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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
Q

Running Yield formula

A

Gross Coupon / Market Price

26
Q

Holding Period Return Formula

A

(Price Received @ Maturity -Price Purchased) / Price purchased

27
Q

What does an inverse yield relationship mean

A

As price of interest rates rise the price of a bond will fall

28
Q

What are Equities?

A

Shares

29
Q

What are Dual Class Shares

A

Various types of shares issued by a company

30
Q

Define Mezzanine Capital

A

Subordinated debt or preferred equity securities often represent the most junior portion of company’s capital structure

31
Q

What are bonus Issues

A

No. of shares in issue will increase but no new capital raised, reducing share price

32
Q

What are Rights Issues?

A

A method used to raise capital by asking shareholders to subscribe for a new tranche of shares

33
Q

What is the order in which investors are paid

A

Secured Bondholders
Unsecured Bondholder
Preference shareholders
Ordinary Shareholders

34
Q

Gross Dividend Yield Formula

A

Gross Dividend Paid in Yr / Current Market Price of Share

35
Q

Earnings Per Share Formula

A

Profit Attributable to Ordinary Shares / No. of ordinary Shares in issue

36
Q

Earning Yield (%) Formula

A

Earnings Per Share (gross) / Market Price of Share

37
Q

Price/Earnings Ratio Formula

A

Current Market Price of Share / EPS

38
Q

High P/E Ratio Means…

A

Low perception of risk or expectation of good profit growth

39
Q

Define the price to cash formula

A

assesses market expectations or prospects about company’s financial health

40
Q

Price to Cash flow Formula

A

Share Price / Operating Cash Flow Per share

41
Q

Return on Equity % formula

A

Profit after tax & preference dividends / capital & Reserves

42
Q

Return on Capital Employed % Formula

A

Profits before interest & tax / capital employed

43
Q

Define Direct & Indirect Investing

A

Direct - Investing in Shares
Indirect - Investing through Funds

44
Q

Features of residential Property

A

Typically short renewable leases
Repairs are responsible by landlord

45
Q

Features of Commercial Property

A

Tenancies are long term in excess of 10 years
Repairs responsible by tenant

46
Q

SLDT Rate for threshold - up to £125,000

A

0%

47
Q

SLDT Rate for threshold - £125,000 - £250,000

A

2%

48
Q

SLDT Rate for threshold - £250,000 - £500,000

A

5%

49
Q

SLDT Rate for threshold - £925,000 - £1.5m

A

10%

50
Q

SLDT Rate for threshold - £1.5m +

A

12%

51
Q

First time buyers SLDT for:
- Up to 300k
- 300k - 500k
- 500k +

A
  • 0%
  • 5%
  • Normal rates
52
Q

Define Open Ended Investment Companies (OEICs)

A

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
Q

What is the annual equivalent rate

A

Used to show what you would earn in a savings account over the course of a year

54
Q

What is the clean and dirty price

A

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
Q

What are floating rate gilts

A

They pay variable coupons and pay four times a year instead of semi annually

56
Q

What are supranational bonds

A

Entities formed by multiple countries to promote economic development of the members.

57
Q

What is secured and unsecured debt

A

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
Q

What are differed dividend shares

A

Dividends are payed to these shareholders after certain conditions are met and usually trade at a lower price

59
Q

What is a cumulative preference shareholder

A

If the company cannot pay dividends during the year the unpaid dividends is accumulated and payed out when it can

60
Q

What are non-cumulative shareholders

A

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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