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Chapter 6

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User has deleted their subject information Quiz on Chapter 6, created by Deleted user on 03/09/2021.
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Question 1

Question
A company's Market Value Added equates to the market assessment of the present value of the company's future:
Answer
  • dividend distributions
  • economic value added
  • capital costs
  • gross profits

Question 2

Question
If the real annual returns of a UK equity investment are normally distributed around the mean return of 8% with a standard deviation of 4.5% approximately two-thirds of the returns recorded will be within what range?
Answer
  • -5.5% and 21.5%
  • -1% and 17%
  • 3.5% and 12.5%
  • 5.75% and 10.25%

Question 3

Question
When considering the money supply, money is accurately described as anything that is generally:
Answer
  • convertible to sterling currency
  • acceptable as a means of settling a debt
  • sustainable in value over a defined period
  • tradable and held outside of a bank or building society deposit

Question 4

Question
Which of the following is a fiscal policy used to stimulate the economy?
Answer
  • Raising interest rates
  • Cutting interest rates
  • Raising personal taxes
  • Cutting personal taxes

Question 5

Question
Two sets of data are positively correlated. If one set of data rises in value, what will happen to the other set?
Answer
  • Rises
  • Falls
  • No change
  • Rises to begin with then falls

Question 6

Question
What differentiates Gross Domestic Product (GDP) and Gross National Product (GNP)?
Answer
  • A Indirect taxes, depreciation and net exports
  • Indirect taxes and depreciation
  • Depreciation and property income
  • Net property income

Question 7

Question
A function of the Monetary Policy Committee is to:
Answer
  • attempt to control inflation by setting the base rate
  • intervene in the financial markets to control money supply
  • maintain confidence in the UK financial system
  • promote public understanding of inflation

Question 8

Question
The demand curve for a particular product will be horizontal where the supplying firm operates in:
Answer
  • a perfect competitive market
  • a monopolistic market
  • a sector generating excessive profits
  • a sector generating minimal profits

Question 9

Question
The annual return of a portfolio in each of the last six years has been 8.2%, 3.6%, 5.1%, 2.1%, 9.4% and 4.7%. What is the arithmetic mean return?
Answer
  • 4.2%
  • 4.9%
  • 5.5%
  • 5.8%

Question 10

Question
A company's p/e ratio recently changed from 12 to 15. This normally indicates that:
Answer
  • the share value has fallen
  • growth expectations have improved
  • dividend levels have become less stable
  • the relevant market sector is in decline

Question 11

Question
Which of the following is MOST LIKELY to be a factor causing market movement?
Answer
  • Sentiment
  • Supply and demand
  • Economic and political strategy
  • Investor psychology

Question 12

Question
The Liquidity (Acid Test) ratio measures a company's ability to:
Answer
  • increase its current assets
  • meet its current liabilities
  • increase its inventory turnover
  • pay its non-current liabilities

Question 13

Question
In a two-stock portfolio which of the following correlations would normally offer the greatest level of diversification?
Answer
  • 0.8
  • 0.6
  • -0.4
  • -0.7

Question 14

Question
In technical analysis, the term, 'primary movement' refers to which of the following?
Answer
  • Short-term share price trend
  • Long-term share price trend
  • Short-term dividend policy
  • Long-term dividend policy

Question 15

Question
The difference between a nominal rate of return and a real rate of return relates solely to the effects of
Answer
  • taxation
  • charges
  • inflation
  • compounding

Question 16

Question
Which of the following is NOT counted as part of the Current Account Balance?
Answer
  • Imported and exported goods
  • Dividends on UK holdings of overseas assets
  • Long-term capital flows
  • Interest on UK holdings of overseas assets

Question 17

Question
If $2,200 is invested for four years with interest at the rate of 6% p.a., compounded half-yearly, what will be the value at the end of this period?
Answer
  • $2,696.55
  • $2,777.45
  • $2,786.89
  • $2,860.77
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