Which of the following statement is not true about interest rate risk? (Only one correct answer.)

Select one:

a. Lower coupon bonds have lower interest rate risk.

b. Bond prices are negatively related to interest rate movements.

c. Interest rate risk is the uncertainty of how the bond price will change following the interest rate changes.

d. Long term bonds have higher interest rate risk than short term bonds.

Which of the following entities is specialised in the investments in emerging businesses at the very early stage in small deals? (Only one correct answer.)

Select one:

a. venture capital funds

b. superannuation funds

c. investment banks

d. insurance companies

A portfolio is a(n) _________. (Only one correct answer.)

Select one:

a. group of assets held by an investor

b. type of risk-free asset

c. asset that has a standard deviation less than 1

d. term commonly used to refer to systematic risk

What common method of share valuation would be best suited for a mature company with an established history of regular dividend payments. (Only one correct answer.)

Select one:

a. Dividend discount model with a constant growth rate

b. Present value of an annuity.

c. Net present value of an annuity.

d. Dividend discount model with mixed growth rates

Which one of the following statements best describes two mutually exclusive investments? (Only one correct answer.)

Select one:

a. To build both a parking lot and a restaurant on a corner lot

b. To build a parking lot for the benefit of both the theatre and the restaurant

c. To build either a theatre or a restaurant on a corner lot

d. To build a theatre and a restaurant side by side

Which of the following is(are) the advantage(s) of the discounted payback period method comparing to the normal form of payback period method? (There may be more than one correct answer. You will lose marks by choosing a wrong answer. The minimum mark for the question is zero.)

Select one or more:

a. The discounted payback period method does not bias against long-term projects.

b. The discounted payback period method considers all cash flows of a project.

c. The discounted payback period method considers time value of money.

d. It is easier to calculate the discounted payback period of a project.

e. The discounted payback period method avoids projects with negative net present value (NPV) to be chosen.

Which of the following is (are) the reasons for some people to choose interest only loan? (There may be more than one correct answer. You will lose marks by choosing a wrong answer. The minimum mark for the question is zero.)

Select one or more:

a. The interest only loan provides more tax deductions for investment properties.

b. The interest only loan is less expensive over the whole loan term.

c. The interest only loan requires lower periodic repayment during the interest-only term.

d. Banks usually apply lower interest rate for interest only loans.

e. Interest only loan requires lower periodic repayment over the whole term of the loan.

Which of the following statements is(are) true about capital market efficiency? (There may be more than one correct answer. You will lose marks by choosing a wrong answer. The minimum mark for the question is zero.)

Select one or more:

a. In a strong form efficient market, it is not possible for an investor to earn an abnormal high return by acting on private information.

b. In a weak form efficient market, it is not possible for an investor to earn an abnormal high return by acting on private information.

c. In a semi-strong form efficient market, it is not possible for an investor to earn an abnormal high return by acting on public information.

d. Informational efficiency focuses on bringing buyers and sellers together at the lowest possible cost.

e. In a weak form efficient market, it is possible for an investor to earn an abnormal high return by studying the past patterns in assets prices.

Which of the following can be used by venture capitalists to reduce the risk of their investments in emerging businesses? (There may be more than one correct answer. You will lose marks by choosing a wrong answer. The minimum mark for the question is zero.)

Select one or more:

a. To provide funds stage by stage.

b. To invite other venture capitalist to syndicate the venture capital investments.

c. To have in-depth knowledge of the industry and technology invested in.

d. To require a higher expected return for the investment.

e. To require the entrepreneur to make a substantial personal investment in the business.

Which of the following statements is(are) true about ordinary shares? (There may be more than one correct answer. You will lose marks by choosing a wrong answer. The minimum mark for the question is zero.)

Select one or more:

a. Ordinary shareholders have priority over creditors in the case of a company liquidation.

b. Ordinary shareholders are not guaranteed dividend payments from the company.

c. Ordinary shareholders enjoy limited liability in the case of a company liquidation.

d. Ordinary shareholders have unlimited liability in the case of a company liquidation.

e. Ordinary shareholders do not have voting rights on important matters affecting the company.