Which of the following is least likely to be a fixed cost?
Select one:
a. Photocopier maintenance contract
b. Executive Management salaries
c. Electricity
d. Rent
Which of the following statements is INCORRECT relating to Fixed Interest Investments?
Select one:
a. Corporate bonds are issued by large companies and are generally considered riskier than semi-government and government bonds
b. Government Bonds are issued directly by a government and are explicitly guaranteed by that government
c. Semi-government bonds are not issued directly by government but may be issued by a statutory authority empowered by government legislation.
d. Hybrids have characteristics of both cash and fixed interest
Investment management styles can be broken down into two main types; active management and passive management. Which of the following statements is NOT correct?
Select one:
a. Fundamental analysts evaluate stocks with a view to determining undervalued stocks which would represent attractive investment opportunities.
b. Technical analysts study past patterns of price behaviour to predict future market behaviour. This is consistent with a passive investment style.
c. Fundamental analysis is a management style consistent with that of an active manager
d. Passive management is an investment style that seeks to attain performance equal to a designated benchmark index. Passive investment managers do not try to pick under priced stocks.
Which of the following best describes an index fund?
Select one:
a. The costs associated with index funds is generally higher than other managed funds because so many securities must be held in the index fund
b. An advantage of an index fund is that when the target index rises, so does the index fund but when the target index falls, fund managers try to sell securities within the index fund to minimise losses
c. The specific securities in an index fund are held in the same proportion or as close as possible to, the proportion that those securities are held in a defined target index, eg All Ordinaries Index
d. Index funds do not provide diversification within an asset class because the proportion of large companies dominate
This question relates to the bid/ask system on the Australian share market. If the ask is $21.60 and the bid is 21.50 and assuming the seller wants to sell immediately on market (and sufficient quantity of shares exist at both the bid and ask levels), what price would the transaction be executed at?
Select one:
a. $21.50
b. $43.10
c. $21.60
d. $0.10
In relation to the Australian share market, the greater the market depth:
Select one:
a. None of the answers are correct
b. The harder it is to execute a transaction to buy or sell shares without influencing the share price up or down
c. The easier it is to execute a transaction to buy or sell shares without influencing the share price up or down
d. The higher the returns over time due to more market participants forcing the price up due to demand and supply
Feedback
he concept of a weighted return:
Select one:
a. Explains the volatility of a portfolio
b. The sum of each investment's return multiplied by the respective volatility (standard deviation) of each investment
c. Is determined by the sum of each investment's percentage allocation multiplied by those investments' returns
d. All the answers are correct
What is the present value (the value in today's money terms) of an annuity of $1,200 received at the end of each year for seven years? Assume a discount rate of 11%. The first payment will be received one year from today (round to the nearest $1).
Select one:
a. $6,129
b. $5,987
c. $5,211
d. $5,655
Max wants to ensure that he has $10,000 in savings five years from now. He is prepared to save a portion of his salary each month to achieve his goal. If Max can earn 12% p.a. in interest on his savings (compounded monthly), how much will he need to invest each month? Assume that Max saves the first of these equal payments one month from now.
Select one:
a. $122.44
b. $128.81
c. $130.32
d. $126.76
Mary invested $400,000 into a Cash Managed Fund and Equity Managed Fund 12 months ago, split equally across both in line with her target asset allocation. Today, you are reviewing Mary's investment and the performance of both funds. The cash fund has returned 3% and the equity fund has returned 12% in the previous 12 months. If you want to re-balance Mary's portfolio back to her target asset allocation of 12 months ago in line with Strategic Asset Allocation principles, you would need to:
Select one:
a. Buy $9,000 of the Equity Managed Fund and Sell $9,000 of the Cash Fund
b. Buy $6,000 of the Equity Managed Fund and Sell $6,000 of the Cash Fund
c. Sell $6,000 of the Equity Managed Fund and Purchase $6,000 of the Cash Fund
d. Sell $9,000 of the Equity Managed Fund and Purchase $9,000 of the Cash Fund
Suppose the price of one IBM share is $100. An April call option on IBM shares has a premium of $5 and an exercise price of $100. Ignoring commissions, the holder of the call option will earn a profit if the price of the share
Select one:
a. increases to $107
b. decreases to $90
c. increases to $104
d. decreases to $96
Which of the following is/are an example of an over-the-counter (OTC) derivative?
Select one:
a. all answers are correct
b. a Government contract
c. a forward contract
d. a futures contract
A call option exists on the shares of Woolbuyers Ltd. The exercise price is $45. Right now the call option can be purchased for $7. Woolbuyers shares are currently selling for $50 per share. What is the current "premium" on the call option?
Select one:
a. $7
b. $0
c. $3
d. $5
The interest rate spread relating to a cash investment offered by a retail bank relates to:
Select one:
a. The interest rate the Reserve Bank is able to influence in order to implement Monetary Policy
b. The difference in the loan type borrowers are offered by banks based on the loan term they require
c. The interest rate determined by the Reserve Bank, known as the 'overnight' interest rate
d. The difference in the interest rate borrowers are offered by a bank, versus the amount depositors are offered by the same bank
Feedback
If an investor receives a fully franked dividend of $12,500 and assuming the company tax rate is 30 per cent, the imputation credit would be?
