Test Questions Flashcards
Delta
Sensitivity of the change in the option price with respect to the underlying asset price
What is pure expectations theory
The shape of the yield curve can be explained in terms of expected future interest rates
Monetarist school of thought
Supply and demand are in equilibrium
Which of the following are true in relation to an investment trusts capital structure?
The investment trust can raise more capital through a rights issue
The investment trust may have a split capital structure
Can raise money through borrowing
Simple aggregate unweighted share price
Dow Jones industrial average
Which of the following exchanges would an investor wishing to trade non-ferrous metals derivatives most likely use
London metal exchange (LME)
How long to transactions on the FOREX take?
T+2
Available for sale bonds
Available for sale bonds have transaction costs added to purchase price to arrive at initial carrying value
What determines the height of the short-run Phillips curve?
Long-term money growth rate
What best describes the strategy of a market neutral hedge fund
It aims to have returns that have a low correlation with returns on traditional assets
Which best describes how derivatives are treated in financial accounts
They are captured on the balance sheet when a contractual arrangement is entered
Which of the following best describes an index-linked gilt?
A gilt whose coupons and principle are linked to the RPI
If one country currency appreciated relative to another the most likely explanation is
The real GDP is higher than the other countries
Which ratio would be least distorted by accounting practices
Price/cash flow ratio
A change in methods of depreciation which leads to a higher depreciation charge will
Reduce profits
Stamp duty reserve tax is charged at
0.5% on the purchase of all eligible securities
Wan analyst identifies a potential liability which is NOT predictable enough to have a specific provision in the accounts
Contingent liability
The default category under IAS 39 for financial liabilities which do not meet the definition of financial liabilities at fair value through profit and loss is
Measured at amortized cost
Highest non-investment grade for Moodys
Ba1
What is least accurate in regards to ADRs
They eliminate currency risk for US investors
MES is best described as
Lowest level of output where long run costs is at a minimum
International accounting standards requires that goodwill in a business combination
Is recorded in the balance sheet at cost less accumulated impairment charges
Consumption function
At zero income the level of consumption is know as autonomous consumption
Overall economic activity can be measure by
The value of consumer purchases
The value of output by firms
The value of expenditure by firms on inputs
The frequency of data in a histogram is represented by the
Area of the bars
A measure of the decline in the value of an investment from its historical peak value is best describes as
Drawdown
Facts about ETFs
ETFs are traded on the London Stock exchange
ETFs must be UCITS compliant to obtain FCA recognition
ETFs are passively managed
When price volatility increases over time, which of the following is most likely to occur
Correlations between securities increases
