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  21.Bonds with a call provision sell at lower market yields than comparable noncallable bonds. a.True b.False 22.The risk that the lender may not receive payments as promised is called default risk. a.True b.False 23.Australian government securities do not have any default risk and are the best proxy measure for the risk-free rate. a.True b.False 24.Ascending or normal yield curves.

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  •   21.Bonds with a call provision sell at lower market yields
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  21.Preference dividend payments are fixed obligations of the company, similar to the interest payments on corporate bonds. a.True b.False 22.The market considers preference shares to be a debt security because the dividend payment is a fixed financial obligation and has credit ratings like bonds. a.True b.False 23.Valuation of ordinary and preference shares is done using a.

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  •   21.Preference dividend payments fixed obligations of the company, similar to
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  46.If a company has paid no tax on a dividend, the Australian Financial Review will note what next to the value? a.the letter f. b.the letter p. c.the letter n. d.none of the above. 47.Which one of the following statements is NOT true about ordinary shares? a.Ordinary shareholders have the right to vote on the selection.

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  •   46.If a company has paid no tax a dividend, the
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  16.The appropriate measure of risk for a diversified portfolio is beta. a.True b.False 17.The coefficient of variation divides the variance of the returns of an asset by the expected return of that asset. a.True b.False 18.The coefficient of variation is a good measure of the amount of risk that an asset will contribute to a diversified.

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  •   16.The appropriate measure of risk for a diversified portfolio beta. a.True b.False 17.The
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  51.Preference shares are sometimes regarded as a debt security because: a.legally preference shares are a debt security. b.preference share dividend payments like bond interest payments are considered fixed obligations for the company. c.preference dividends are paid out of before-tax income just like interest payments on bonds. d.preference shareholders receive a residual value and not.

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  •   51.Preference shares sometimes regarded as a debt security because: a.legally preference
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  56.Which one of the following statements is NOT true about zero-growth shares? a.Dividend stays constant over time. b.The cash flow pattern resembles a perpetuity with a constant cash flow. c.Dividend payments are zero. d.There is no growth in dividends over time. 57.The constant-growth dividend model will provide invalid solutions when: a.the growth rate of the share.

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  •   56.Which one of the following statements NOT true about zero-growth
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  6.Public share markets in developed countries like Australia have strong-form of market efficiency. a.True b.False 7.The largest investors in corporate bonds are life insurance companies and superannuation funds. a.True b.False 8.Most secondary market transactions for corporate bonds take place through dealers in the over-the-counter (OTC) market. a.True b.False 9.A thin market for a security implies a high frequency of.

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  •   6.Public share markets in developed countries like Australia have strong-form
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  26.A fast growing company will pay constant dividends over time. a.True b.False 27.The constant-growth share has dividends growing at a constant rate over time. a.True b.False 28.The constant-growth dividend model tells us that the current price of a share is the next period divided by the difference between the discount rate and the dividend growth rate. a.True b.False 29.Whenever.

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  •   26.A fast growing company will pay constant dividends over time. a.True b.False 27.The
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  6.For investors, the function of secondary markets is to provide marketability for the shares of securities they own at a fair price. a.True b.False 7.Secondary market transactions in Australia mostly take place over the counter and not in exchanges. a.True b.False 8.In terms of total volume of activity and total capitalisation of the companies listed, the.

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  •   6.For investors, the function of secondary markets to provide marketability
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True/False 1.Equity securities are certificates of ownership of a company. a.True b.False 2.Households are the largest investors in equity securities. a.True b.False 3.Superannuation funds are the largest institutional investors in equities. a.True b.False 4.Companies raise capital in secondary markets by issuing new securities. a.True b.False 5.An active secondary market for debt or equity securities makes raising new capital less expensive for companies. a.True b.False   .

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  • True/False 1.Equity securities certificates of ownership of a company. a.True b.False 2.Households the largest
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  11.For a commission fee less than the cost of direct search, dealers give investors an incentive to make use of the information by hiring them as brokers. a.True b.False 12.A broker market eliminates the need for time-consuming search for a fair deal by buying and selling immediately from their inventory of securities. a.True b.False 13.The ASX.

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  •   11.For a commission fee less than the cost of direct
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True/False 1.A security's intrinsic value is the price that reflects investors' estimates of the value of the cash flows they expect to receive in the future. a.True b.False 2.In an efficient capital market, security prices fully reflect the knowledge and expectations of all investors at a particular point in time. a.True b.False 3.If market prices reflect all.

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  • True/False 1.A security's intrinsic value the price that reflects investors' estimates
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  61.Horse Stock returns have exhibited a standard deviation of 0.57, whereas Mod T Stock returns have a standard deviation of 0.63. The correlation coefficient between the returns is 0.078042. What is the covariance of the returns? a.0.028025 b.0.217327 c.0.359100 d.0.993094 62.Batman Stock has exhibited a standard deviation in share returns of 0.5, whereas Superman Stock.

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  •   61.Horse Stock returns have exhibited a standard deviation of 0.57,
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  31.Failure to pay a preference dividend signals to the market that the company is in serious financial trouble. a.True b.False 32.Preference shares with no fixed maturity can be valued as a perpetuity. a.True b.False 33.The bond valuation model can be used to value perpetual preference shares. a.True b.False 34.The largest holders of equity securities are: a.managed funds. b.superannuation funds. c.foreign investors. d.households. 35.Which ONE.

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  •   31.Failure to pay a preference dividend signals to the market
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