Select one:
a. $5,408
b. $4,253
c. $5,357
d. $3,750
Select one:
a. Photocopier maintenance contract
b. Executive Management salaries
c. Electricity
d. Rent
Which of the following statements is INCORRECT relating to Fixed Interest Investments?
Select one:
a. Corporate bonds are issued by large companies and are generally considered riskier than semi-government and government bonds
b. Government Bonds are issued directly by a government and are explicitly guaranteed by that government
c. Semi-government bonds are not issued directly by government but may be issued by a statutory authority empowered by government legislation.
d. Hybrids have characteristics of both cash and fixed interest
Investment management styles can be broken down into two main types; active management and passive management. Which of the following statements is NOT correct?
Select one:
a. Fundamental analysts evaluate stocks with a view to determining undervalued stocks which would represent attractive investment opportunities.
b. Technical analysts study past patterns of price behaviour to predict future market behaviour. This is consistent with a passive investment style.
c. Fundamental analysis is a management style consistent with that of an active manager
d. Passive management is an investment style that seeks to attain performance equal to a designated benchmark index. Passive investment managers do not try to pick under priced stocks.
Which of the following best describes an index fund?
Select one:
a. The costs associated with index funds is generally higher than other managed funds because so many securities must be held in the index fund
b. An advantage of an index fund is that when the target index rises, so does the index fund but when the target index falls, fund managers try to sell securities within the index fund to minimise losses
c. The specific securities in an index fund are held in the same proportion or as close as possible to, the proportion that those securities are held in a defined target index, eg All Ordinaries Index
d. Index funds do not provide diversification within an asset class because the proportion of large companies dominate
This question relates to the bid/ask system on the Australian share market. If the ask is $21.60 and the bid is 21.50 and assuming the seller wants to sell immediately on market (and sufficient quantity of shares exist at both the bid and ask levels), what price would the transaction be executed at?
Select one:
a. $21.50
b. $43.10
c. $21.60
d. $0.10
In relation to the Australian share market, the greater the market depth:
Select one:
a. None of the answers are correct
b. The harder it is to execute a transaction to buy or sell shares without influencing the share price up or down
c. The easier it is to execute a transaction to buy or sell shares without influencing the share price up or down
d. The higher the returns over time due to more market participants forcing the price up due to demand and supply
Feedback
he concept of a weighted return:
Select one:
a. Explains the volatility of a portfolio
b. The sum of each investment's return multiplied by the respective volatility (standard deviation) of each investment
c. Is determined by the sum of each investment's percentage allocation multiplied by those investments' returns
d. All the answers are correct
What is the present value (the value in today's money terms) of an annuity of $1,200 received at the end of each year for seven years? Assume a discount rate of 11%. The first payment will be received one year from today (round to the nearest $1).
Select one:
a. $6,129
b. $5,987
c. $5,211
d. $5,655
Max wants to ensure that he has $10,000 in savings five years from now. He is prepared to save a portion of his salary each month to achieve his goal. If Max can earn 12% p.a. in interest on his savings (compounded monthly), how much will he need to invest each month? Assume that Max saves the first of these equal payments one month from now.
Select one:
a. $122.44
b. $128.81
c. $130.32
d. $126.76
Mary invested $400,000 into a Cash Managed Fund and Equity Managed Fund 12 months ago, split equally across both in line with her target asset allocation. Today, you are reviewing Mary's investment and the performance of both funds. The cash fund has returned 3% and the equity fund has returned 12% in the previous 12 months. If you want to re-balance Mary's portfolio back to her target asset allocation of 12 months ago in line with Strategic Asset Allocation principles, you would need to:
Select one:
a. Buy $9,000 of the Equity Managed Fund and Sell $9,000 of the Cash Fund
b. Buy $6,000 of the Equity Managed Fund and Sell $6,000 of the Cash Fund
c. Sell $6,000 of the Equity Managed Fund and Purchase $6,000 of the Cash Fund
d. Sell $9,000 of the Equity Managed Fund and Purchase $9,000 of the Cash Fund
Suppose the price of one IBM share is $100. An April call option on IBM shares has a premium of $5 and an exercise price of $100. Ignoring commissions, the holder of the call option will earn a profit if the price of the share
Select one:
a. increases to $107
b. decreases to $90
c. increases to $104
d. decreases to $96
Which of the following is/are an example of an over-the-counter (OTC) derivative?
Select one:
a. all answers are correct
b. a Government contract
c. a forward contract
d. a futures contract
A call option exists on the shares of Woolbuyers Ltd. The exercise price is $45. Right now the call option can be purchased for $7. Woolbuyers shares are currently selling for $50 per share. What is the current "premium" on the call option?
Select one:
a. $7
b. $0
c. $3
d. $5
The interest rate spread relating to a cash investment offered by a retail bank relates to:
Select one:
a. The interest rate the Reserve Bank is able to influence in order to implement Monetary Policy
b. The difference in the loan type borrowers are offered by banks based on the loan term they require
c. The interest rate determined by the Reserve Bank, known as the 'overnight' interest rate
d. The difference in the interest rate borrowers are offered by a bank, versus the amount depositors are offered by the same bank
Feedback
If an investor receives a fully franked dividend of $12,500 and assuming the company tax rate is 30 per cent, the imputation credit would be?
Select one:
a. $5,408
b. $4,253
c. $5,357
d. $3,750
