Canadian Securities Course Exam -2 questions with correct answers

Canadian Securities Course Exam #2 |\ |\ |\ |\ |\




questions with correct answers |\ |\ |\




What is Fundamental Analysis? - CORRECT ANSWERS ✔✔The
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method of evaluating capital market conditions, economic
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conditions, industry conditions, and the condition of individual
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companies.


What is the goal of fundamental analysis - CORRECT ANSWERS
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✔✔To compare the intrinsic value against a security's price so you
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can determine whether it is undervalued or overvalued.
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What is technical analysis? - CORRECT ANSWERS ✔✔The method
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of determining the future price direction based on the past price
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movements.


What are the 3 market theories? - CORRECT ANSWERS ✔✔1)
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Efficient Market Hypothesis |\ |\




2) Random Walk Theory
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3) Rational Expectations hypothesis
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Describe the Efficient market hypotheses - CORRECT ANSWERS
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✔✔A stock's price fully reflects all available information an
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represents the best estimate of the stock's true value.
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,Describe the Random Walk Theory - CORRECT ANSWERS ✔✔Past
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prices contain no useful info because any developments affecting
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the company have already been reflected in the current price of
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the stock |\




Describe the Rational Expectations Theory - CORRECT ANSWERS
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✔✔Past mistakes can be avoided by using available information to
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anticipate change. |\




What are the 3 variations of of the efficient market hypothesis -
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CORRECT ANSWERS ✔✔1) Weak form: Assumes all past market
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information is fully reflected in current prices |\ |\ |\ |\ |\ |\




2) Semi-strong form: Assumes publicly available info is fully
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reflected in current prices |\ |\ |\




3) Strong form: Assumes all info is fully reflected (public and
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insider) No single investor |\ |\ |\




What are the 3 fiscal policy tools that can affect a macroeconomic
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analysis? - CORRECT ANSWERS ✔✔1) Tax changes
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2) Government Spending
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3) Government Debt
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When economic growth accelerates, what happens to bond yields?
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- CORRECT ANSWERS ✔✔They tend to rise. Longer term bond
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yields will rise at a slower rate.
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,What impact does inflation have - CORRECT ANSWERS ✔✔It
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creates uncertainty which can lead to higher interest rates, lower
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corporate profits, and lower P/E multiples.|\ |\ |\ |\ |\




What are the life cycle stages of an industry? - CORRECT
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ANSWERS ✔✔1) Emerging growth industries |\ |\ |\ |\




2) Growth Industries
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3) Mature Industries
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4) Declining Industries
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What are the 5 basic competitive forces that determine the
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attractiveness of an industry? - CORRECT ANSWERS ✔✔1) Threat |\ |\ |\ |\ |\ |\ |\ |\ |\



of new entry
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2) Competitive rivalry
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3) Threat of substitutes
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4) Bargaining power of buyers
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5) Bargaining power of supplier.
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Define Cyclical Industries - CORRECT ANSWERS ✔✔Refers to the
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industries in which the effect on earnings is most pronounced.
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Most are large international exporters of commodities
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What are defensive industries - CORRECT ANSWERS ✔✔Have
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relatively stable returns and do well during recessions. "Blue chip"
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stocks, maintain dividends through bad times.
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, What are the 3 assumptions technical analysis is based on> -
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CORRECT ANSWERS ✔✔1) All influences on market action are
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automatically accounted for or discounted in price. |\ |\ |\ |\ |\ |\




2) Prices move in trends
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3) The future repeats itself.
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Name commonly used tools in technical analysis: - CORRECT
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ANSWERS ✔✔- Support/resistance levels |\ |\ |\




- Reversal and continuation patterns
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- Head & Shoulders pattern
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Moving averages |\




- Sentiment indicators
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What is cyclical analysis: - CORRECT ANSWERS ✔✔Helps forecast
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when the market will start moving in a direction and when it will
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reach it's peak or trough.
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What are the cyclical analysis cycle lengths? - CORRECT ANSWERS
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✔✔Long Term = 2+ years
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Seasonal = 1 year |\ |\ |\




primary/intermediate = 9-26 weeks |\ |\ |\




Trading = 4 weeks |\ |\ |\




What information can you draw from the analysis of a company's
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statement of comprehensive income? - CORRECT ANSWERS |\ |\ |\ |\ |\ |\ |\



✔✔Information about revenue (growth or decline?) Operating |\ |\ |\ |\ |\ |\ |\



costs (high, low steady?)
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