CSC CANADIAN SECURITIES COURSE EXAM
NEWEST ACTUAL EXAM COMPLETE 330
QUESTIONS AND CORRECT DETAILED ANSWERS
(VERIFIED ANSWERS) ALREADY GRADED A+
What is Fundamental Analysis? - ANSWER>>The method of evaluating capital
market conditions, economic conditions, industry conditions, and the condition of
individual companies.
What is the goal of fundamental analysis - ANSWER>>To compare the intrinsic
value against a security's price so you can determine whether it is undervalued or
overvalued.
What is technical analysis? - ANSWER>>The method of determining the future price
direction based on the past price movements.
What are the 3 market theories? - ANSWER>>1) Efficient Market Hypothesis
2) Random Walk Theory
3) Rational Expectations hypothesis
Describe the Efficient market hypotheses - ANSWER>>A stock's price fully reflects all
available information an represents the best estimate of the stock's true value.
Describe the Random Walk Theory - ANSWER>>Past prices contain no useful info
because any developments affecting the company have already been reflected in the
current price of the stock
Describe the Rational Expectations Theory - ANSWER>>Past mistakes can be
avoided by using available information to anticipate change.
,What are the 3 variations of of the efficient market hypothesis - ANSWER>>1) Weak
form: Assumes all past market information is fully reflected in current prices
2) Semi-strong form: Assumes publicly available info is fully reflected in current
prices
3) Strong form: Assumes all info is fully reflected (public and insider) No single
investor
What are the 3 fiscal policy tools that can affect a macroeconomic analysis? -
ANSWER>>1) Tax changes
2) Government Spending
3) Government Debt
When economic growth accelerates, what happens to bond yields? -
ANSWER>>They tend to rise. Longer term bond yields will rise at a slower rate.
What impact does inflation have - ANSWER>>It creates uncertainty which can lead
to higher interest rates, lower corporate profits, and lower P/E multiples.
What are the life cycle stages of an industry? - ANSWER>>1) Emerging growth
industries
2) Growth Industries
3) Mature Industries
4) Declining Industries
What are the 5 basic competitive forces that determine the attractiveness of an
industry? - ANSWER>>1) Threat of new entry
2) Competitive rivalry
3) Threat of substitutes
4) Bargaining power of buyers
5) Bargaining power of supplier.
,Define Cyclical Industries - ANSWER>>Refers to the industries in which the effect on
earnings is most pronounced. Most are large international exporters of commodities
What are defensive industries - ANSWER>>Have relatively stable returns and do well
during recessions. "Blue chip" stocks, maintain dividends through bad times.
What are the 3 assumptions technical analysis is based on> - ANSWER>>1) All
influences on market action are automatically accounted for or discounted in price.
2) Prices move in trends
3) The future repeats itself.
Name commonly used tools in technical analysis: - ANSWER>>- Support/resistance
levels
- Reversal and continuation patterns
- Head & Shoulders pattern
Moving averages
- Sentiment indicators
What is cyclical analysis: - ANSWER>>Helps forecast when the market will start
moving in a direction and when it will reach it's peak or trough.
What are the cyclical analysis cycle lengths? - ANSWER>>Long Term = 2+ years
Seasonal = 1 year
primary/intermediate = 9-26 weeks
Trading = 4 weeks
What information can you draw from the analysis of a company's statement of
comprehensive income? - ANSWER>>Information about revenue (growth or
decline?) Operating costs (high, low steady?)
Dividend Records
, Why might a company have a high dividend payout? - ANSWER>>If earning are
stable.
What does a company's capital structure refer to? - ANSWER>>Refers to the
distribution of debt and equity that comprise the company's finances.
What are the effects of leverage on a company? - ANSWER>>It accelerates any
cyclical rise of fall in earnings. A company is said to be using leverage when the
capital structure contains debt or preferred shares.
What warning signs should you watch for when reviewing notes to the financial
statements? - ANSWER>>Company's can use specific accounting practices to make
their finances look they best they possibly can.
What are liquidity ratios used for? - ANSWER>>Help show investors the ability of a
company to turn assets into cash to meet its short term commitments.
What do risk analysis ratios show you? - ANSWER>>Shows the company's ability to
meet its financial obligations
What do operating performance rations show? - ANSWER>>Tells the investor how
well management is making use of the company's resources.
What do value ratios show? - ANSWER>>Measures the way the stock market rates a
company by comparing the market price of its shares to information on its financial
statement.
What is working capital? - ANSWER>>Also called the current ratio, it is current
assets / current liabilities
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