Question about multiple choice in Cathloic 2003 (1 Viewer)

[chris42]

Hey everyone,

I was wondering if you could help me in trying to work out why I got 3 of these multiple choice questions (Which I'm sure I'm right!!) wrong.

It was the catholic paper 2003

Question 6, the answer was sell index derivative what does this mean ??

Question 16, isn't the Current ratio the best indicator of efficency?

Question 18... I wasn't even sure what it was saying,

If anyone could help out it would be most appeciated

 

[AGB]

Q.6 - a derivative is a security that DERIVES its value from another security. They are usually used to reduce risk when dealings involve fluctuations in prices/values etc. Therefore, for the company to reduce its risk, it would have to sell index derivatives

Q.16 - the current ratio is the best measure of liquidity. The best measure for efficiency there is the accounts receivable turnover ratio. It is straight out of the syllabus

Q. 18 - gearing is debt:equity. Therefore, you had to find the value of owner's equity. So, using the equation A = L + OE, where A = 600 and L = 200, OE must be 400. Therefore substituting L (debt) and OE (equity) into the formula, you get 200:400, which equals 1:2.

Then you have to compare this to the industry average, and obviously, it is lower

 

[chris42]

Wouldn't buying foreign shares also reduce risk because they are protecting themselves against flucating economic cycles?

 

[connie]

its not about whether its the right answer its about whether it is the MOST CORRECT answer

 

[Xu]

The asx also deals with foreign markets, via the asx world link. besides, in investing in foreign markets, wouldnt that be inducing another degree of risk?