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Intro to Securities and Investment > Chapter One - Introduction > Flashcards

Chapter One - Introduction Flashcards

1
Q

How much did the financial services contribute to Uk economy last year?

A

173.6 billion

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2
Q

Financial services employed how many people in 2022

A

1.1million

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3
Q

Between 2018 and 2021, the value of UK exports of financial services to EU fell by…

A

19%

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4
Q

Between 2018 and 2021, the value of UK exports of financial services to non EU grew by…

A

4%

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5
Q

GFCI is

A

Global Financial Centres Index

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6
Q

What is Global Financial Centres Index?

A

Produced by China Development Institute

Evaluates rankings and future competitiveness of major financial centres based on:

1) business environment
2) human capital
3) infrastructure
4) financial sector development
5) reputation

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7
Q

Name 2 other words for “professional” sector

A

Wholesale and Institutional

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8
Q

Financial activities that make up professional sector (8)

A

equity markets
bond markets
foreign exchange
derivatives
insurance
fund management
investment banking
custodian banking

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9
Q

Financial activities that make up retail sector (5)

A

Retail banking
insurance
pensions
investment services
financial planning/advice

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10
Q

Equity markets

A

name given to stock markets where the shares of companies are traded

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11
Q

Market Capitalisation

A

Total value of shares quoted on world stock exchange

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12
Q

The worlds third largest exchange is

A

The Shanghai Stock exchange

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13
Q

Rivals to traditional stock exchanges are called

A

Multilateral Trading Facilities

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14
Q

Multilateral Trading Facilities

A

systems that bring together multiple parties interested in buying/selling

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15
Q

Bond Markets

A

These allow governments and companies to raise loans or debt finance directly from investors and then facilitate the subsequent secondary trading of debt securities

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16
Q

What’s larger in size, bond or equity markets

A

Bond

Both in size and value
But lower volume of trades

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17
Q

Who has largest bond market

A

US - by a long way

Trading in international bonds is done mostly in Europe though

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18
Q

What market is largest

A

FX Markets

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19
Q

the rate at which currency is exchanged is due to

A

supply and demand eg if there’s strong demand from japan for US assets, the dollar will rise in value

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20
Q

FX is what type of market

A

Over the counter (OTC)

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21
Q

What does OTC market mean

A

one where brokers negotiate directly

22
Q

5 main FX locations

A

1) UK
2) other
3) US
4) singapore
5) hong kong
6 japan

23
Q

Derivatives markets

A

trade a range of complex products based on underlying instruments: currency, indices, interest rates, equities, commodities and credit risk

Futures and options two of the most well know

24
Q

largest derivatives market

A

Chicago Mercantile Exchange

25
the growth in derivatives market…
came about an a reaction to the 2000-02 stock market crash as trades sought to hedge their position against interest rate risk
26
What do insurance markets specialise in?
management of risk
27
what is Lloyds of London?
Market place that brings together a range of insurers, each of whom accepts insurance risks as a member of one or more underwriting syndicates Lloyds names join together in syndicates Each syndicate hopes premiums received will exceed claims out and increase profits
28
what is reinsurance
insurers protecting themselves using reinsurance firms. can cover an entire portfolio or a single risk
29
what’s another name for saving institutions
building societies
30
What are building societies?
jointly owned by the individuals who have deposited money or borrowed money ‘the members’
31
What’s demutualisation?
legislation was introduced allowing building societies to become companies
32
example of building societies
Nationwide building society National Savings and Investment
33
what is NS&I
largest savings organisations operated by the govt in return the govt pays interest or prizes for premium bonds and offers 100% security
34
peer to peer lending
cuts out banks so borrowers get better rates in exchange for accepting greater risk, savers can earn higher returns rates vary dependant on type of borrower
35
Crowdfunding
funding a project or venture by raising small amounts of money from lots of people
36
types of crowdfunding (3)
donation debt crowdfunding = investors receive money back with interest equity crowdfunding = people invest in exchange for equity
37
What do investment banks offer (5)
Corporate finance and advisory work Banking Treasury dealing Investment management Security trading
38
Insurance companies…
collect premiums in exchange for cover provided This is used to buy investments such as shares and bonds and as a result the insurance industry is a major player in stock market they realise investments to pay any claims
39
Fund managers…
professional management of investment portfolios
40
stockbrokers…
traditionally they arranged trades on behalf of their clients which include institutions, fund managers and clients. Today they make money by using their skill to execute large trades
41
wealth managers…
charge a fee for advice
42
Custodian banks specialise in…
holding assets for safekeeping arranging settlement processing corp actions AGM info Managing cash transactions FX reporting
43
Platforms are online services used by intermediaries. Platform refers to wraps and fund supermarkets. what are these?
Wraps offer more access to ISA, pensions and insurance. Able to take more holistic view of assets client has Fund supermarkets offer lots of services - unit trusts and OEICS
44
Financial planning
Main objective is to help organise financial affairs
45
Financial advisers
Offer advice Fact find clients and suggest appropriate action Independent advice - unbiased advice Restricted advice - only give advice on a range, need to be made clear to FCA
46
Execution Only
Firms need to be clear they gave no advice. Not responsible for suitability
47
Robo advice
Uses tech to provide advice Prospect enters data and then algorithms decide investments
48
Fintech
Can be used in many ways eg online banking, data collection, faster client onboarding 2019 dept for trade and treasury published document highlighting UK as forerunner. Uk govt setting global standards FCA looking at fintech for regulation. Initially done using robo advice, now uses sandbox (gives them a chance to test fintech)
49
What does ESG stand for
Environmental Social Governance
50
What organisation determines ESG rating
MSCI
51
Trade and professional bodies examples
Bonds - international capital market association Derivatives - FIA europe, international swaps and derivatives association Fund managers - investment association Insurance - association of British insurers Wealth management - PIMFA Banks - many examples eg asset based finance association and British bankers association Investment funds - the tax incentivised savings association

Intro to Securities and Investment (8 decks)

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