Question

14 which of the following statements about the London Stock Exchange is INCORRECT? a) It used to be membership based but now is publicly owned b) Its main market is for established companies Most trading occurs on the floor-based system d) The commission rate was very high before the Big Bang in 1986 (2 Marks) 15 Which of the following with regard to activities on financial markets is incorrect? a) A speculation strategy can be based on derivatives b) Hedging reduces uncertainties related to future cash flows c) In real life, arbitrage is risk-free d) Arbitrageurs aim to take advantage of asset price differences to achieve excess returns (2 Marks) 16. A venture capitalist can exit her investment via a) Trade sale or merger and acquisitions b) Speculation c) Derivatives trading d) Arbitrage 2 Marks) 17 Which of the following staterments about corporate bonds is INCORRECT? a) It is a major source of funds for comparues and an alternative to equity and bank loans b) Many corporate bonds are traded on the OTC market c) Bond holders do not have to hold their bonds untl matunity 6) Any company can ssue bonds on the primary market 2 Marks) PTO

help with these following mcqs

Answer 1

14 .c. (This is incorrect because most trading now happens electronically and not on the floor based trading)

15. c. (The other three are true. arbitrage is not totally risk free)

16. a. (Venture capitalist cannot do speculation or use derivatives or use arbitrage. The only way is is a trade sale or a merger)

17. d.( Bonds are issued directly to customers and are traded on the secondary market and not the primary market)