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Other Direct Investments Quiz

Comprehensive quiz covering direct investment vehicles including equities, preference shares, stock markets, and corporate actions.

Topics Covered: Ordinary shares, preference shares, London Stock Exchange, AIM market, shareholder rights, dividend calculations, rights issues, scrip issues, and investment ratios.

This quiz is specifically designed for investment professionals, financial advisers, and individuals preparing for financial services and investment examinations.

Direct investments quiz, equities, shares, stock market, LSE, AIM, dividend cover, rights issue, financial investments

Other Direct Investments Quiz

1. What are the two main rights of ordinary shareholders?

A. To receive dividends and vote at shareholders' meetings.
B. To receive fixed interest payments and sell shares at any time.
C. To manage the company's operations and receive bonuses.
D. To receive tax-free income and fund business growth.

2. What is the primary purpose of the London Stock Exchange?

A. To provide buy and sell shares in private companies.
B. To facilitate the trading of shares, gilts, and corporate bonds.
C. To offer tax-free investment opportunities.
D. To manage offshore investments for UK residents.

3. What is the main difference between the main market and Alternative Investment Market (AIM)?

A. The main market is for large companies, while AIM is for smaller, growth-oriented companies.
B. The main market is for all companies, while AIM is for tech companies.
C. The main market is for international companies, while AIM is for UK-based companies.
D. The main market is for high-risk investments, while AIM is for low-risk investments.

4. What is the primary measure used to assess a company's profitability per share?

A. Dividend cover.
B. Price/earnings ratio.
C. Market capitalisation.
D. Earnings per share.

5. What is the purpose of a rights issue?

A. Ownership rights to share in dispute.
B. To issue new shares to the public without offering them to existing shareholders.
C. To convert preference shares into ordinary shares.
D. To offer existing shareholders the opportunity to buy additional shares at a discount.

6. What is the main characteristic of preference shares?

A. They offer voting rights to shareholders.
B. They pay dividends at a fixed rate and have priority over ordinary shares.
C. They are convertible into corporate bonds.
D. They are only available to institutional investors.

7. What is the primary purpose of a scrip issue?

A. To raise additional capital for the company.
B. To issue new shares to existing shareholders free of charge.
C. To convert ordinary shares into preference shares.
D. To pay dividends to shareholders.

8. What is the main risk for shareholders in a limited liability company?

A. They are liable for the company's debts.
B. Investment is always reliant on a fund manager.
C. They are required to pay taxes on the company's profits.
D. They may lose their investment if the company fails.

9. What is the primary purpose of the dividend cover ratio?

A. To measure the growth potential of a company.
B. To assess how much of a company's profits are paid out as dividends.
C. To calculate the price/earnings ratio of a company.
D. To determine the market capitalisation of a company.

10. What is the main advantage of convertible preference shares?

A. They offer fixed interest payments.
B. They can be converted into ordinary shares at a later date.
C. They provide voting rights to shareholders.
D. They are exempt from capital gains tax.

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