Afin310 2018 s1 2018 Exam

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AFIN310 2018 S1 - 2018 EXAM
Issues in Applied Finance (Macquarie University)
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SEAT NUMBER: ……….… ROOM:..……………….
FAMILY NAME:………….....………………………….
This question paper must be returned.
OTHER NAMES:……..…….…………………..……..
Candidates are not permitted to remove any part
of it from the examination room.
STUDENT NUMBER:…..…….………..……………..
FORMAL EXAMINATION PERIOD: SESSION 1, JUNE 2018
Unit Code: AFIN310
Unit Name: ISSUES IN APPLIED FINANCE

Duration of Exam 1 hour 30 minutes plus 10 minutes reading time
(including reading time if applicable):
Total No. of Questions: 18
Total No. of Pages 11

(including this cover sheet):
GENERAL INSTRUCTIONS TO STUDENTS:

 Students are required to follow directions given by the Final Examination Supervisor and must refrain from communicating in any way with another student once they have entered
the final examination venue.
 Students may not write or mark the exam materials in any way during reading time.
 Students may only access authorised materials during this examination. A list of authorised material is available on this cover sheet.
 All watches must be removed and placed at the top of the exam desk and must remain there for the duration of the exam. All alarms, notifications and alerts must be switched off.
 Students are not permitted to leave the exam room during the first hour (excluding reading time) and during the last 15 minutes of the examination.
 If it is alleged you have breached these rules at any time during the examination, the matter may be reported to a University Discipline Committee for determination.
EXAMINATION INSTRUCTIONS:
1. This test comprises two parts:

Part A: 10 True False questions with equal value for a total of 10 marks.
Part B: 8 Short problem based questions with unequal value for a total of 40 marks.
2. Do NOT use a separate exam booklet for your answers. Write your answers neatly in the space
provided on the examination paper (you can do rough working on the back of a page, if needed).
Illegible answers will receive zero marks.
3. You must return this test paper at the end of the test. You must not leave the examination room with
any part of this paper.
AIDS AND MATERIALS PERMITTED/NOT PERMITTED:

Dictionaries: No dictionaries permitted
Calculators: Non-programmable calculators with no text storage/retrieval capacity permitted
Other: Closed book – No notes or textbooks permitted
FOR OFFICE USE ONLY:
Questions Part A Part B: Part B: Part B: Part B: Part B: Part B: Part B: Part B: Total
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Out of /10 /4 /6 /6 /5 /6 /4 /4 /5 /50

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Final Exam Session 1, 2018

AFIN310_Issues in Applied Finance (20% of overall assessment)
Part A: True false questions

Circle 8T9 (True) or 8F9 (False) for each of the following questions to indicate your answer.
Each question worth 1 mark.
1. T F
The first rule of trading is maximise positive expectancy.
2. T F
The difference between gambling and speculation is a legal matter.
3. T F
Most chart indicators fall into two categories they are momentum and mean reversion.
4. T F
In relative value trading, a share may be traded against a stock in the sector and the market
index only.
5. T F
The Internal Rate of Return (IRR) is not a valuation method but EBITDA multiple or Price to
Earnings multiple is.
6. T F
The ratio of Liquid Monetary Assets (LMA) to Total Liabilities (TL) does not provide an
indication of whether the market valuation of a listed industrial company is relatively cheap
or expensive

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7. T F
The key primary step in assessing a valuation of a listed company in Australia is to forecast
future profitability based on broker research and carefully taking into account published
consensus forecasts from reliable investment banks.
8. T F
If you are missing dead stocks in your database this is referred to as <supervision bias=?
9. T F
The order of the factor backtests from most to least realistic is: Optimised backtest,
Fractiles, Information Coefficients
10. T F
Statistical Insignificance is a protection against data mining.

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Part B Short problem based questions

Question 1
Why is it useful to determine financial and performance ratios for company fundamental
analysis? (4 marks)
Question 2
EBITDA is commonly used in fundamental analysis. Provide 6 reasoning why is EBITDA a
useful measure of financial performance? (6 marks)

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Question 3
What is the economic function and purpose of the stock market in the economy? Provide six
key reasoning. (6 marks)

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Question 4
Name the 5 stages of the quant-data pipeline? (5 marks)
Question 5
List and describe three core data sets quants need to use to create their models? (6 marks)

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Question 6
What are the 3 main financial statements you would use to assess the value of a listed
company and which is the most important to that assessment? (4 marks)
Question 7
(a) If a company XYZ Limited has stated retained earnings of A$100m and has in total issued
150 million ordinary shares, has drawn down bank debt of A$200 million, carries goodwill of
A$87m, has no net cash and the market share price of XYZ is currently $1.40. Calculate the
enterprise value of XYZ. (2 marks)

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(b) If an investor has a short term investment horizon of 2-3 weeks then the most
appropriate investment strategy for generating alpha returns above benchmark could likely
be which of the following? Choose only one appropriate option and explain your reasoning.
(2 marks)
a. technical analysis
b. fundamental analysis
c. micro-economic industry analysis
d. geo-political risk analysis

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Question 8
The candlestick chart below relates to the question 8(a) and 8(b) below.
The chart is a weekly chart of a major currency pair. At the top of the chart are the letters A-
D for reference.
(a) What does each candle represent, and what information does it give? (3 marks)
(b) What does the solid line running from A to B denote? How would a trader use it? (2
marks)

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10

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AFIN310 2018 S1 - 2018 EXAM

Issues in Applied Finance (Macquarie University)

Scan to open on Studocu

Studocu is not sponsored or endorsed by any college or university

SEAT NUMBER: ……….… ROOM:..……………….

FORMAL EXAMINATION PERIOD: SESSION 1, JUNE 2018

Unit Code: AFIN310

Unit Name: ISSUES IN APPLIED FINANCE

Total No. of Questions: 18

Total No. of Pages 11

GENERAL INSTRUCTIONS TO STUDENTS:

1. This test comprises two parts:

AIDS AND MATERIALS PERMITTED/NOT PERMITTED:

FOR OFFICE USE ONLY:

Downloaded by Chen Nguy?n (khaihung1210@gmail.com)

Final Exam Session 1, 2018

Part A: True false questions

Downloaded by Chen Nguy?n (khaihung1210@gmail.com)

Statistical Insignificance is a protection against data mining.

Downloaded by Chen Nguy?n (khaihung1210@gmail.com)

Part B Short problem based questions

Downloaded by Chen Nguy?n (khaihung1210@gmail.com)

Downloaded by Chen Nguy?n (khaihung1210@gmail.com)

Name the 5 stages of the quant-data pipeline? (5 marks)

Downloaded by Chen Nguy?n (khaihung1210@gmail.com)

Downloaded by Chen Nguy?n (khaihung1210@gmail.com)

Downloaded by Chen Nguy?n (khaihung1210@gmail.com)

Downloaded by Chen Nguy?n (khaihung1210@gmail.com)

(IF NEEDED, USE THIS PAGE FOR YOUR CALCULATIONS)

Downloaded by Chen Nguy?n (khaihung1210@gmail.com)

(IF NEEDED, USE THIS PAGE FOR YOUR CALCULATIONS)

Downloaded by Chen Nguy?n (khaihung1210@gmail.com)

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