Question 1

Compare the trading arrangements in order-driven and quote-driven markets.

Accepted Answer

The answer of Compare the trading arrangements in order-driven and...

Question 2

Which of the following is consistent with (or explained by)the EMH?

Accepted Answer

A) Price bubbles. 
B) Random price movements. 
C) Bull and Bear markets. 
D) Excess returns earned through superior knowledge or skill. 
E) Anomalies, relating to firm size and time-patterns.

Question 3

The process of revaluing securities on the basis of their current market value is known as:

Accepted Answer

A) marking-to-market 
B) pricing-to-market 
C) valuing-to-market 
D) revaluing-to-market 
E) calculating-to-market.

Question 4

Price movements are random when they are equally likely to rise as to fall.

Accepted Answer

A) True 
 B)False

Question 5

Distinguish between the functions of the primary and secondary markets.

Accepted Answer

The answer of Distinguish between the functions of the primary...

Question 6

Explain the purpose and main practices of primary markets.

Accepted Answer

The answer of Explain the purpose and main practices of...

Question 7

A dealer who wishes to reduce their holding of a particular security will set (when compared to other dealers):

Accepted Answer

A) a higher bid price 
B) a lower bid price 
C) a higher offer price 
D) a lower offer price 
E) a lower commission rate.

Question 8

Liquid markets perform the price discovery function more reliably than illiquid markets.

Accepted Answer

A) True 
 B)False

Question 9

Under a 'best efforts' contract an investment bank handles the issue of securities but does not guarantee that they will all be sold.

Accepted Answer

A) True 
 B)False

Question 10

Maturity transformation is achieved by a liquid secondary market.

Accepted Answer

A) True 
 B)False

Question 11

Why might a dealer initiate a trade by accepting another dealer's quote?

Accepted Answer

The answer of Why might a dealer initiate a trade...

Question 12

Price resilience refers to the ability of a market to handle normal-sized trades without disrupting prices.

Accepted Answer

A) True 
 B)False

Question 13

The price discovery function of markets is useful:

Accepted Answer

A) to investors, to help them monitor the value of their investments 
B) to potential issuers of securities because it informs them of the proceeds they can expect to receive 
C) in revealing the general movement in market values through indices. 
D) All of these. 
E) None of these.

Question 14

Bull and bear markets appear to be driven (at least partially)by investor sentiment.

Accepted Answer

A) True 
 B)False

Question 15

The intention to sell 5000 AMP shares at not less than $5.20 each would be best achieved by:

Accepted Answer

A) a limit order 
B) an at-market sell order 
C) a dealer's bid price 
D) a dealer's offer price 
E) short selling.

Question 16

The phenomenon of price bubbles is relatively recent.

Accepted Answer

A) True 
 B)False

Question 17

Ratings agencies are paid by investors who are interested in the credit quality of particular securities.

Accepted Answer

A) True 
 B)False

Question 18

It is the issuer's responsibility to keep a record of the owners of its debt securities and changes thereof.

Accepted Answer

A) True 
 B)False

Question 19

The 'greater fool' theory of investing is an approach taken by fundamental analysts who are looking for under- and over-valued assets.

Accepted Answer

A) True 
 B)False

Question 20

The Australian Securities Exchange regulates the issue of new securities.

Accepted Answer

A) True 
 B)False

Exam 3: Introduction to the Flow of Funds

Compare the trading arrangements in order-driven and quote-driven markets.

Which of the following is consistent with (or explained by) the EMH?

The process of revaluing securities on the basis of their current market value is known as:

Price movements are random when they are equally likely to rise as to fall.

Distinguish between the functions of the primary and secondary markets.

Explain the purpose and main practices of primary markets.

A dealer who wishes to reduce their holding of a particular security will set (when compared to other dealers) :

Liquid markets perform the price discovery function more reliably than illiquid markets.

Under a 'best efforts' contract an investment bank handles the issue of securities but does not guarantee that they will all be sold.

Maturity transformation is achieved by a liquid secondary market.

Why might a dealer initiate a trade by accepting another dealer's quote?

Price resilience refers to the ability of a market to handle normal-sized trades without disrupting prices.

The price discovery function of markets is useful:

Bull and bear markets appear to be driven (at least partially)by investor sentiment.

The intention to sell 5000 AMP shares at not less than $5.20 each would be best achieved by:

The phenomenon of price bubbles is relatively recent.

Ratings agencies are paid by investors who are interested in the credit quality of particular securities.

It is the issuer's responsibility to keep a record of the owners of its debt securities and changes thereof.

The 'greater fool' theory of investing is an approach taken by fundamental analysts who are looking for under- and over-valued assets.

The Australian Securities Exchange regulates the issue of new securities.