1 Flashcards
Personal savings allowance for interest on cash within their tax brackets
Basic - £1k
Higher - £500
Additional - £0
FSCS limit with cash deposits
£85k
Restricted access cash account
Have to give notice in order to access cash or cash tied in for period of time
ISA annual limit and min. investment
£20k and £1
What % must the ISA guarantee is returned in order to be classed as a cash ISA not a stocks and shares ISA
95%
Limit allowed in premium bonds
£50k
Fixed interest savings certificate
Lump sum investment with a guaranteed return over a term. Minimum of £100 and max. of £15k or issue.
Index linked savings certificate
Lump sum investment with return linked to an index over a set term. Min of £100 and max. of £15k per issue.
Child bond
Can only be bought by a relative and this is a rolling 5yr contract that terminates on first 5th anniversary after 16th birthday.
Min investment of £25 and max. Of £3k per issue.
Penalty of 90daysbinterdt for early encashment
Direct saver NS&I consists of what 2 bonds and what is their min. and max. Investment?
Guaranteed growth bond and guranteed income bond. Min. investment £500 and max. £1mil per issue.
Treasury bill
Sold below face value and bought back at face value. Aimed at the short term and weekly auctions are held. Guaranteed return applies.
Who are treasury bills managed by?
Debt management office
Certificates of deposit
Fixed term and fixed return over very short term. No guarantees apply and can be sold on stock market
Commercial bills
Sold below face value and bought back at face value. Focused for very short term. Highest risk when compared to treasury bills and certificates of deposit.
What time frame are treasury bills, certificates of deposit and commercial bills aimed at?
TB - 12 months
CD - 1-3 months
CB - 1-3 months
Can treasury bills, certificates of deposit and commercial bills tradable on the stock market?
Yes
What is the difference between money market funds and short term money market funds?
Money market funds - weighted average maturity of no more than 6 months and weighted average life of no more than 12 months
Short term money market funds - weighted average maturity of no more than 2months and weighted average life of no more than 4 months
Weighted average maturity
Average time til maturity of security. Eg if has multiple with 2 and 4 month maturity date for different investments then average is 3 months
Weighted average life
Average time til the original investment repaid in full. So average time of every penny lent to be repaid.
Nominal value
Price at redemption (PAR value)
Stocks coupon
Rate of interest paid
Clean price of an asset
Price if no adjustments were made for any interest due from the bond
How often does interest accrue and when is it paid
Accrues daily and paid 6 monthly
Cum dividend and ex dividend for a bond
Cum - traded with dividend
Ex - traded without dividend
GILTS are issued by
Debt management office of HM treasury
What happens to bond prices and bond yields if interest rates rise?
Bond drives drop and bond yields increase
What happens to bond prices and bond yields if interest rates fall?
Bond prices rise and bond yields fall
Unsystematic risk
Risks that effect a particular stock
Market or systematic risk
Risks that effect the whole market
What level is a investment grade bond?
Anything higher than a BBB- or BBB3
Short medium and long term GILTS as classified by DMO and financial press?
DMO FP
S Less than 7yrs Less than 5yrs
M 7-15yrs 5-15yrs
L Over 15yrs Over 15yrs
Index linked GILTs were created to tackle what?
Inflation
Index linked GILT
Both interest payment and capital on maturity paid in line with inflation(RPI) from 3months prior
Indexation lag
Delay of 3months for calculating RPI paid to bond on an index linked GILT
Strips market for GILTS
Market to trade and sell interest payments and redemption payment separately
Is a corporate bond secured or unsecured?
Can be both
Debenture
Secured loan with trustees to represent the lender and a deed which sets the rules.
Fixed charge debenture
Floating charge debenture
Fixed - Charge over a specified asset so sale is restricted
Floating - General charge over a companies assets so sale not restricted
What has higher priority Floating charge debenture or fixed charge debenture?
Fixed
Convertable loan stock
Able to convert loan into stock
Floating rate notes and who are they issued by?
Often issued by banks
Pay interest linked to money markets
Permenant interest bearing shares (PIBS) and who are normally issued by?
Building society and returns are high but interest payments could be missed. Also not covered by FSCS
Perpetual subordinate bonds
Any demutualised building societies PIBS turn into these
Preference shares
Paid a fixed amount of dividends each year that isn’t related to performance of company but have no voting rights
Convertable - change to ordinary shares at pre-set date and pre-set date if they wish
Cumulative - any missed dividend must be made up in following payment
Redeemable - can be purchased back by company
Alphabet shares
Ordinary shares with different rules
What ranks first out of preference and ordinary shares should the company go into liquidation?
Preference
How often are preference shares paid and what if payments fall short of fixed agreement?
Every 6 months and they are made up in the following payment
Private equity firms
Take out shares in a private company that isn’t listed in the stock exchange
Dow Jones
Standard and poor composite
NASDAQ
NIKKEI 225
TOPIX
DAX 30
Hang seng
CAC 40
FTSE/JSE
S&P all ordinary shares
USA
JAPAN
GERMANY
HONG KONG
FRANCE
SOUTH AFRICA
AUSTRALIA
Rent a room relief 6 sets of criteria
- must be in the UK
- must be owners main residence
- one exempt amount per residence
- must not be self contained
- must be furnished
- owner must be resident
Panel of takeover and mergers charge a flat fee of £X? And this applies to purchases above £X?
£1 above £10k
SDLT FTB allowance?
£300k
6 Tax free NS&I products
Junior ISA
Premium bonds
Fixed interest savings certificates
Index linked savings certificates
Children’s bonds
Direct ISA
What is the penalty levy for early withdrawal on a children’s bond?
90days of interest
