Question 1

What are the main costs involved for surplus and deficit units with direct financing?

Accepted Answer

The cost of funds for deficit units is c

Question 2

What are 'limit' orders and 'at market' orders? Explain how they are handled in an order-driven market?

Accepted Answer

A 'limit' order specifies a trader's max

Question 3

Explain the role of ratings agencies and the part they played in the GFC.

Accepted Answer

Ratings agencies play a crucial role in

Question 4

Deficit units value liquidity and so have a preference for short and/or flexible financial contracts.

Accepted Answer

A) True 
 B)False

Question 5

In the OTC markets trading rules and conventions are established by:

Accepted Answer

A) AFMA 
B) ASIC 
C) The ASX 
D) The RBA 
E) The ATO. 
A) AFMA 
B) ASIC 
C) The ASX 
D) The RBA 
E) The ATO.

Question 6

Strong-form market efficiency implies that security prices are always fair.

Accepted Answer

A) True 
 B)False

Question 7

Discuss the main implications of the efficient market hypothesis.

Accepted Answer

The efficient market hypothesis has the

Question 8

Which of the following statements is TRUE if the efficient market hypothesis holds?

Accepted Answer

A) It implies perfect forecasting ability. 
B) It implies that the market is irrational. 
C) It implies that prices do not fluctuate. 
D) It implies that prices reflect all available information. 
E) It implies that tomorrow's price will be the same as today's price. 
A) It implies perfect forecasting ability. 
B) It implies that the market is irrational. 
C) It implies that prices do not fluctuate. 
D) It implies that prices reflect all available information. 
E) It implies that tomorrow's price will be the same as today's price.

Question 9

Liquid markets allow investors to follow the value of their holdings during the market's trading hours.

Accepted Answer

A) True 
 B)False

Question 10

The role of the primary market is to:

Accepted Answer

A) provide investors with liquidity 
B) discover the price of securities 
C) raise funds for issuers 
D) reflect general price movements through benchmark indices. 
E) All of these. 
A) provide investors with liquidity 
B) discover the price of securities 
C) raise funds for issuers 
D) reflect general price movements through benchmark indices. 
E) All of these.

Question 11

Dealers in the financial markets are required to provide bid and offer quotes when called by another dealer.

Accepted Answer

A) True 
 B)False

Question 12

The primary market is the set of arrangements for the issuing of securities.

Accepted Answer

A) True 
 B)False

Question 13

ASIC requires that issuers always provide relevant and reliable information in order to overcome information asymmetry.

Accepted Answer

A) True 
 B)False

Question 14

A dealer provides you with a bid quote of 0.9420 and an offer quote of 0.9430.This means that:

Accepted Answer

A) you can buy at 0.9420 
B) you can sell at 0.9430 
C) the market spread is 0.0010. 
D) All of these. 
E) None of these. 
A) you can buy at 0.9420 
B) you can sell at 0.9430 
C) the market spread is 0.0010. 
D) All of these. 
E) None of these.

Question 15

Briefly outline the three main forms of market efficiency under the EMH.

Accepted Answer

Weak form efficiency says that prices in

Question 16

'Transparency' is an important feature of exchange-organised markets.It means:

Accepted Answer

A) buyers and seller know who they are trading with 
B) trading takes place in a centralised trading room 
C) real-time accurate information is available about a market's trading 
D) markets provide transactional immediacy. 
E) None of these. 
A) buyers and seller know who they are trading with 
B) trading takes place in a centralised trading room 
C) real-time accurate information is available about a market's trading 
D) markets provide transactional immediacy. 
E) None of these.

Question 17

Active secondary markets do NOT:

Accepted Answer

A) provide investors with liquidity 
B) raise funds for the issuers of securities 
C) perform price discovery 
D) perform maturity transformation 
E) assist the operation of primary markets. 
A) provide investors with liquidity 
B) raise funds for the issuers of securities 
C) perform price discovery 
D) perform maturity transformation 
E) assist the operation of primary markets.

Question 18

Which of the following best describes a price 'bubble'?

