Book - Chapter 9 ST Questions Flashcards
What is the role of a regulatory information service?
Where an announcement has be made under either the Disclosure and Transparency Rules or the Listing Rules it must be made to, a regulatory information service. This is a primary information provider approved by the regulator.
Which of the following transactions would be a notifiable interest?
a. The addition to an investor’s stake that increas,es their percentage holding of voting shares from 3.2% to 3.7%.
b. The addition to an investment fund’s holding that increases their percentage holding of voting shares from 2.9% to 3.1 %.
c. The addition to an investor’s stake that increas,es their percentage holding of voting shares from 3.7% to 4.1%.
d. The addition to a market maker’s inventory tha1, increases their percentage holding of voting shares from 2.8% to 3.2%.
The answer is c. The addition to an investor’s stake that increases their percentage holding of voting shares from 3.7% to 4.1%. Increases to a stake that take it across a full percentage point are notifiable. An investment fund’s interest is notifiable only when it is beyond 5% and a market maker’s when it is more than 10%.
- Name five factors that might be considered when undertaking a qualitative analysis of a company.
- Business model.
- Competitive advantage.
- Company management.
- Corporate governance.
- Industry or sector in which it operates.
- How do reversal patterns differ from a continuation pattern?
Reversal patterns normally indicate an important reversal in trend is happening. Continuation patterns usually indicate that the sideways price action is nothing more than a pause in the prevailing trend.
- A chart shows a head and shoulders pattern developing for a stock. What impact would you expect on the share price?
A head and shoulders reversal pattern arises, when a price movement causes the right shoulder to breach the neckline, the resistance level, indicating the prospect of a sustained fall in the price of the security.
- What is a symmetrical triangle and what does it indicate?
A symmetrical triangle is a pattern in which two trendlines converge towards each other. This pattern is neutral in that a breakout to the upside or downside is a confirmation of a trend in that direction.
- How would you summarise how technical analysis. differs from fundamental analysis?
Technical analysis considers there is no need to analyse a company as its fundamentals are accounted for in the price. It uses a much shorter timeframe and is used to determine short-term trading decisions.
- Is the consumer confidence index an example of a leading, lagging or coincident indicator?
The consumer confidence index is a lagging indicator because most people don’t really feel the economy has changed until after it actually has and they have felt the impact.
- What type of policy switch would you expect a bond manager to enter into if they expect that interest rates are due to fall?
Switching from low-duration to high-duration bonds if interest rates are expected to fall is an example of a policy switch which will cause spreads to change.
The 2/10 gilt spread is currently 150 basis points. If the ten-year gilt has a gross redemption yield of 3.25%, what is the yield on the two-year gilt, assuming a normal yield curve?
A normal yield curve is upward sloping and, as the spread is measured in basis points, the two-year gilt must be yielding 1.5% less and so have a GRY of 1.75%.
