NEW
Font size
S
M
L
XL
WorksheetsFIM Week 4 Tutorial
Total questions: 10
Worksheet time: 6mins
Name
Class
Date
1.
It is important that a stock exchange should operate a market that is efficient. In this context, 'efficient' refers primarily to:
a)
the level of transaction costs in the market.
b)
the speed with which new information is reflected in security prices.
c)
the performance of the exchange in quickly processing payments.
d)
the performance of brokers and the exchange in maintaining up-to-date records.
2.
Potential investors in an Initial Public Offering (IPO) must be provided with information. This information is contained in:
a)
a prospectus issued by the company.
b)
a research report prepared by a broker.
c)
reports issued by the stock exchange.
d)
public notices in major newspapers.
3.
Complete the next sentence with the most appropriate response. 'From the perspective of company management, the existence of a well developed secondary market in the company's shares...
a)
facilitates the raising of further capital in the secondary market.
b)
maintains the share price above the initial issue price.
c)
encourages successful primary market issues.
d)
is of little or no consequence.
4.
The existence of an active, liquid market in existing shares adds to the attractiveness of acquiring new shares. Liquidity in the share market means that:
a)
the companies whose shares are traded have adequate holdings of liquid assets.
b)
market participants can buy and sell shares with little effect on the market price.
c)
there are many potential buyers who can be expected to enter the market if prices fall significantly.
d)
transactions are settled quickly.
5.
An important feature of exchange-traded derivative contracts, in comparison to over-the-counter (OTC) contracts, is:
a)
OTC contracts are standardised.
b)
the price of an exchange-traded derivative is more highly correlated with the price of the underlying asset.
c)
exchange-traded contracts are standardised on a global basis.
d)
exchange-traded contracts are standardised within each exchange.
6.
To ensure that investors have confidence in the integrity of its operation, the Australian Stock Exchange (ASX) is heavily regulated and supervised. The main supervision is carried out by the:
a)
Australian Prudential Regulation Authority (APRA).
b)
Australian Securities and Investments Commission (ASIC).
c)
ASX itself.
d)
None of the answers provided.
7.
Under the Australian Stock Exchange (ASX) continuous disclosure regime, when must a listed entity disclose information that is relevant to investors?
a)
daily
b)
monthly
c)
immediately
d)
as soon as its auditor has verified the information
8.
Corporate investment decisions should be based on the fundamental objective of:
a)
achieving at least a satisfactory profit.
b)
maximising shareholder value.
c)
implementing only those projects that can be financed from the company's operating cash flow.
d)
increasing profits every year.
9.
An investment proposal with a positive net present value:
a)
will definitely increase shareholder value if it is implemented.
b)
will maintain shareholder value if it is implemented.
c)
is expected to increase shareholder value.
d)
should be accepted, provided that its internal rate of return is adequate.
10.
The corporation differs from other forms of business organisations in ways that can be very important. Which of the following is not a valid difference between the corporation and other organisational forms?
a)
A corporation's ownership claims are freely transferable.
b)
Shareholders do not have a right to participate directly in the operation and management of the business.
c)
Shareholders are protected by limited liability.
d)
Operating through a company structure reduces the income tax payable on company profits.
Reset
