Brainscape's Knowledge GenomeTM

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


See full index

RO2 Investment Principles And Risk > Equities > Flashcards

Equities Flashcards

1
Q

What does the secondary market do for shares?

A

Allows sale of equities for liquidity but does not raise capital for companies

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

What are the markets for uk stocks?

A

London Stock Exchange (LSE)
Alternative Ivestment Market (AIM) for those that don’t qualify for the LSE

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

How are shares categorised

A

Size
Correlation with the economy
Finacial characteristics

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

What does UKLA do?

A

They are a special part of the FCA that decides which companies can be listed and go on the main market.

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

Who regualtes the AIM

A

The LSE

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

What is AIM for

A

Allow access to primary and secondary markets for smaller newer firms.

Less barriers to entry
Costs are lower.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are ordinary shares?

A

Bulk share of a company
Rank behind other shares in receiving dividends

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

What is the dividend allowance?

A

There is no tax on the first £1000 of dividend

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

What does a basic tax rate payer pay on dividends?

A

8.75%

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

How much do higher rate taxpayers pay on dividends?

A

33.75%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

How much do additional rate tax payers pay on dividends?

A

39.35%

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

What are preferences stocks?

A

Pay a fixed rate of return, but only when the company has sufficient profits

Ranks ahead of ordinary bonds for paying dividends and company going bust.

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

What are the different types of preference shares?

A

Cumulative - pays missed divs later.
Non-cumulative - div lost
Participating - fixed dividend and can have bonus
Redeemable - firm buys back at preset date or when they choose.
Convertible - to ordinary shares

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

What costs come with buying and selling shares?

A

Commision to dealer
Stamp duty or SDRT
POTAM levy

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

Describe stamp duty

A

Paper transactions
0.5%
Nearest £5
£1000 threshold

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

Describe SDRT

A

Electronic transactions
0.5
Nearest penny
No threshold

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

What is stamp and SDRT not spent on?

A

AIM
OEICs
Unit in trusts

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

What is the POTAM levy

A

£1 on transactions over £10000 paid to the panel of takeovers and mergers.

Responsible for looking into competitive impacts of mergers and takeovers

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

What are the risks of equities?

A

Share dividend volatility
Equity capital risk
Counterparty failure (FSCS may pay)
Currency risk
Liquidity risk
Regualtory risk

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

What is earning per share for?

A

Seeing trends in profitability.
Comparison

Profits are distributed after tax, so remember to remove them if given.

21
Q

What is P/E ratio used for?

A

How high investors value earnings of company?

High = more demand and higher willingness to pay price

or overvalued

22
Q

What is the dividend per share used for?

A

Comparison of return between shares, bonds cash deposits.

23
Q

Dividend yield

A

Shows the return investors are receiving in the way of annual income.

Does not necessarily mean sustainable

24
Q

What is the dividend cover used for?

A

Shows how many times the dividend could have been paid from the periods profits.

Less than 1 would suggest utilising reserves

25
Q

What is NAV for?

A

Shows the value of a company for accounting purposes

Reflects the true value of a company from their balance sheet rather than by Market sentiment.

26
Q

What is the FTSE All-share

A

625 companies on the stock exchange reviewed each December

27
Q

What is the FTSE 100

A

Top 100 firms in the UK by Market cap.

Revised quaterly

90% of UK market capitisation

28
Q

What is the FTSE 250

A

Next 250 after FTSE 100 by Market cap.

Reviewed quarterly
8-10% of market capitalisation

29
Q

What is the FSTE 350

A

FTSE 100 and 250 combined
98% of market capitalisation

30
Q

What is the FTSE small cap

A

Last 2% of the FTSE all share

31
Q

What is the FTSE fledgling

A

Smallest on FTSE. Too small for market cap

32
Q

What is the FTSE all small

A

Combination of FTSE small cap and fledgling

33
Q

What is the FTSE AIM 100

A

Largest 100 companies on the AIM

34
Q

What is the FTSE AIM 50

A

Largest 50 companies on the AIM

35
Q

What is the FTSE AIM all-share index

A

All AIM companies meeting the eligibility criteria.

Most commonly used in the UK when comparing price and yield movements

36
Q

What is the dow Jones industrial average?

A

Main 30 blue chip companies in the US

37
Q

What is the DOW Jones EuroStoxx 50?

A

US measure of the top 50 European stocks

38
Q

What is the standard and poors composite

A

Main 500 companies on the US stock exchange

39
Q

What is the NASDAQ composite?

A

Smaller US companies

40
Q

What is the Nikkei 255?

A

Largest Japanese stocks but not weighted

41
Q

What is the Topix

A

A wider, more comprehensive version of the Nikkei 225

42
Q

What is the Dax 30

A

Largest 30 quoted German companies

43
Q

What is the hang seng?

A

Broad movements in Hong Kong stocks

44
Q

What is the CAC general

A

Opening prices on the paris cash market

45
Q

What is the CAC 40

A

Real-time weighted index of largest French stocks

46
Q

What is the issue with indices?

A

Largest companies have a disproportionate effect on index

Most don’t take account of dividends

47
Q

What is the issue with indices?

A

Largest companies have a disproportionate effect on index

Most don’t take account of dividends

48
Q

What do ordinary stocks include?

A

Voting and defered

49
Q

What CGT is payable on equities?

A

10 or 20%
£6000 exemption available

RO2 Investment Principles And Risk (18 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions