Question 1

A market's liquidity is indicated by its daily turnover, its trading hours and its degree of automation.

Accepted Answer

A) True 
 B)False

Question 2

The expression 'order-driven market' refers to the bids and offers of dealers.

Accepted Answer

A) True 
 B)False

Question 3

What function do ratings agencies serve in the financial markets?

Accepted Answer

Ratings agencies are one way in which fi

Question 4

Explain the functions performed by secondary markets.Describe the different trading arrangements used in secondary markets.

Accepted Answer

Secondary markets play a crucial role in

Question 5

Under the weak-form of the EMH, the study of past price patterns can be effective in enabling investors to generate abnormal profits.

Accepted Answer

A) True 
 B)False

Question 6

Discuss the use of information by financial markets and the theory of market efficiency.Assess the relevance of market efficiency to market traders.

Accepted Answer

Financial markets rely heavily on inform

Question 7

In the financial markets, surplus and deficit units deal directly with each other without any assistance from financial institutions.

Accepted Answer

A) True 
 B)False

Question 8

How do the preferences of surplus and deficit units generally differ?

Accepted Answer

Surplus and deficit units differ in thei

Question 9

If financial markets are efficient, then:

Accepted Answer

A) there is reason to believe that prices are too high or too low 
B) it is possible to profit regularly from analysing publicly available information 
C) prices will adjust quickly to correctly reflect new information 
D) there will be periods where expectations are too bullish and too bearish 
E) historical price trends will give you a good idea of where prices are headed in the near future. 
A) there is reason to believe that prices are too high or too low 
B) it is possible to profit regularly from analysing publicly available information 
C) prices will adjust quickly to correctly reflect new information 
D) there will be periods where expectations are too bullish and too bearish 
E) historical price trends will give you a good idea of where prices are headed in the near future.

Question 10

Which of the following is NOT a feature of secondary markets?

Accepted Answer

A) A trading platform (such as a computer program)that enables trading. 
B) Trading rules and procedures. 
C) A centralised trading room. 
D) Settlement procedures. 
E) Standardised securities. 
A) A trading platform (such as a computer program)that enables trading. 
B) Trading rules and procedures. 
C) A centralised trading room. 
D) Settlement procedures. 
E) Standardised securities.

Question 11

A market's clearinghouse:

Accepted Answer

A) issues certificates representing securities to investors 
B) keeps an electronic record of securities and their owners 
C) is only involved in primary market trades 
D) provides an expert opinion about the expected performance of securities. 
E) All of these. 
A) issues certificates representing securities to investors 
B) keeps an electronic record of securities and their owners 
C) is only involved in primary market trades 
D) provides an expert opinion about the expected performance of securities. 
E) All of these.

Question 12

Identify the institutions that assist deficit and surplus units to arrange direct financing and briefly describe their activities.

Accepted Answer

Investment banks (and the large banks)ar

Question 13

The issue of debt securities generally requires them to be rated by a recognised ratings agency.

Accepted Answer

A) True 
 B)False

Question 14

The credit ratings provided by ratings agencies:

Accepted Answer

A) play a role in overcoming information asymmetry in the financial markets 
B) are an informed opinion on the credit standing of a debt issue 
C) are paid for by the security's issuer 
D) were found to be unreliable (in relation to mortgage-related securities)during the GFC. 
E) All of these. 
A) play a role in overcoming information asymmetry in the financial markets 
B) are an informed opinion on the credit standing of a debt issue 
C) are paid for by the security's issuer 
D) were found to be unreliable (in relation to mortgage-related securities)during the GFC. 
E) All of these.

Question 15

Discuss 'market sentiment' and its implications for market efficiency.

Accepted Answer

Market sentiment refers to the overall a

Question 16

Volatility is a source of risk and thus creates the need for risk-management instruments.

Accepted Answer

A) True 
 B)False

Question 17

Automated trading systems have replaced face-to-face trading with screen-based trading in exchange-organised markets.

Accepted Answer

A) True 
 B)False

Question 18

Price bubbles should not occur in efficient markets because they reflect prices that do not represent fair value.

Accepted Answer

A) True 
 B)False

A market's liquidity is indicated by its daily turnover, its trading hours and its degree of automation.

The expression 'order-driven market' refers to the bids and offers of dealers.

What function do ratings agencies serve in the financial markets?

Explain the functions performed by secondary markets.Describe the different trading arrangements used in secondary markets.

Under the weak-form of the EMH, the study of past price patterns can be effective in enabling investors to generate abnormal profits.

Discuss the use of information by financial markets and the theory of market efficiency.Assess the relevance of market efficiency to market traders.

In the financial markets, surplus and deficit units deal directly with each other without any assistance from financial institutions.

How do the preferences of surplus and deficit units generally differ?

If financial markets are efficient, then:

Which of the following is NOT a feature of secondary markets?

A market's clearinghouse:

Identify the institutions that assist deficit and surplus units to arrange direct financing and briefly describe their activities.

The issue of debt securities generally requires them to be rated by a recognised ratings agency.

The credit ratings provided by ratings agencies:

Discuss 'market sentiment' and its implications for market efficiency.

Volatility is a source of risk and thus creates the need for risk-management instruments.

Automated trading systems have replaced face-to-face trading with screen-based trading in exchange-organised markets.

Price bubbles should not occur in efficient markets because they reflect prices that do not represent fair value.

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

A market's liquidity is indicated by its daily turnover, its trading hours and its degree of automation.

The expression 'order-driven market' refers to the bids and offers of dealers.

What function do ratings agencies serve in the financial markets?

Explain the functions performed by secondary markets.Describe the different trading arrangements used in secondary markets.

Under the weak-form of the EMH, the study of past price patterns can be effective in enabling investors to generate abnormal profits.

Discuss the use of information by financial markets and the theory of market efficiency.Assess the relevance of market efficiency to market traders.

In the financial markets, surplus and deficit units deal directly with each other without any assistance from financial institutions.

How do the preferences of surplus and deficit units generally differ?

If financial markets are efficient, then:

Which of the following is NOT a feature of secondary markets?

A market's clearinghouse:

Identify the institutions that assist deficit and surplus units to arrange direct financing and briefly describe their activities.

The issue of debt securities generally requires them to be rated by a recognised ratings agency.

The credit ratings provided by ratings agencies:

Discuss 'market sentiment' and its implications for market efficiency.

Volatility is a source of risk and thus creates the need for risk-management instruments.

Automated trading systems have replaced face-to-face trading with screen-based trading in exchange-organised markets.

Price bubbles should not occur in efficient markets because they reflect prices that do not represent fair value.

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