Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

IMC Unit 1 > Chapter 7 > Flashcards

Chapter 7 Flashcards

1
Q

what are the 2 different types of investor

A

individual
institutional

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what are the categories for an individual investor

A

high net worth
sophisticated
self certificated sophisticated

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

high net worth individual requirements

A

income over £100,000
investable assets of £250,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

sophisticated investor requirements

A

an individual who has been certified by their financial service provider as understanding the products they are involved in

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

examples of institutional investors

A

pension funds
insurance companies
CIS
investments trust companies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

what are the 6 outcomes of treating customers fairly

A
  • consumers are confident that they are dealing with firms where the fair treatment of customers is central to their culture
  • product/ services are marketed and sold are designed to meet the needs of customers correctly
  • consumers are provided with clear info and are kept appropriately informed
  • advice is suitable and takes into account client circumstances
  • consumers are provided with products that perform as firms have led them to expect and the service performs as expected
  • consumers do not face unreasonable post sale barriers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

how are firms supposed to assess the needs of a client

A

the fact find process

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

what is a letter authority

A

a letter from a client which authorizes 3rd parties to release information regarding the client to the advisor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

what does the IPS contain

A

it summarizes the clients investment needs and wants into clear objectives and details any investment constraints
it shows the rules that the investor needs to follow through the entire financial planning lifecycle

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

what should the sequence should the financial planning process involve

A
  • identify and quantify financial objectives
  • collect data to establish the clients current circumstances
  • analyse different options to meet shortcomings
  • prepare a report and arrange a meeting with the client
  • implement the plan
  • monitor and review regularly
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

what are the various risks to investors

A

capital risk
income risk
currency risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

what is capital risk

A

falls in the value of capital invested or less return than expected

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

which venue has no capital risk

A

bank accounts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

which venue has high capital risk

A

bonds have moderate
shares have large

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

what has large income risk

A

shares risk if dividends stop

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

for which person is inflation risk good for

A

borrowers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

who has large interest rate risk

A

bonds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

who has positive investment risk

A

savings account

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

how can legal ownership of securities be confirmed

A

through registered securities
bearer securities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

what is a registered securities

A

where the legal title is determined by the name of the register

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

what are the 2 types of joint ownership

A

joint tenancy
tenants in common

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

what is joint tenancy

A

where each owner has 100% interest
if one dies total ownership is transferred to the other party

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

what is tenants in common

A

each owner has specified % ownership
if one dies then the share is passed and distributed through the will

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

what is a void contract

A

when the contract in unenforcable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
how can a contract become void
- lack of intention to create a legally binding contract - unclear or ambiguous terms and conditions - no mutual consideration was included
26
how long does a contract remain in place
until they are discharged
27
what are the 4 ways in which a contract can be discharged
- by agreement : both parties mutually agree to terminate - by performance : when t/cs have been met - by frustration : when external events prevent the contract to be fulfilled - by breach : where one party does not fulfil their side of the agreement
28
what is a power of attorney
when the donor given a donnee certain powers to make decisions on their behalf
29
what do the powers of attorney include
- power to sign documents - power to make purchases - power to dispose of property - power to handle a financial transaction
30
what is the lasting power of attorney
given by a person who is in sounds mind who is worried about a time that they become incapbale
31
who is the power of attorney registered with
the office of the public guardian
32
who has the ultimate say on when the powers of attorney come into affect
the office of the public guardian
33
what is recievorship
receivers are appointed by the court to take control of the company to keep the company running it it then sold later on to pay the debts
34
what are the 2 ways in which bankruptcy can occur
- via debtors petitions : when a person voluntarily applies - via a creditors petition : when a creditor applies
35
who carries out the will
the executor
36
what happens when a person dies without leaving a valid will
the national intestacy rules come into effect
37
what are the national intestacy rules
where the assets are attempted to be distributed among family members from the nearest to the most distant
38
what is a trust
a legal settlement where a settlor who wishes to relinquish control of an asset place it into the trust and then the trust attempts to make profits for beneficiaries
39
who is the legal owner of the assets in a trust
the trustee
40
what are the trustees responsiblities
legal owner of the assets they oversee the trust make sure that the assets are made correctly in the way that the settlor wanted
41
what is the trust deed
the document used by the settlor to create the trust it spells out the assets, who is the trustee, who are the beneficiaries
42
what are the different kinds of trusts
discretionary trust interest in possession bare trust
43
what is a discretionary trust
where the trustee has absolute discretion to distribute the income to beneficiaries
44
what is an interest in possession trust
where there are 2 types of beneficiaries - life tenant who gets the income from the trust - remainderman who receives capital when the life interest ends
45
what is a bare trust
a bare trust obeys the instructions from the beneficiaries, the trustee is nominee only
46
what does the trustee act 2000 do
it is a piece of governmental law which enables the powers of trust
47
what does the trustee act 2000 force trustees to do
they should have a statutory duty of care in selecting investments they should act with due skill and care
48
what is country risk
being exposed to a countries civil unrest and government actions
49
what are the major factors influencing a clients attitude to risk
objectives timescale existing assets
50
is a fact find required by a government
no
51
the trustees act 2000 gives trustees what investment powers
general: trustee may invest in any ordinary security (bonds and equities) specific: allowing to invest in land in the UK
52
if an individual dies interstate who will the court appoint to distribute the estate
the administrator
53
what was there before the lasting power of attorney
the enduring power of attorney
54
what is the different between the LPA and the EAP
the LPA has a wider power they can make not only financial decisions (property and affairs LPA) but also personal welfare decisions (personal welfare LPA)
55
when was the LPA created
in 2007 under the mental health capacity act 2005
56
can charities buy shares
no, charity portfolios should not be considered as trading accounts
57
what can annual income be for a high net worth individual
salary, interest income
58
when is the Trustee act 2000 relevant
only relevant where the trust deeds make no specific reference to investment policy
59
who is the office of public guardian an agency of
the ministry of justice
60
would a drop or rise in interest rates benefits bonds
drop
61
would does a decrease in interest rates do for borrowers
increase the ability to borrow - so better for property - would increase share prices
62
can a legal person be a company
yes
63
what type of clients does the objective need to be determined for
retail elective professional
64
the investment provisions for the Trustee Act 2000 do not apply to which schemes
occupational pension, authorised unit trusts, certain scheme
65
does tax affect a clients attitude to risk
no
66
can a legal person be prosecuted
no

IMC Unit 1 (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions