Question 1

Discuss what is meant by the derivative role of a share market.

Accepted Answer

Stock exchanges may provide a market for...

Question 2

The owners of _______ face unlimited liability.

Accepted Answer

A)   sole proprietorships only
B)   sole proprietorships and partnerships only
C)   corporations only
D)   partnerships and corporations only

Question 3

The liability of shareholders in 'limited liability' companies means:

Accepted Answer

A)   creditors of a company can call upon the shareholders in the case of company default to contribute an amount based only on the current market price of the shares.
B)   shareholders are only liable for any amount that is unpaid on the shares of a company.
C)   in the event of company default, the creditors have no claim on the shareholders for any contribution.
D)   shareholders do not have a right to participate directly in the day-to-day management of a company.

Question 4

The primary market role of a stock exchange is:

Accepted Answer

A)   to trade the shares of the largest corporations.
B)   to ensure the sale of new-issue securities.
C)   to ensure deep trades in listed securities.
D)   to ensure that information about listed companies is quickly reflected in share prices.

Question 5

Which of the following is incorrect?

Accepted Answer

A)   A real estate investment trust may purchase industrial property.
B)   An infrastructure fund may hold investments in power stations.
C)   The units of a listed REIT purchases property are generally illiquid.
D)   An investor may use a CFD to go long in a rising market.

Question 6

Which of the following are incorrect?

Accepted Answer

A)   On completion of a trade each stock broker will send a contract note to the buyer and settle.
B)   Overlapping bids and offers for shares are executed at each price level in the order they are recorded in the system.
C)   ASX Trade provides a fair, efficient trading system, developing latency down to the 1 second.
D)   Shares listed on the ASX are known as uncertified securities.

Question 7

The risk that arises from the failure of parties to complete and resolve a transaction is called:

Accepted Answer

A)   Herstatt risk.
B)   default risk.
C)   settlement risk.
D)   market risk.

Question 8

When a corporation continues to operate regardless of changes in ownership,this is known as:

Accepted Answer

A)   the right of perpetual succession.
B)   perpetual shares.
C)   perpetual trading.
D)   unlimited succession.

Question 9

If a growing organisation wanted to set itself up so it had greater access to a wider range of capital,it would become a:

Accepted Answer

A)   sole proprietorship.
B)   partnership.
C)   general partnership.
D)   listed corporation.

Question 10

The listing of new companies on an exchange such as the ASX is known as:

Accepted Answer

A)   share buybacks.
B)   initial public offerings.
C)   share issues.
D)   rights issues.

Question 11

The Clearing House Electronic Subregister System (CHESS) is operated by the ASX.Which of the following statements regarding CHESS is incorrect?

Accepted Answer

A)   The system allows settlement of transactions within three working days.
B)   A shareholder must conduct a CHESS transaction with a sponsor.
C)   Shareholders can still hold traditional share certificates.
D)   The clearing house issues holding statements to uncertified shareholders.

Question 12

The number of listed companies in the ASX is approximately:

Accepted Answer

A)   1000
B)   1200
C)   2000
D)   2200

Question 13

The writer of a put option expects the share price to:

Accepted Answer

A)   decrease.
B)   increase.
C)   remain unchanged.
D)   pay a dividend.

Question 14

Discuss briefly the different types of equity capital involved in a modern stock exchange such as the ASX.

Accepted Answer

The different types of equity capital fo...

Question 15

An initial public share offering represents the share market's _____ role.

Accepted Answer

A)   interest rate
B)   information
C)   primary
D)   secondary

Question 16

The major supervisors of the Australian share market are:

Accepted Answer

A)   RBA and ASX.
B)   ASIC and ASX.
C)   APRA and ASX.
D)   EFIC and ASIC.

Question 17

Compared with an over-the-counter derivative product,exchange-traded derivative products:

Accepted Answer

A)   are standardised.
B)   involve margin calls.
C)   are not negotiated between the buyer and seller of the contract.
D)   include all of the given answers.

Question 18

The reason for the requirement by the ASX for companies to abide by the Corporations Act 2001 (Cwlth) is to:

Accepted Answer

A)   ensure that there will be an active market in the company's shares.
B)   maintain investor confidence in the company's creditworthiness.
C)   ensure a minimum number of shareholders in the company.
D)   ensure that information which may have a material effect on the share price is provided to the market.

Question 19

Discuss what is meant by the interest rate role of a stock exchange.

Accepted Answer

Not only may a stock exchange have a mar...

Question 20

When a no-liability company defaults on its loans with its creditors,this means the:

Accepted Answer

A)   creditors have a legal claim against the directors only.
B)   creditors have a legal claim against the CEO only.
C)   creditors have a legal claim against the chairman of the company.
D)   shareholders do not have to meet any remaining payment on shares.

Exam 4: The Share Market and the Corporation

The writer of a put option expects the share price to:

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The liability of shareholders in 'limited liability' companies means:

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If a growing organisation wanted to set itself up so it had greater access to a wider range of capital,it would become a:

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Discuss briefly the different types of equity capital involved in a modern stock exchange such as the ASX.

Correct AnswerverifiedThe different types of equity capital fo...View AnswerShow Answer

The reason for the requirement by the ASX for companies to abide by the Corporations Act 2001 (Cwlth) is to:

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The listing of new companies on an exchange such as the ASX is known as:

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The primary market role of a stock exchange is:

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When a corporation continues to operate regardless of changes in ownership,this is known as:

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Which of the following is incorrect?

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The Clearing House Electronic Subregister System (CHESS) is operated by the ASX.Which of the following statements regarding CHESS is incorrect?

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Which of the following are incorrect?

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When a no-liability company defaults on its loans with its creditors,this means the:

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An initial public share offering represents the share market's _____ role.

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The owners of _______ face unlimited liability.

Correct AnswerverifiedShow Answer

Compared with an over-the-counter derivative product,exchange-traded derivative products:

Correct AnswerverifiedShow Answer

The major supervisors of the Australian share market are:

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The number of listed companies in the ASX is approximately:

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The risk that arises from the failure of parties to complete and resolve a transaction is called:

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Discuss what is meant by the derivative role of a share market.

Correct AnswerverifiedStock exchanges may provide a market for...View AnswerShow Answer

Discuss what is meant by the interest rate role of a stock exchange.

Correct AnswerverifiedNot only may a stock exchange have a mar...View AnswerShow Answer

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The different types of equity capital fo...
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Stock exchanges may provide a market for...
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Not only may a stock exchange have a mar...
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