Chapter 1 - Self Assesment Flashcards
Which of the following is a deposit- accepting institution?
(a) A mutual fund.
(b) A commercial bank.
(c) An investment trust.
(d) A pension fund.
(b) Only banks accept deposits to fund their assets. All the other institutions are investment
institutions.
How is the process for trading ordinary FTSE 100 shares best described?
(a) Quote -driven.
(b) Order-driven.
(c) Open outcry.
(d) Price-driven
(b) FTSE 100 shares are traded on the Stock Exchange Trading Service (SETS}, which is an electronic order matching system. Trading is order-driven.
UK gilts usually pay:
(a) Gross coupons annually.
(b) Net coupons annually .
(c) Net coupons semi-annually.
(d) Gross coupons semi-annually .
(d) UK gilts pay interest semi-annually and pay interest gross on new holdings unless the holder indicates otherwise.
SETSqx is a London Stock Exchange trading system for trading:
(a) International securities.
(b) Retail bonds.
(c) Less liquid equity securities .
(d) Equity derivative securities.
(c) SETSq x is a trading system for less liquid equity securities.
The issuance of gilts is managed by which of the following bodies?
(a) The Gilt- Edged Market Makers Association (GEMMA).
(b) The Central Gilts Office (CGO).
(c) CREST.
(d) The Debt Management Office (DMO).
(d) The OMO is the body responsible for gilt issuance and general management of the UK Government issued debt.
The standard settlement time for gilts is:
(a) Same day.
(b) T+1.
(c) T+2.
(d) T+3.
(b) The standard settlement time for gilts through CREST is T+1 (i.e. one working day after transaction).
What term best describes the settlement procedure for CREST?
(a) Physical settlement.
(b) Certified settlement.
(c) Paperless settlement.
(d) Materialised settlement.
(c) Settlement through CREST is electronic and hence paperless.
Which organisation is responsible for setting rules for trading in the Eurobond market?
(a) International Capital Markets Association (ICMA).
(b) Euroclear.
(c) The Financial Conduct Authority (FCA).
(d) The Securities and Exchange Commission (SEC).
(a) Eurobonds are normally traded over the counter and the rules for trading are set by the ICMA.
Somebody who wants to appoint another person to vote as they think fit on their behalf at a company meeting would appoint:
(a) Two- way proxy.
(b) General proxy.
(c) Agent proxy.
(d) Special proxy.
(b) There are two main types of proxy - a general proxy and a special proxy. A general proxy is able to vote as they see fit at the general meeting, whereas a special proxy has to vote in a way specified before the meeting takes place.
The Financial Reporting Council (FRC) principles aim to make institutional investors actively engage in corporate governance in the interests of their beneficiaries. These are known as:
(a) The UK Corporate Governance Code.
(b) The Agency Code.
(c) The Takeover Code.
(d) The UK Stewardship Code.
(d) The UK Stewardship Code aims to make shareholders, who manage other people’s money (institutional shareholders}, active and engage in governance in the interests of their beneficiaries.
An investor would be required to notify the company if their stake goes from:
(a) 3.1% to 4.2% of comp any shares.
(b) 3.1% to 3.9% of comp any shares.
(c) 1.9% to 2.7% of company shares.
(d) 10.9% to 10.1% of company shares.
(a) Shareholders who already have a stake in the company above 3% are required to notify the company when their stake increases by more than 1%.
A company wishing to list shares on the main market must ensure these securities have a minimum market capitalisation of at least:
(a) £200,000.
(b) £700,000.
(c) £90 0,000.
(d) £1,000,000.
(b) For both a premium and standard listing on the main market the minimum value of the shares listed must be £700,000.
