Download Efficient Stock Market - Economics of Financial Markets - Exam and more Exams Financial Accounting in PDF only on Docsity! EC362 Autumn 2010 /11 Page 1 of 4 Autumn Examinations 2010/11 Exam Code(s) 3BA1, 3BA5, 4BA4, 3BC1, 4BC2, 4BC3, 4BC4, 3FM2, 1EM1, 1OA1, 1EK2, 1EK3 Exam(s) B.A., B.A. (Public & Social Policy), B.A. (Economic & Social Studies), B.Comm., B.Comm. International, 3rd B.Sc. in Financial Mathematics and Economics, Erasmus, International Students, HDip. Economic Science Module Code(s) EC362 Module(s) ECONOMICS OF FINANCIAL MARKETS Paper No. 1 External Examiner(s) Dr. C. Ryan Internal Examiner(s) Prof. J. McHale C. Twomey Instructions: Section A – answer all questions (20 marks) Section B - answer 4 out of 6 questions (80 marks) There are 100 marks in total. All questions will be marked equally. If you attempt MORE THAN the correct number indicate clearly those questions which you wish to be graded. Duration 2hrs No. of Answer Books 1 Requirements: None No. of Pages 4 Department(s) Economics EC362 Autumn 2010 /11 Page 2 of 4 SECTION A Answer all questions. This section is worth 25 marks. Each question is worth 2.5 marks. NB: Write your answers in the answer book, not on the exam paper. 1. In an efficient stock market, new information: a) arrives in a random fashion. b) arrives in a predictable fashion. c) is biased. d) is ignored by insiders and the general public. 2. Selling futures contracts to offset a long futures position results in a: a) long position. b) hedged position. c) short position. d) none of these. 3. If the initial margin requirement is 40%, an investor buying 100 shares at $100 per share must furnish equity of: a) $4,000. b) $6,000. c) $10,000. d) $100. 4. According to the PEG ratio rule-of-thumb, if PEG < 1, then a share a) may be worthy of investment attention and possible purchase. b) is definitely worthy of investment and represents an attractive investment. c) is apt to represent an extraordinarily attractive investment opportunity. d) none of these 5. As the correlation coefficient between two securities changes in a portfolio: a) both expected return and risk change. b) only expected return changes. c) only risk changes. d) neither expected return nor risk change. 6. If a portfolio has three stocks; GE, IBM and DIS weighted as 45%, 30% and 25%, respectively. If the expected annual return for GE is 12%, IBM is 16% while for DIS is 10%, what is the expected return of this portfolio? a) 12.70% b) 12.67% c) 12.56% d) 12.48% 7. Which of the following is TRUE for technical analysis? a) It does not require subjective decision b) It does not require much accounting information c) It often beats the market and fundamental analysis. d) Fundamental analysis is older than technical analysis.
