COLLEGIOTTILISSIS pomoc WGS are comece 8. BSB Company bonds have a coupon rate of 13%, paid semi-annually, a face value of $1,500, and mature at the end of 15 years. What is the current price of this bond if its yield to maturity is 8%? A. $2,142 B. $2,149 C. $3,272 D. $3,834 E. None of the above. 9. An increase in inflationary expectations for the next few years would, all else the same: A. Increase demand for bonds. B. Increase the real interest rate. C. Decrease the supply of bonds. D. Decrease the real interest rate. E. Increase long-term bond yields. 10. If aggregate superannuation fund assets experienced a significant increase over a period of a year the most likely explanation would be: A. Increased payments from contributors. B. Strong positive returns on investments. C. Decreased payments from funds to retirees. D. Reduced fees charged by managers. E. Changes to superannuation tax rules by government. 6. You are a fund manager wishing to purchase a parcel of bank accepted bills (BABs). In order to pay the lowest price you would accept the_ you can find from a dealer. A. lowest bid B. highest bid Clowest offer D. highest offer E. lowest acceptance fee 7. For a number of years, AXA company's share price was around $24 and its earnings per share approximately $2. You determine that its earnings are likely to increase to $2.50 per share this period for various reasons. Which statement is correct? A. The company has a P/E ratio of 12. B. Your P/E analysis suggests the share price will move to $30. C. You would make a buy recommendation. D. You assume that the P/E ratio will remain stable. E. If the change in earnings is permanent, all of these are correct. 8. BSB Company bonds have a coupon rate of 13%, paid semi-annually, a face value of $1,500, and mature at the end of 15 years. What is the current price of this bond if its yield to maturity is 8%? A. $2,142 B. $2,149 C. $3,272 D. $3,834 E. None of the above. A. The most common approach to issuing securities in Australia is on a 'best efforts' basis. B. Share issues require the preparation of a prospectus. C. In addition to the best efforts contract, issuers can also enter into a standby underwriting agreement. D. Under the best efforts method, the underwriter will acquire all unsold securities. E. Investment bank fees for underwriting services are usually in the form of a commission. 4. The price discovery function of markets is useful: A. To investors, to help them monitor the value of their investments. B. To potential issuers of securities because it informs them of the proceeds they can expect to receive. C. In revealing the general movement in market values through indices. D. All of these. E. None of these. 5. Which of the following is consistent with (or explained by) the EMH? A. Price bubbles. B. Random price movements. C. Bull and Bear markets. D. Excess returns earned through superior knowledge or skill. E. Anomalies, relating to firm size and time-patterns. Page 3 of 7 12.5 marks per question: Total 25 marks) 1. A situation where a contract distorts incentives to behave responsibly is known as: A. Information asymmetry. B. Coincidence of wants. C. Pooling of funds. D. Moral hazard. E. None of these. 2. Identify the correct statement about Australia's financial system. A. The main source of funds is household savings. B. Savings can be in the form of deposits and/or investments. C. Governments are a source of savings when they have budget surpluses. D. Firms are a source of savings when they retain earnings. E. All of these. 3. Which of the following is NOT true about the underwriting services provided by investment banks? A. The most common approach to issuing securities in Australia is on a 'best efforts' basis. B. Share issues require the preparation of a prospectus. C. In addition to the best efforts contract, issuers can also enter into a standby underwriting agreement. D. Under the best efforts method, the underwriter will acquire all unsold securities. E. Investment bank fees for underwriting services are usually in the form of a commission