Essay About Investing Publiccommodity Index Values And Country’S Financial Market

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Financial Instruments and Markets: Sample Mid-Semester TestThe test consists of 30 questions, and students have 1-hour to attempt ALL questions.Note your answer on the sheet provided.A book publisher requires substantial quantities of paper. The publisher and a paper producer have entered into an agreement for the publisher to buy and the producer to supply a given quantity of paper four months later at a price agreed upon today. This agreement is a:Futures contractForward contractCommodity swapThe current price of a stock is $25 per share. You have $10,000 to invest. You borrow an additional $10,000 from your broker and invest $20,000 in the stock. If the maintenance margin is 30 percent, at what price will a margin call first occur?$9.62$17.86$19.71In an underwritten offering, the risk that the entire issue may not be sold to the public at the stipulated offering price is borne by the:IssuerInvestment bankBuyers of the part of the issue that is soldA financial analyst is examining whether a country’s financial market is well functioning. She finds that the transaction costs in this market are low and trading volumes are high. She concludes that the market is quite liquid. In such a market:Traders will find it hard to make use of their informationTraders will find it easy to trade and their trading will make the market less informationally efficientTraders will find it easy to trade and their trading will make the market more informationally efficientSecurity market indices are:Constructed and managed like a portfolio of securitiesSimple interchangeable tools for measuring the returns of different asset classesValued on a regular basis using the actual market prices of the constituent securitiesA float-adjusted market-capitalization-weighted index weights each of its constituent securities by its price and:Its trading volumeThe number of shares outstandingThe number of its share available to the investing publicCommodity index values are based on:Futures contract pricesThe market price of the specific commodityThe average market price of a basket of similar commoditiesA unique feature of hedge fund indices is that they:Are frequently equal weightedAre determined by the constituents of the indexReflect the value of private rather than public investmentsIf a market is semi-strong-form efficient, the risk-adjusted returns of a passively managed portfolio relative to an actively managed portfolio are most likelyLowerHigherThe sameWhich of the following market anomalies is inconsistent with weak-form market efficiency?Earnings surpriseMomentum patternClosed-end fund discountThe type of equity voting right that grants one vote for each share of equity owned is referred to as:Proxy votingStatutory votingCumulative votingParticipating preference shares entitle shareholders to:Participate in the decision-making process of the companyConvert their shares into a specified number of common sharesReceive an additional dividend if the company’s profits exceed a predetermined levelWhich of the following statements is most accurate in describing a company’s book value?Book value increases when a company retains its net incomeBook value is usually equal to the company’s market valueThe ultimate goal of management is to maximise book valueWhich of the following measures is the most difficult to estimate?The cost of debtThe cost of equityInvestors’ required rate of return on debtWhich industry classification system uses a three-tier classification system?Russell Global SectorsIndustry Classification BenchmarkGlobal Industry Classification StandardWhich of the following is not a limitation of the cyclical/noncyclical descriptive approach to classifying companies?A cyclical company may have a growth component in itBusiness-cycle sensitivity is a discrete phenomenon rather than a continuous spectrumA global company can experience economic expansion in one part of the world while experiencing recession in another partWhich of the following companies most likely has the greatest ability to quickly increase its capacity?RestaurantSteel producerLegal services providerIn which of the following life-cycle phases are price wars most likely to be absent?MatureDeclineGrowthAn analyst estimates the intrinsic value of a stock to be in the range of $17.85 to $21.45. The current market price of the stock is $24.35. This stock is most likely:OvervaluedUndervaluedFairly valuedThe Beasley Corporation has just paid a dividend of $1.75 per share. If the required rate of return is 12.3 percent per year and dividends are expected to grow indefinitely at a constant rate of 9.2 percent per year, the intrinsic value of Beasley Corporation stock is closest to:$15.54$56.45$61.65The primary difference between P/E multiples based on comparables and P/E multiples based on fundamentals is that fundamentals-based P/Es take into account:Future expectationsThe law of one priceHistorical informationEnterprise value is most often determined as market capitalization of common equity and preferred stock minus the value of cash equivalents plus the:Book value of debtMarket value of debtMarket value of long-term debtIn analysing a price chart, high or increasing volume most likely indicates which of the following?Predicts a reversal in the price trendPredicts that a trendless period will followConfirms a rising or declining trend in pricesBased on the decennial pattern of cycles, how would the return of the Dow Jones Industrial Average (DJIA) in the year 2015 compare with the return in 2020?The return would be betterThe return would be worseThe answer cannot be determined because the theory does not apply to both of those years