Accepted Answer

A) Abnormal returns that are not explained by EMH. 
B) The movement over time in a security's price where an increase is equally likely to be followed by a fall as a further increase. 
C) Periods where share prices fall because of pessimistic sentiment. 
D) Periods where share prices rise because of optimistic sentiment. 
E) Periods where prices rise as a result of excessive optimism that are followed by a sharp correction. 
A) Abnormal returns that are not explained by EMH. 
B) The movement over time in a security's price where an increase is equally likely to be followed by a fall as a further increase. 
C) Periods where share prices fall because of pessimistic sentiment. 
D) Periods where share prices rise because of optimistic sentiment. 
E) Periods where prices rise as a result of excessive optimism that are followed by a sharp correction.

Question 19

When issuing securities, deficit units will seek assistance from:

Accepted Answer

A) investment banks 
B) retail investors 
C) institutional investors 
D) financial analysts 
E) brokers. 
A) investment banks 
B) retail investors 
C) institutional investors 
D) financial analysts 
E) brokers.

Question 20

A dealer's position is not exposed to price risk because dealers set their own bid and offer quotes and can therefore ensure each trade is profitable.

Accepted Answer

A) True 
 B)False

What are the main costs involved for surplus and deficit units with direct financing?

What are 'limit' orders and 'at market' orders? Explain how they are handled in an order-driven market?

Explain the role of ratings agencies and the part they played in the GFC.

Deficit units value liquidity and so have a preference for short and/or flexible financial contracts.

In the OTC markets trading rules and conventions are established by:

Strong-form market efficiency implies that security prices are always fair.

Discuss the main implications of the efficient market hypothesis.

Which of the following statements is TRUE if the efficient market hypothesis holds?

Liquid markets allow investors to follow the value of their holdings during the market's trading hours.

The role of the primary market is to:

Dealers in the financial markets are required to provide bid and offer quotes when called by another dealer.

The primary market is the set of arrangements for the issuing of securities.

ASIC requires that issuers always provide relevant and reliable information in order to overcome information asymmetry.

A dealer provides you with a bid quote of 0.9420 and an offer quote of 0.9430.This means that:

Briefly outline the three main forms of market efficiency under the EMH.

'Transparency' is an important feature of exchange-organised markets.It means:

Active secondary markets do NOT:

Which of the following best describes a price 'bubble'?

When issuing securities, deficit units will seek assistance from:

A dealer's position is not exposed to price risk because dealers set their own bid and offer quotes and can therefore ensure each trade is profitable.

Overview of the Financial System

The Payments System

Funds Management

Authorised Deposit-Taking Institutions

The Stability of Deposit-Taking Institutions

The Money Market

The Bond Market

Shares

The Share Market

Foreign Exchange and Global Capital Markets

Financial Futures

Swaps

Exchange-Traded Options

Filters

Exam 3: Introduction to the Flow of Funds

What are the main costs involved for surplus and deficit units with direct financing?

What are 'limit' orders and 'at market' orders? Explain how they are handled in an order-driven market?

Explain the role of ratings agencies and the part they played in the GFC.

Deficit units value liquidity and so have a preference for short and/or flexible financial contracts.

In the OTC markets trading rules and conventions are established by:

Strong-form market efficiency implies that security prices are always fair.

Discuss the main implications of the efficient market hypothesis.

Which of the following statements is TRUE if the efficient market hypothesis holds?

Liquid markets allow investors to follow the value of their holdings during the market's trading hours.

The role of the primary market is to:

Dealers in the financial markets are required to provide bid and offer quotes when called by another dealer.

The primary market is the set of arrangements for the issuing of securities.

ASIC requires that issuers always provide relevant and reliable information in order to overcome information asymmetry.

A dealer provides you with a bid quote of 0.9420 and an offer quote of 0.9430.This means that:

Briefly outline the three main forms of market efficiency under the EMH.

'Transparency' is an important feature of exchange-organised markets.It means:

Active secondary markets do NOT:

Which of the following best describes a price 'bubble'?

When issuing securities, deficit units will seek assistance from:

A dealer's position is not exposed to price risk because dealers set their own bid and offer quotes and can therefore ensure each trade is profitable.

Overview of the Financial System

The Payments System

Funds Management

Authorised Deposit-Taking Institutions

The Stability of Deposit-Taking Institutions

The Money Market

The Bond Market

Shares

The Share Market

Foreign Exchange and Global Capital Markets

Financial Futures

Swaps

Exchange-Traded Options

Filters