Words Limit: 4500
Question 1
The Asian financial crisis provided some valuable lessons about nation-state and global financial system. What are some of those lessons?
Question 2
The Basel II capital accord comprises a framework of three pillars. Pillar 1 established the minimum capital required by a commercial bank and incorporates three risk components: credit risk, operational risk and market risk.
(b) What approaches may be used to measure the credit risk capital adequacy component of pillar1?
(c) Under what circumstances might such schemes prove to be unattractive to the dividend-paying company?
Question 3
(a) It may be argued that information is the life blood of an efficient stock market. Explain this proposition.
(b) Within the context of the ASX, explain the requirement and purpose of continuous reporting
(c) Identify using examples, five different pieces of information that are regarded as being material and therefore should be reported to the stock exchange
Question 4
(a) Explain how dividend reinvestment schemes operates and discuss their significance as a source of equality funding
(b) Discuss the advantages of a dividend reinvestment scheme from the point of view of the corporation and shareholders
(c) Under what circumstances might such schemes prove to be unattractive to the dividend-paying company?
Question 5
Santos limited has declared a $0.45 cents per share dividend, payable in one month. At the same time the company has decided to capitalise reserves through a one-for-three bonus issue. The current share price at the close of business on the final cum-dividend date is $14.70
(a) Explain the strategy adopted by the company in your answer define the terms ‘cum-dividend’ and ‘ex-dividend’
(b) Calculate the theoretical price of the share after the bonus issue and the dividend payment have occurred.
Question 6
A technical analyst has been charting movements in a share price and notices that the trend line has been rising for some time.
(a) As the analyst, draw and label an uptrend line and a return line on the chart. Explain how this is achieved
(b) After a major shift in a trend line a technical analyst might expect a reversal to become apparent. One reversal pattern is called the head and shoulders pattern. Describe the main characteristics of a head and shoulders pattern that you would expect to become evident
(c) You know that there are at least five reasonably reliable generalisations that can be made when analysing trend lines. Briefly identify and explain these generalisations.