Q. Which of the following questions can be answered by using accounting ratio analysis?
1. What is the company's cash balance?
2. What is the company's current market share?
3. How much profit is the company generating from its assets?
Q. A decrease in inventories contributes to cash flow from which activity?
1. Investing
2. Financing
3. Operating
Q. Analysts who build statistical models to identify stocks that are likely to outperform are best described as:
1. technical analysts.
2. quantitative analysts.
3. fundamental analysts.
Q. An objective of risk management is to:
1. maximise returns for shareholders.
2. eliminate risk associated with investments.
3. identify potential threats facing a company.
Q. The risk, also known as Herstatt risk, that the counterparty fails to complete its side of the deal as agreed is commonly referred to as:
1. liquidity risk.
2. settlement risk.
3. compliance risk.
Q. An investor buys equity in a company with a major portion of its operations in the exploration, production, and processing of oil. The investor is purchasing:
1. an oil derivative.
2. a physical commodity.
3. a commodity-related stock.
Q. Using a value at risk (VaR) model based on historical data to forecast future expected losses works well:
1. all the time.
2. during times of normal market conditions.
3. during times of increased market volatility.
Q. A company is operating below capacity. What is the most likely result when production rises?
1. The fixed cost per unit will decrease.
2. The variable cost per unit will increase.
3. The total cost per unit remains constant.
Q. According to the discounted cash flow method, the value of a bond equals the sum of the:
1. present values of the expected coupon payments.
2. expected coupon payments and final principal payment.
3. present values of the expected coupon payments and the final principal payment.
Q. An investment management agreement between a firm and a client is most likely an:
1. ad hoc document.
2. internal document.
3. external document.
Q. A convertible bond:
1. is a hybrid security.
2. usually trades below its conversion value.
3. typically gives the issuer the right to convert it into a pre-specified number of shares.
Q. The CFA Institute Code of Ethics stipulates that members must:
1. concentrate on the integrity and viability of domestic capital markets over international markets.
2. maintain and improve their professional competence as well as that of other investment professionals.
3. reference consensus opinions whenever researching an investment option or acting on an investment decision.
Q. Which of the following is a need served by participants within the investment industry?
1. Custodial services
2. Monetary policy actions
3. Regulation enforcement
Q. The party that settles trades after the trades have been arranged is known as the:
1. auditor.
2. fund manager.
3. clearing house.
Q. A vehicle in which investment professionals promise to implement a specific active strategy in exchange for a single flat fee is known as:
1. an index fund.
2. a hedge fund.
3. a managed account.
Q. The underlying asset of a derivative contract can be a:
1. real asset only.
2. financial asset only.
3. real or financial asset.
Answers
Answer:
Explanation:
Financial ratios are created with the use of numerical values taken by company financial statement .Financial ratios are grouped into the following categories:
Liquidity ratios - Liquidity ratios are financial ratios that measure a company’s ability to repay both short- and long-term obligations
Leverage ratios -the amount of capital that comes from debt. In other words, leverage financial ratios are used to evaluate a company’s debt levels.
Efficiency ratios - how well a company is utilizing its assets and resources.
Asset turnover ratio = Net sales / Total assets
Profitability ratios - A company’s ability to generate income relative to revenue, balance sheet assets, operating costs, and equity.
Market value ratios- Market value ratios are used to evaluate the share price of a company’s stock.
The book value per share ratio calculates the per-share value of a company based on equity available to shareholders:
Book value per share ratio = Shareholder’s equity / Total shares outstanding
Answer:
1) how much profit is the company generating from its assest
2. operating
3.technical analysts
4. eliminate risk associated with investment
5. settlement risk
6.a commodity-related stock.
7. during times of normal market conditions.
8.The fixed cost per unit will decrease
Explanation: