of future profitability
5 B. fundamental analysis.
rather than on past price movements of a company's stock is
6 The investment approach that evaluates and interprets past share price movements is B.technical analysis.
In relation to fundamental analysis, which of the following is NOT a problem associated
7 C.Pressure on wage growth falls
with rapid, unsustainable economic growth
The portion of the overall economy defined by the nature of a company's operations is called
8 C.industry sector.
th
9 The net record of a country's international earnings less its international payments is it B. current account.
In relation to a country's economy, the more a country imports and the worse the current
10 D.higher foreign debt becomes.
account becomes, the
In relation to a country's economy, if a country’s current account deteriorates, the
11 C.tighten interest rates.
government is likely to

12 Foreign exchange risk is best described as the C.risk that the price of one currency relative to another currency will change.
13 Writing down the value of a capital asset, reported as an expense, is called B. depreciation.
If there were an appreciation of the exchange rate of a local currency against the USO, then
14 C.profits; increased exports; more
__ from __ sales would be ___ than i f the exchange rate had remained constant
Investment analysts use a number of approaches in the analysis of fundamentals that may
15 affect share prices. Which of the following statements in relation to the bottom-up approach B. is applied to select specific firms from within desired industry sectors.
to share price analysis is MOST correct? The bottom-up approach
Investment analysts use a number of approaches in the analysis of fundamentals that may
D. identifies future economic factors that may impact on industry sector
16 affect share prices. Which of the following statements in relation to the top-down approach
performance.
to share price analysis is MOST correct? The top-down approach
 Some of the factors that are used by analysts using the top-down approach in the analysis of
17 D.all of the given answers.
fundamentals affecting share prices are
18 Firm-specific financial indicators used in fundamental analysis top-down approach are C.return on assets.
Which of the following is NOT a problem that may be associated with rapid , unsustainable
19 C.An improvement in the current account of the balance of payments
growth in an economy
20 The greater the degree of systematic risk, the B. higher the expected rate of return.
21 The lower the degree of unsystematic risk, the A.higher the diversification of a share portfolio.
An investor who buys a large number of shares from different companies and from many
22 B. Minimize unsystematic risk.
different industries will
According to modern portfolio theory, the the degree of systematic risk, the should be the
23 B. greater; greater.
expected return
The investment approach that focuses more on past price movements of a company's stock
24 D. technical analysis.
than on the underlying determinants of future profitability is
When investors use past share price movements to make their investment decisions, they are
25 D. technical analysis.
using
26 Compared with technical analysis, fundamental analysis considers the D. factors that influence a company and the overall market.
27 Compared with fundamental analysis, technical analysis focuses on D. share price movements.
28 An important belief underlying the use of technical analysis techniques is that B. security prices react gradually to new information.
C.react gradually to new information, and market prices are determined by the
29 Technical analysts basically believe that security prices
interaction of supply and demand.
An alternative approach to forecasting the behaviour of share prices is technical analysis.
C.Historical price patterns are of little use in forecasting future price
30 Which of the following statements in relation to the approach taken by technical analysts is
movements.
incorrect
___is a mathematical technique used by technical analysts to clearly reveal all the trends in a
31 B. Moving average
price series
32 A graph of average price series constructed over time is called a C. moving average.
33 In technical analysis, when the lower points of a rising price series are connected this is a C. upward trend line.

When the share price series breaks through the moving average line from below, a technical
34 A.buy the share.
analyst would probably suggest it is a good time to
35 An analyst constructs a moving average line in order to C.smooth out erratic price movements
When the share price series breaks through a flattening moving average line from above, a
36 B. sell the share.
technical analyst would probably suggest it is a good time to
 B. sell when the MA series is rising strongly and the price series cuts or
Once the actual price and moving average (MA) series are plotted on the same graph, buy
37 touches the MA from above, but then moves back above the MA after only a
and sell signals are generated . So
few observations.
38 In relation to technical analysis, a support level is B. a level below which the market is unlikely to fall.
In relation to technical analysis, what is the level above which the market finds it difficult to
39 B. Resistance level
rise
In technical analysis, a price level below which the market price is temporarily unlikely to
40 C. support line.
fall is a
In technical analysis, a price level below which the market price is temporarily unlikely to
41 B.resistance line.
rise is a
For technical analysts, the pattern formed by a series of price fluctuations characterised by
42 A.ascending triangle.
rising bottoms and horizontal tops is a/an
For technical analysts, the pattern formed by a series of price fluctuations composed with
43 each top and bollom smaller chan its predecessor and with transaction volumes usually B. symmetrical triangle.
diminishing is a/an
For technical analysts, the pattern formed by three successive rallies with the second rally
44 B. head and shoulder pattern.
being greater than the first or third, is called a
A support/resistance pattern plotted by chartists in the stock markets is the rectangle, which A. Rectangles tend to characterized by increasing volumes, except for a few
45 consists of sideways price fluctuations contained within horizontal support and resistance days before the breakout when there are strong decreases in volumes of trade
levels in the share(s)
In relation to charting, an upward trend line connects the ___ points of a __ price series,
46 B. lower; risi ng; higher; falling
while a downward trend connects the___points of a ___ price series
The Elliot wave theory maintains that the bullish behaviour of the share market can be C.a series of three major waves upwards, followed by two major waves
47
explained as downwards.
In relation to share trading, buy and sell orders automatically triggered by rules entered into a
48 C.program trading.
computer program are called
In relation to share trading, a dedicated system that operates within an exchange allowing
49 some institutional investors to place large buy or sell orders without having to disclose the D. dark pools.
whole trade to the exchange are
D. the trades of certain institutional investors that receive information from a
50 In relation to stock exchanges, the term 'flash trading' refers to
stock exchange of incom ing orders before other traders.
C.refers to computer-generated orders to buy or sell many shares at the same
51 Program trading
time.
 One of the theories on the determination of, and change i n the val ue of, shares and other
C.Share price reflects the share's intrinsic value., based on the latest
52 securities is the random wal k hypothesis. Which of the following statements in relation to
information set relevam to current and future prospects.
the random walk hypothesis is correct
53 If a share price falls on four consecutive days of trading, share price B. can still be following a random walk
54 Which of the following statements regarding an efficient capital market is correct C.Current prices reflect all current information.
55 In an efficient market D.All of the given answers are correct.
56 The weak form of the efficient marker hypothesis asserts that D.all of tbe given answers are correct.
57 If the weak form of the efficient market hypothesis holds D.all of the given answers are correct.
Strategies based on technical analysis are most l ikely to be profitable in a market that is
58 D. not weak-form efficient.
regarded as
D.technical analysis, but is silent on the possibility of successful fundamental
59 The weak form of the efficiene market hypothesis denies the use of
analysis.
At which level of market efficiency does the efficient market hypothesis support the
60 D. None of the given answers
technical analysis approach to future share price determination
61 The semi-strong form of the efficient market hypothesis states that C.security prices reflect all publicly available information.
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84
85
86
87
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89
90
91
92
93
94
95
96
97
98
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100