Topic 2 - Equity Markets

Topic 2 Equity - BANK1005 Derivatives and Securities Markets Page |1 TOPIC 2 EQUITY MARKETS MULTIPLE CHOICE QUESTIONS 1 In the event of a firm's

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P a g e | 1 TOPIC 2 – EQUITY MARKETS MULTIPLE CHOICE QUESTIONS 1. In the event of a firm's bankruptcy A) The most shareholders can lose is their original investment in the firm's stock. B) Ordinary shareholders are the first in line to receive their claims on the firm's assets. C) Bondholders have claim to what is left from the liquidation of the firm's assets after paying the shareholders. D) The claims of preferred shareholders are honored before those of the ordinary shareholders. E) A and D. 2. Which of the following is true regarding a firm's securities? A) Ordinary dividends are paid before preferred dividends. B) Preferred stockholders have voting rights. C) Preferred dividends are usually cumulative. D) Preferred dividends are contractual obligations. E) Ordinary dividends usually can be paid if preferred dividends have been skipped. Consider the following three stocks on a particular day: Share Price Number of shares On issue A $40 200 B $70 500 C $10 600 3. What is the price-weighted index constructed with the three stocks is A) 30 B) 40 C) 50 D) 60 E) 70 4. The value-weighted index constructed with the three stocks, given that the previous day’s index of 100, is A) 1.2 B) 1200 C) 490 D) 4900 E) 49 5. The companies included in the All Ordinaries Index: A) Have remained unchanged since the creation of the index. B) Are changed occasionally as circumstances dictate. C) Include all of the stocks traded on the ASX. D) Consist of stocks on which the investor cannot lose money. E)
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This note was uploaded on 10/19/2011 for the course BANK 1005 taught by Professor Hb during the Three '09 term at South Australia.

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Topic 2 Equity - BANK1005 Derivatives and Securities Markets Page |1 TOPIC 2 EQUITY MARKETS MULTIPLE CHOICE QUESTIONS 1 In the event of a firm's

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