Question 1

Which of the following is not an example of indirect investment by a household?

Accepted Answer

A)   Investment in a mutual fund's shares
B)   Investment in an original offering of corporate securities
C)   Investment in life insurance
D)   Savings deposit in a bank

Question 2

Financial instruments in the capital markets generally fall under what category in the balance sheet?

Accepted Answer

A)   Short-term liabilities and equities.
B)   Near cash assets.
C)   Marketable securities.
D)   Long-term liabilities and equities.

Question 3

Random walk theory generally supports weak form market efficiency.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following users of long-term capital has been the biggest demander of new funds in the last 10 years?

Accepted Answer

A)   Corporations
B)   Provincial governments
C)   Federal government
D)   federal government Crown corporations

Question 5

Name the 7 types of financial intermediaries that channel funds into the capital markets.What is the function of these intermediaries and their relative importance?

Accepted Answer

The intermediaries are banks,trusteed pe...

Question 6

The efficient market hypothesis has several forms.The weak form states that:

Accepted Answer

A)   past price data is unrelated to future prices.
B)   prices reflect all public information.
C)   all information both public and private is immediately reflected in stock prices.
D)   market efficiency is weakest during an economic downturn.

Question 7

Financial intermediaries channel funds into the capital markets from the household sector.

Accepted Answer

A) True 
 B)False

Question 8

In a capital intensive economy,a shortage of capital could drive interest rates down and stock prices up.

Accepted Answer

A) True 
 B)False

Question 9

IIROC is the regulatory body of investment dealers.It oversees the trading activity of the securities markets.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not true about the over-the-counter market?

Accepted Answer

A)   The OTC market is a network of dealers connected by phone and computer.
B)   There is a central market location.
C)   The OTC is by far the largest market for bond trading.
D)   Brokers who facilitate trades establish prices.

Question 11

What are alternative trading systems and what advantages might they provide for investors?

Accepted Answer

Alternative trading systems (ATS)or Elec...

Question 12

Over the last decade,long-term federal government securities outstanding have grown at a faster rate than corporate debt securities outstanding.

Accepted Answer

A) True 
 B)False

Question 13

Over-the-counter markets trade:

Accepted Answer

A)   securities that have not met the listing requirements for an exchange.
B)   investor information on high quality securities.
C)   blue chip securities.
D)   private issues to high net worth investors.

Question 14

In the new issues market for corporate capital,common shares account for the largest percentage of new funds raised.

Accepted Answer

A) True 
 B)False

Question 15

In an efficient market:

Accepted Answer

A)   all financial transactions have an NPV greater than zero.
B)   the investor does not receive abnormal returns consistently.
C)   the investor is not compensated properly for risk borne.
D)   information flow is exclusively through investment dealers.

Question 16

Which of the following is not a criterion for an efficient market?

Accepted Answer

A)   Prices adjust rapidly to new information.
B)   Large dollar amounts of securities can be absorbed without price destabilization.
C)   Each successive trade is made at a price close to the previous trade.
D)   Computerized handling of transactions.

Question 17

Which of the following is an internal source of funds?

Accepted Answer

A)   Retained earnings
B)   Net loss
C)   Repurchase of debt securities
D)   Bank loan

Question 18

Security markets are efficient when each of the following exist except:

Accepted Answer

A)   there is a continuous market in which each successive trade is made at a price close to the previous price.
B)   the markets can absorb large dollar amounts of stock without destabilizing the price.
C)   prices adjust rapidly to new information.
D)   all of the trades occur between 9:30 am and 4:00 pm.other conditions must exist.

Question 19

A key variable of market efficiency is the certainty of the income stream.The more certain these streams are,the more efficient the market will be.

Accepted Answer

A) True 
 B)False

Question 20

The bulk of Canadian government securities are traded on the Toronto Stock Exchange.

Accepted Answer

A) True 
 B)False

Exam 14: Capital Markets

A key variable of market efficiency is the certainty of the income stream.The more certain these streams are,the more efficient the market will be.

Correct AnswerverifiedShow Answer

Financial intermediaries channel funds into the capital markets from the household sector.

Correct AnswerverifiedShow Answer

Which of the following users of long-term capital has been the biggest demander of new funds in the last 10 years?

Correct AnswerverifiedShow Answer

Random walk theory generally supports weak form market efficiency.

Correct AnswerverifiedShow Answer

Which of the following is an internal source of funds?

Correct AnswerverifiedShow Answer

In a capital intensive economy,a shortage of capital could drive interest rates down and stock prices up.

Correct AnswerverifiedShow Answer

Security markets are efficient when each of the following exist except:

Correct AnswerverifiedShow Answer

What are alternative trading systems and what advantages might they provide for investors?

Correct AnswerverifiedAlternative trading systems (ATS)or Elec...View AnswerShow Answer

Name the 7 types of financial intermediaries that channel funds into the capital markets.What is the function of these intermediaries and their relative importance?

Correct AnswerverifiedThe intermediaries are banks,trusteed pe...View AnswerShow Answer

The bulk of Canadian government securities are traded on the Toronto Stock Exchange.

Correct AnswerverifiedShow Answer

IIROC is the regulatory body of investment dealers.It oversees the trading activity of the securities markets.

Correct AnswerverifiedShow Answer

Over the last decade,long-term federal government securities outstanding have grown at a faster rate than corporate debt securities outstanding.

Correct AnswerverifiedShow Answer

The efficient market hypothesis has several forms.The weak form states that:

Correct AnswerverifiedShow Answer

In an efficient market:

Correct AnswerverifiedShow Answer

Which of the following is not true about the over-the-counter market?

Correct AnswerverifiedShow Answer

Over-the-counter markets trade:

Correct AnswerverifiedShow Answer

Financial instruments in the capital markets generally fall under what category in the balance sheet?

Correct AnswerverifiedShow Answer

Which of the following is not an example of indirect investment by a household?

Correct AnswerverifiedShow Answer

In the new issues market for corporate capital,common shares account for the largest percentage of new funds raised.

Correct AnswerverifiedShow Answer

Which of the following is not a criterion for an efficient market?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Alternative trading systems (ATS)or Elec...
View Answer

Correct Answer
verified
The intermediaries are banks,trusteed pe...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified