Exam 6: Investors in the Share Market

Consider the following five statements: i.The expected return of a portfolio of shares is the weighted average of the expected returns for each share. ii.All other things being equal,a cum-dividend share price should fall be the amount of a dividend that is paid. iii.One of the effects of dividend imputation is the removal of 'double taxation' of company profits that are distributed as dividends. iv.For a shareholder with a marginal tax rate that is lower than the company tax rate,no tax will be payable on the fully franked dividend received,and the excess credit can be applied against other assessable income. v.In a one-for-nine bonus issue,if the cum-bonus price was $10,then the theoretical ex-bonus price would be $9. Which of the following is correct?

After a company has made an announcement about a forthcoming dividend,then at a specified date when the share begins to trade ex-dividend:

According to the text,an investment portfolio that is well-diversified contains:

If a dividend is declared on 1 November,has a cum-dividend date of 19 November and a record date of 26 November,which of the following shareholders will NOT receive the dividend?

Compared with a company's current ratio,the shareholders' interest ratio gives information about a company's:

A company has a higher current ratio than the industry average.This implies that the company:

When shares are purchased cum-rights it means the purchaser of the share:

Which of the following statements regarding dividends is incorrect?

A rights issue differs from a bonus issue of shares in that:

The _______ ratio measures the proportion of total assets provided by the company's owners.

When using indicators for a company's performance:

When an investor alters the mix of their portfolio to reflect market changes or their circumstances,this is called _____ asset allocation.

Which financial ratio links long-term funds provided by the company's owners and those of the creditors?

Which of the following about beta coefficient is incorrect?

The current market price of a stock is $3.00.The rights issue is one-for-ten,priced at $2.80.Calculate the theoretical ex-rights price.

Consider the following five statements: i.The expected return of a portfolio of shares is the weighted average of the expected returns for each share. ii.All other things being equal,a cum-dividend share price should fall by the amount of a dividend that is paid. iii.One of the effects of dividend imputation is the removal of 'double taxation' of company profits that are distributed as dividends. iv.For a shareholder with a marginal tax rate that is lower than the company tax rate,no tax will be payable on the fully franked dividend received,and the excess credit can be applied against other assessable income. v.In a one-for-nine bonus issue,if the cum-bonus price was $10,then the theoretical ex-bonus price would be $9. How many of the above statements are true and how many are false?

Share market participants can regard a bonus issue favourably because:

Which of the following groups of financial ratios provide information on the short-run operation of the company?

The financial ratio that measures operating profit after tax to shareholders funds is:

Stockbrokers act as _____ for an exchange.