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Chpt 1 - CISI > Cash & Cash Equivalents > Flashcards

Cash & Cash Equivalents Flashcards

1
Q

What is Inverse Cash Rate?

A

Earning Money for having Cash tied Up longer.

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2
Q

Difference between Gross and Net?

A

Gross = Before deductions
Net = After Deductions

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3
Q

What are the Tax Rates for:
Basic, Higher, Additional

A

Basic = 20%
Higher = 40%
Additional = 45%

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4
Q

Personal Savings Allowance for Interest:
Basic, Higher, Additional

A

Basic = £1,000
Higher = £500
Additional = £0

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5
Q

What is the role of the Prudential Regulation Authority?

A

A subsidiary of BoE & is responsible for the supervision of banks

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6
Q

What is the role of the FCA?

A

It is responsible for ensuring the markets function properly & protect consumer interest

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7
Q

What is the maximum payout for the Financial Services Compensation Scheme?

A

£85,000

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8
Q

What is the Financial Ombudsman Service & max award?

A

If a deposit taker gives a poor service and £375,000

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9
Q

What is a Money Market Account?

A

It is a premium account or high-interest savings account
A financial institution invests into low risk, short-term investments

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10
Q

Define Constant Net Asset Value

A

Shares issues with unchanging face value.

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11
Q

Define Accumulating Net Asset Value

A

Income that is reflected by an increase in the value of the funds units/shares

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12
Q

Define Front ended loads and Back Ended Loads

A

Front ended - Cost added at the beginning
Back ended - cost added at end of investment period

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13
Q

Define Peer to Peer lending

A

Lending without using a financial intermediary

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14
Q

Define Fixed Income Securities

A

Type of bond refers to a loan which represents a promise to repay a loan with a certain amount of interest

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15
Q

Define Eurobonds

A

Denominated in a currency other than the home currency of the country or market in which the bond is issued

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16
Q

Define Nominal Value

A

Bonds are issued at Face Value

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17
Q

Define Coupon

A

Amount of interest that an investor will earn each year on the nominal value

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18
Q

What are Floating Rate Notes?

A

These coupons are tied to a short-term market rate of interest

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19
Q

Define Zero Coupon Bonds

A

Bonds that are issued at a discounted rate to their face value and redeemed at par on pre-specified date

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20
Q

What are Convertible Gilts?

A

Owners are able to convert the gilt into pre-defined amount of a different gilt in the future

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21
Q

What is a gilt

A

Government Bond

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22
Q

Conversion Price Formula

A

Current Market Price per £100 nominal / Number of shares that can be acquired for that nominal

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23
Q

What is Sukuk?

A

Bond like an instrument of equal value representing a common share of an underlying asset

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24
Q

Define Running Yield

A

It is an expression of income received as a % of an investor’s outlay

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25
Running Yield formula
Gross Coupon / Market Price
26
Holding Period Return Formula
(Price Received @ Maturity -Price Purchased) / Price purchased
27
What does an inverse yield relationship mean
As price of interest rates rise the price of a bond will fall
28
What are Equities?
Shares
29
What are Dual Class Shares
Various types of shares issued by a company
30
Define Mezzanine Capital
Subordinated debt or preferred equity securities often represent the most junior portion of company's capital structure
31
What are bonus Issues
No. of shares in issue will increase but no new capital raised, reducing share price
32
What are Rights Issues?
A method used to raise capital by asking shareholders to subscribe for a new tranche of shares
33
What is the order in which investors are paid
Secured Bondholders Unsecured Bondholder Preference shareholders Ordinary Shareholders
34
Gross Dividend Yield Formula
Gross Dividend Paid in Yr / Current Market Price of Share
35
Earnings Per Share Formula
Profit Attributable to Ordinary Shares / No. of ordinary Shares in issue
36
Earning Yield (%) Formula
Earnings Per Share (gross) / Market Price of Share
37
Price/Earnings Ratio Formula
Current Market Price of Share / EPS
38
High P/E Ratio Means...
Low perception of risk or expectation of good profit growth
39
Define the price to cash formula
assesses market expectations or prospects about company's financial health
40
Price to Cash flow Formula
Share Price / Operating Cash Flow Per share
41
Return on Equity % formula
Profit after tax & preference dividends / capital & Reserves
42
Return on Capital Employed % Formula
Profits before interest & tax / capital employed
43
Define Direct & Indirect Investing
Direct - Investing in Shares Indirect - Investing through Funds
44
Features of residential Property
Typically short renewable leases Repairs are responsible by landlord
45
Features of Commercial Property
Tenancies are long term in excess of 10 years Repairs responsible by tenant
46
SLDT Rate for threshold - up to £125,000
0%
47
SLDT Rate for threshold - £125,000 - £250,000
2%
48
SLDT Rate for threshold - £250,000 - £500,000
5%
49
SLDT Rate for threshold - £925,000 - £1.5m
10%
50
SLDT Rate for threshold - £1.5m +
12%
51
First time buyers SLDT for: - Up to 300k - 300k - 500k - 500k +
- 0% - 5% - Normal rates
52
Define Open Ended Investment Companies (OEICs)
Allow you to pool your money with other investors, so you can access assets which would be difficult to invest in on your own
53
What is the annual equivalent rate
Used to show what you would earn in a savings account over the course of a year
54
What is the clean and dirty price
Clean price = quotes price and excluded the accrued interest that is due to the seller Dirty Price = total price payable by the buyer and is clean price plus accrued interest
55
What are floating rate gilts
They pay variable coupons and pay four times a year instead of semi annually
56
What are supranational bonds
Entities formed by multiple countries to promote economic development of the members.
57
What is secured and unsecured debt
Secured debt involves identification of issuers assets incase of a default on issue Unsecured debt leaves the investor with no certainty of payment of interest or repayment of capital
58
What are differed dividend shares
Dividends are payed to these shareholders after certain conditions are met and usually trade at a lower price
59
What is a cumulative preference shareholder
If the company cannot pay dividends during the year the unpaid dividends is accumulated and payed out when it can
60
What are non-cumulative shareholders
Any unpaid dividends is not accumulated and they must wait until the next collection to receive anything

Chpt 1 - CISI (7 decks)

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