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Investment And Portfolio Management > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

It provides the link between organizations needing capital and those with capital available for investmenr

A

Financial service sector

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2
Q

Plays a critical role in all advanced economies, and that the services it provides can be broken down into three core functions

A

Financial service sector

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3
Q

Three core functions

A

Investment chain
Risk
Payment systems

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4
Q

Through this, savers and borrowers are brought together

A

Investment chain

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5
Q

Provide financing to businesses and businesses wish to grow offer opportunities for savers tp take part in the growth and resulting potential returns

A

Savers

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6
Q

The financial services sector allows other risks to be managed effectively and efficiently through the use of insurance and increasingly through the use of sophisticated derivatives

A

Risk

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7
Q

These tools help businesses cope with global uncertainties as diverse as the changing value of currencies, the incidence of major accidents or extreme weather conditions

A

Risk

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8
Q

Payment and banking services operated by the financial services sector provide the practical mechanisms for money to be managed, transmitted and received quickly and reliably

A

Payment systems

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9
Q

It is an essential requirement for commercial activities to take place and for participation in international trade and investment

A

Payment systems

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10
Q

What are the 5 financial markets

A

Equity markets
Bond markets
Foreign exchange markets
Derivatives markets
Insurance markets

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11
Q

Are the best known of the financial markets and facilitate the trading of shares in quoted companies

A

Equity markets

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12
Q

Is the largest stock exchange in the world

A

New york stock exchange(NYSE)

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13
Q

Is the value of shares listed on an individual exchange

A

Domestic market capitalization

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14
Q

Was ranked as the 2nd largest

A

NASDAQ

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15
Q

is the worlds third largest market

A

Japan exchange group

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16
Q

Are systems that bring together multiple parties that are interested in buying and selling financial instruments

A

Multilateral trading facilities (MTFs)

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17
Q

Financial instruments including

A

Shares
Bonds
Derivatives

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18
Q

These systems are also known as crossing networks or matching engines that are operated by an investment firm or anothe market operator

A

MTF

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19
Q

Are the largest of all financial markets, with average daily turnover in excess of 5 trillion US Dollar

A

Foreign Exchange Markets

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20
Q

Meaning one where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house

A

Forex as OTC Market

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21
Q

Is concentrated in a small number of financial centres

A

Forex trading

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22
Q

Releases figures on the composition of the Forex market every three years

A

Bank for International Settlements (BIS)

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23
Q

Main locations for forex trading

A

UK
US
Japan
Hongkong
Singapore
Others

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24
Q

Trade a range of complex products based on underlying instruments, including currencies, indices, interest rates, equities, commodities, and credit risk

A

Derivative markets

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25
Q

Underlying instruments

A

Currencies
Indices
Interest rates
Equities
Commodities
Credit risk

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26
Q

Derivatives based on these underlying elements are available on both

A

Exchange traded market
OTC market

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27
Q

Is where trading takes place directly between parties rather than on an exchange and tha trading of derivatives is increasingly moving from OTC to trading on exchange

A

OTC market

28
Q

The largest of the exchange traded derivatives markets

A

Chicago Mercantile Exchange

29
Q

Dominates trading in the OTC derivatives markets worldwide

A

Europe

30
Q

The next largest segment and which are used to speculate on currency movements and to hedge tge risks of currency positions

A

Forex derivatives

31
Q

Specialize in the management of personal risk, corporate risk and peotection of life events

A

Insurance markets

32
Q

What are the 13 participants

A

Investment banks
Custodian banks
Retail or commercial banks
Savings institution
Peer-to-peer and crowd funding
Insurance companies
Retirement schemes
Fund managers
Stockbrokers and wealth managers
Private banks
Sovereign wealth funds
Trade bodies
Third party administrators

33
Q

Provide advice and arrange finance for companies that want to float on the stock market, raise additional finance by issuing further shares or bonds

A

Investment banks

34
Q

They also provide services for institutional firms that might want to invest in shares and bonds in particular pension funds and asset managers

A

Investment banks

35
Q

A number of banks have diversified their range of activities by developing businesses such as

A

Proprietary trading
Servicing hedge funds
Making private equity instruments

36
Q

Are banks that specialize in safe custody services, looking after portfolios of shares and bonds on behalf of others,

A

Custodians

37
Q

Collecting income from assets, namely dividends in the case of equities and interest in the case of bonds, and processing corporate actions

A

Asset servicing

38
Q

Provide services such as taking deposits from, and lending funds to retail customers, as well as providing payment and money transmission services

A

Retail or commercial banks

39
Q

They may also provide similar services to business customers

A

Retail or commercial banks

40
Q

Most countries also have this that started off by specializing in offering savings products to retail customers

A

Savings institutions

41
Q

Savings institutions are known by different names around the world
Spanish
North america
Australia and UK

A

Cajas
Credit unions
Building societies

42
Q

They are typically jointly owned by the individuals that have deposited or borrowed money from them

A

Savings institutions

43
Q

Cuts out the banks so that the borrowers often receive slightly lower rates,

A

P2P lending

44
Q

Provides solutions for much more than the standard areas, such as life cover and general insurance cover

A

Insurance industry

45
Q

Is a key area of financial advice, and the insurance industry provides a variety of products to meet many potential scenarios

A

Protection planning

46
Q

Collect premiums in exchange for the coverage provided

A

Insurance companies

47
Q

Will also hold a large amount of cash to be able to satisfy any claims that may arise on the various policies, if required, will liquidate investment holdinga

A

Insurance companies

48
Q

Are one of the key methods by which individuals can make provision for their retirement needs

A

Retirement schemes or pension schemes

49
Q

Are large, long term investors in shares, bonds and cash

A

Retirement schemes

50
Q

Fund managers are also known as

A

Investment managers
Portfolio managers
Asset managers

51
Q

They run portfolios of investment for others

A

Fund managers

52
Q

They invest money held by institutions, such as pension funds and insurance companies as well as wealthier individuals

A

Fund managers

53
Q

Also known as asset managemenr

A

Fund management

54
Q

Will buy and sell shares, bonds and other assets in order to increase the value of their clients portfolioa

A

Investment managers

55
Q

Arrange stock market trades on behalf of their clients

A

Stockbrokers

56
Q

They may advice investors about which shares, funds or bonds they should buy or they may offer execution only services, when the broker executes a trade on a clients instruction without providing advice

A

Stockbrokers

57
Q

Four main categories of stockbrokers

A

Execution only stockbrokers
Robo advisers
Advisory and discretionary wealth managers
Institutional brokers

58
Q

These offer telephone or internet based trade execution and settlement for retail clients

A

Execution only stockbrokers

59
Q

A recent innovation, is an online wealth management service that provides automated, algorithm based portfolio management advice without the use of human financial planners

A

Robo advisers

60
Q

These offer a wealth management service to private investors either advice only or a fully managed advice

A

Advisory and discretionary wealth managers

61
Q

Who arrange trades on behalf of large institutions

A

Institutional brokers

62
Q

Provide a wide range of services for their clients, including wealth management, estate planning, tax planning, insurance, lending and lines of credit

A

Private banks

63
Q

Their services are normally targeted at clients with a certain minimum sum of investable cash or minimum net worth

A

Private banks

64
Q

Private banking is offered both by domestic banks and by those operating offahore

A

Private banking

65
Q

Is a state owned investment fund that holds financial assets such as equities, bonds, real estate, or other financial instruments

A

Soverign wealth fund (SWF)

66
Q

Undertake investment administration on behalf of other firms, and specialize in this area of the investment industry

A

Third party administrators

Investment And Portfolio Management (6 decks)

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