Equity Market

Question 1

Just like commercial banks, they issue stocks to boost their capital base.

Answer 1

Finance Companies

Question 2

They invest a large number of premiums in the stock market.

Answer 2

Insurance Companies

Question 3

Give the distinctions between debt and equity.

TRMVCR

Answer 3

Tax implications
Return Expectations
Maturity
Voice in Management
Claim on Assets and Income
Risk Profile

Question 4

Which is prioritized? Debt or Equity?

Answer 4

Debt

Question 5

This distinction means that debt is prioritized over equity.

Answer 5

Claims on assets and income

Question 6

What do you call when shares are owned by individual investors or a small group of private investors such as family?

Answer 6

Close

Question 7

What do you call when shares are actively traded in the stock market and are owned by a mix of public and private investors?

Answer 7

Publicly

Question 8

What do you call when shares are owned by unrelated individuals or institutional parties?

Answer 8

Widely

Question 9

Why do ordinary shareholders possess voting rights?

Answer 9

To decide on certain corporate decisions

Question 10

What are granted to the ordinary shareholders?

Answer 10

Preemptive Right

Question 11

The palms of the hands are very important in buying or selling stocks. What does it mean when the palms are facing towards the buyer?

Answer 11

Seller wants an offer to buy

Question 12

The palms of the hands are very important in buying or selling stocks. What does it mean when the palms are facing inwards, towards the buyer?

Answer 12

Buyer searching for a seller

Question 13

What does it mean when the fist is against the palm?

Answer 13

There’s a stop order

Question 14

Why is there a stop order?

Answer 14

Because the price has already reached a specific level.

Question 15

A put is signaled by what?

Answer 15

A hand forming an “OK” sign

Question 16

A call is signaled by what?

Answer 16

A hand forming letter “C”

Question 17

This category includes companies that have a market cap of $200 billion or higher.

Answer 17

Mega-cap

Question 18

This category includes companies that have a market cap below $50 million.

Answer 18

Nano-cap

Question 19

This category includes companies that have a market cap between $300 million to $2 billion.

Answer 19

Small-cap

Question 20

What do you call when the investors buy or sell shares by opening an account with a stock broker?

Answer 20

Conventional Brokerage

Question 21

What do you call the payment when the broker buys and sells shares on behalf of the investor?

Answer 21

Commission

Question 22

These are investment companies pooling money from various investors and invests them in different securities based on the investment objective.

Answer 22

Mutual Funds

Question 23

This model generally assumes that investors are prepared to hold the stock for one year.

Answer 23

One-Period Valuation Model

Question 24

It is an extension of the one-period dividend discount model wherein an investor expects to hold a stock for multiple periods.

Answer 24

Multiple-Period Valuation Model

Question 25

This model assumes that dividends will be fixed and will not change anymore un the future.

Answer 25

Zero-growth Model

Question 26

The Gordon Growth Model operates under what four assumptions?

(DGFR)

Answer 26

1. Dividends are assumed to grow at a constant rate forever.
2. Growth rate is assumed to be lower than the required return.
3. First dividend is assumed to be received right away and the next dividend will be received after a year.
4. Reasonableness of expectations of investors is important to determine the right share evaluation.

Question 27

It represents the amount of cash flow from operations available for distribution after accounting for depreciation expenses, taxes, working capital, and investments.

Answer 27

Free Cash Flow to the Firm (FCFF)

Question 28

Liquidation Value per Share pertains to the actual amount per share that will be received if:

(AAR)

Answer 28

All assets are sold based on their current market value
All liabilities, including preference shares, are fully paid
Remaining proceeds are divided between shareholders

Question 29

What is known as a trading band?

Answer 29

Static Threshold

Question 30

It refers to the lowest and highest price limit for each security that the PSE accepts.

Answer 30

Static Threshold

Question 31

It is the maximum allowable price difference between an update in the Last Traded Price of a given stock or group of stocks against is preceding LTP.

Answer 31

Dynamic Threshold

Question 32

If the trade frequency qualifier is that it’s traded 20 times or less in the past six months, what’s the security cluster?

Answer 32

A

Question 33

If the trade frequency qualifier is that it’s traded 500 times or less but greater than 20 times in he past six months, what’s the security cluster?

Answer 33

B

Question 34

If the trade frequency qualifier is that it’s traded more than 500 times in the past six months, what’s the security cluster?

Answer 34

C

Question 35

What’s the dynamic threshold for security cluster A?

Answer 35

20%

Question 36

What’s the dynamic threshold for security cluster B?

Answer 36

15%

Question 37

What’s the dynamic threshold for security cluster C?

Answer 37

10%

Question 38

What does Dyn T Low mean?

Answer 38

Minimum threshold

Question 39

What do you call Dyn T High?

Answer 39

Maximum threshold

Question 40

Where do corporations, that have an authorized capital stock of at least 500 million, are listed?

Answer 40

Main Board

Question 41

What are the requirements for companies to be listed under the Main Board?

Answer 41

1. Authorized Capital Stock of at least 500 million.
2. At least 25% of the authorized capital stock must be subscribed and fully paid

Question 42

What are the requirements for companies to be listed under the Main Board?

Answer 42

1. Authorized Capital Stock of at least 500 million.
2. At least 25% of the authorized capital stock must be subscribed and fully paid