Chapter 19

Question 1

This type of model assumes that a stock’s intrinsic value is equal to the present value of a stream of future cash flow.

Answer 1

discounted cash flow model

Question 2

This type of model assumes that a stock’s intrinsic value is equal to the present value of a stream of future dividends.

Answer 2

dividend discount model

Question 3

It represents ownership interest in the issuing corporation.

Answer 3

common share

Question 4

It involves understanding a company’s business, analyzing its financial statements, and forecasting its future financial performance.

Answer 4

company analysis

Question 5

An off-exchange, private, electronic network that discreetly and directly matches buyers and sellers, requiring no intermediaries.

Answer 5

alternative trading system

Question 6

It is the study of graphical representations of stock or stock index price movements over a defined period.

Answer 6

chart analysis

Question 7

It involves studying investor views or opinions, or data that reflect those opinions, to determine their degree of bullishness or bearishness about a particular stock or stock index.

Answer 7

sentiment analysis

Question 8

It involves researching, analyzing, and forecasting the factors that contribute to or detract from the success of all companies within the industry.

Answer 8

industry analysis

Question 9

It provides a link between the statement of comprehensive income and the statement of financial position at a specified time.

Answer 9

statement of changes in equity

Question 10

This approach begins with an analysis of macro factors.

Answer 10

top-down approach

Question 11

This type of analysis combines historical fundamental data with statistical analyses.

Answer 11

quantitative analysis

Question 12

They use fundamental analysis to estimate the return and risk from an investment in the common shares of the companies in their coverage universe.

Answer 12

equity analysts

Question 13

These approaches focus on a particular set of stocks that have similar fundamental characteristics and performance patterns.

Answer 13

style-based approaches

Question 14

These approaches do not focus on a particular group of stocks but involve a search for stocks with the best chance of meeting particular objectives.

Answer 14

non-style-based approaches

Question 15

It shows the company’s revenue and expenses over a specified period.

Answer 15

statement of comprehensive income

Question 16

This lists a company’s assets, equity, and liabilities at a specified time.

Answer 16

statement of financial position

Question 17

It outlines the cash inflow and outflow for the company over a specified period.

Answer 17

statement of cash flows

Question 18

This type of analysis of a company’s business considers how well the firm competes within its industry, which, in turn, depends on its sustained competitive advantage.

Answer 18

qualitative analysis

Question 19

Does a companies management team usually prefer dividends or share buybacks and why?

Answer 19

A company’s management usually prefers share repurchase payouts because they reduce the number of shares outstanding, and therefore increase the companies earnings per share which can help management hit certain bonus targets

Question 20

Canada has six stock exchanges, three of which are owned by the TMX Group:

Answer 20

Toronto Stock Exchange (TSX)
TSX Venture Exchange, including NEX
TSX Alpha Exchange

Question 21

Securities of junior issuers are listed on the

Answer 21

TSX Venture Exchange

Question 22

This exchange positions itself as a low-cost alternative to so-called traditional stock exchanges

Answer 22

Canadian Securities Exchange

Question 23

owned by the TMX Group, trades TSX and TSX Venture Exchange listed securities

Answer 23

Alpha Exchange

Question 24

This exchange provides listing services and facilitates trading in securities listed on Aequitas NEO, TSX, and TSX Venture Exchanges.

Answer 24

NEO Exchange

Question 25

Listing shares on exchanges in US and CAD is called

Answer 25

interlist

Question 26

These ratios are used to determine how well the company deals with its debt obligations. The debt-to-equity ratio is a common measure of debt capacity.

Answer 26

Risk Analysis Ratios

Question 27

These ratios measure a company’s ability to meet its short-term obligations. Common measures of liquidity include the current ratio and the quick ratio.

Answer 27

Liquidity

Question 28

These ratios help determine a company’s long-term growth and survival prospects

Answer 28

Operating performance ratios

Question 29

These ratios gauge the market’s perception of the value of a company’s shares relative to its dividends, earnings, or other measures, such as the equity value (or book value) per common share. Common value ratios include price-to-earnings ratio (P/E) and dividend yield.

Answer 29

Value Ratios

Question 30

These models determine a precise value (called a point estimate) for the intrinsic value of a stock based on a set of forecast company fundamentals

Answer 30

Absolute valuation models

Question 31

In the securities industry, the two most widely used absolute valuation models are the

Answer 31

dividend discount model (DDM) and discounted cash flow model

Question 32

These models determine the intrinsic value by comparing one or more of the stock’s value ratios or price multiples to a benchmark value for the price multiple

Answer 32

Relative valuation models

Question 33

There are three broad areas of analysis within the larger discipline of technical analysis:

Answer 33

chart analysis, statistical analysis, and sentiment analysis.

Question 34

A form of technical analysis made possible by the increased sophistication of computers. Analysts use several indicators to confirm the existence of trends identified through chart analysis

Answer 34

Statistical Analysis

Question 35

To become licensed as an advisor to trade in options, you must have successfully completed the

Answer 35

Derivatives Fundamentals Course and the Options Licensing Course

Question 36

If a company has securities listed on the TSX, it must file these audited annual financial statements within ____days of the end of its financial year-end. If a company has securities listed only on the TSX Venture Exchange or CSE, it must file the statements within _____days of the end of its fiscal year.

Answer 36

90 days

120 days

Question 37

Listed companies must also file interim unaudited financial statements. For companies with securities listed on the
TSX, the statements must be filed through SEDAR within _____ days of the end of the interim period. If securities are listed only on the TSX Venture Exchange or CSE, the filing period is within ____ days of the end of the interim period.

Answer 37

45 days

60 days

Question 38

Usually refers to important financial statement items that influence many other financial statement items

Answer 38

Key Drivers

Question 39

give shareholders limited voting rights or full voting rights under certain circumstances.

Answer 39

Non-voting shares

Question 40

The only difference between technical and fundamental analysis is that

Answer 40

The technical analyst studies the effects of changing fundamentals – that is, price movements – while the fundamental analyst studies the causes of price movements.