11/10/21, 5:26 PM Quiz M5: Attempt review

Dashboard / My courses /
(21/10) MScFE 560 Financial Markets (C21-S4) /
Module 5: Stock and Equity Markets /
Quiz M5

Started on Wednesday, 10 November 2021, 4:49 PM

State Finished
Completed on Wednesday, 10 November 2021, 5:26 PM
Time taken 36 mins 23 secs
Marks 15.00/15.00
Grade 20.00 out of 20.00 (100%)

Question 1
Correct

Mark 1.00 out of 1.00

What is the cost of equity from an issuing entity’s perspective?

Select one:
Equal to the cost of debt where the equity/debt mix is 50/50.

The risk you assume for taking on the share.

The rate of return the equity holders require.


The interest repayments on that share.

Question 2
Correct

Mark 1.00 out of 1.00

Approaching a commercial bank for start-up capital is an example of what type of funding?

Select one:
Private equity funding

Public equity funding

Debt funding

Savings funding

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Question 3
Correct

Mark 1.00 out of 1.00

Select the correct statement regarding the cost of capital:

Select one:
Debt has no cost.

The weighted average cost of capital excludes the cost of equity.

Equity has a cost.


Equity has no cost.

Question 4
Correct

Mark 1.00 out of 1.00

What is the primary benefit of early stage equity funding?

Select one:
The business isn’t locked into debt repayments early on.

Equity capital is always cheaper than debt funding.

Only small monthly repayments are required for large capital outlay.

Interest repayments are low.

Question 5
Correct

Mark 1.00 out of 1.00

In which private equity strategy does the private equity firm seek to improve growth in an established business?

Select one:
Growth capital

Merger and acquisition

IPO

Venture capital

Question 6
Correct

Mark 1.00 out of 1.00

In which type of fiscal environment does the value of money change over time?

Select one:
An inflationary/deflationary neutral environment

An inflationary and deflationary environment


An inflationary environment only

A deflationary environment only

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Question 7
Correct

Mark 1.00 out of 1.00

“The standard deviation or variance in relation to the share’s mean price” is the definition of which concept?

Select one:
Alpha

Risk free-rate

Beta coefficient

Volatility


Question 8
Correct

Mark 1.00 out of 1.00

The initial public offering of shares occurs in which market?

Select one:
The tertiary market

The secondary market

The primary market


The futures market

Question 9
Correct

Mark 1.00 out of 1.00

If we know the dividend stream, the future price of the stock, the future selling date of the stock, and the required return, we can
price stocks just as we priced ________.

Select one:
Annuities

bonds

Perpetuities

Preferred stocks

Question 10
Correct

Mark 1.00 out of 1.00

Taking a phased approach whereby an investor enters the market gradually over a period of time is aligned to which concept?

Select one:
Portfolio management

Dollar-cost averaging

Diversification

Hedging

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Question 11
Correct

Mark 1.00 out of 1.00

You want to invest in a stock that pays $5.00 annual cash dividends for the next four years. At the end of the four years, you will sell
the stock for $20.00. If you want to earn 12% on this investment, what is a fair price for this stock if you buy it today?

Select one:
$25.42

$40.00

$43.90

$27.90


Question 12
Correct

Mark 1.00 out of 1.00

Private equity investors have more company data readily available to them.

Select one:

True

False 

Question 13
Correct

Mark 1.00 out of 1.00

What are large corporates who are known to pool investor’s money called?

Select one:
Investment banks

Institutions of oversight

Commercial banks

Institutional investors


Question 14
Correct

Mark 1.00 out of 1.00

What is the beta of a stock that has moved 17% more than its benchmark stock?

Select one:
83

1.17

0.83

117

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Question 15
Correct

Mark 1.00 out of 1.00

Which one of the following describes a value investor?

Select one:
They usually hold their investments for much shorter periods of time.

They need to be very quick with their decision-making, as they are more prone to higher fluctuations in gains and losses.

They are primarily forward-looking, as their valuations concern future cash flows and future price growth.

They source their data for decision-making from numerous technical charts.

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