Exam Prep - Need To Knows

Question 1

Qualified investor / Professional client requirements? (2/3)

Answer 1

1- Significant size transaction on average ten per quarter for last four quarters.

2- Client’s portfolio exceeds €500,000.

3- One year of professional work experience in financial services.

Question 2

Exempt persons from Part 4A authorisation?

Answer 2

• Appointed representatives
• Investment exchanges & clearing houses
• Lloyd’s syndicate members
• Members of designated professional bodies
• Governments & supranationals

Question 3

Contracts can be ended through?

Answer 3

• Breach
• Frustration
• Agreement
• Performance

Question 4

DTR rules require notification to issuer if?

Answer 4

• EU Thresholds are broken: 5%, 10%, 15%, 20%, 25%, 30%, 50%, 75% (notify in 4 days)
• UK thresholds of 3% voting shares and any whole percentage point above must notify issuer within 2 days .
• PDMR must notify of any buy/sell of shares to issuer within 4 days.

Issuer will notify market through RNS.

Question 5

What percentage of shares must shareholder own to call a meeting?

Answer 5

At least 10% collectively or as an individual.

Question 6

PTM Levy is payable on?

Answer 6

• Essentially anything representing equities exc. preference shares and covered warrants
• American Depository Receipts
• Securities convertible to equity such as Warrants
• Equity share capital
  Not payable on Preference shares or Covered warrants

£1 fee on trades over £10k

Question 7

Under the Takeover Code / City Code, what are the thresholds for Legal Control and Effective Control?

Answer 7

• Legal Control of a company is >50% (mandatory bid becomes unconditional)
• Effective Control of a company is >30% (mandatory bid begins)
• If holding 90% as a result of the bid acceptance, they may acquire the outstanding minority shares by force.

Question 8

How many years of NICs must be paid to qualify for a full state pension?

Answer 8

35 years. If this isn’t met, Class 3 voluntary contributions can be made to reach the threshold.

Question 9

EMIR function?

Answer 9

Ensures transparency and a reduction of risk in the derivatives market.

Question 10

CMA will investigate mergers if?

Answer 10

• Turnover is >100m
• Company supplies >25% of the market

Question 11

CGT rates on non-resident property gains?

Answer 11

Basic rate is 18% and higher rate is 28%.

General CGT is 10% basic and 20% higher rate.

Question 12

EIS receive tax relief if held for 3 years for which amounts?

Answer 12

Maximum investment of £1m per tax year and minimum of £500, with 30% income tax relief.

EIS are also exempt from IHT and CGT.

Question 13

SDRT is payable in which situations?

Answer 13

SDRT is only payable for the buyer of securities at 0.5% on shares, options to buy shares and convertible loan stock.

Question 14

What is your personal tax allowance?

Answer 14

£12,570

Tax records must be kept for 6 years in order to justify and claim a tax return

Question 15

What are the income tax thresholds?

Answer 15

Basic rate 20%: £37,700
Higher rate 40%: £37,700 - £125,140
Additional rate 45%: £125,140 and over

Starting rate for savers is £5000

Question 16

What are the dividend tax thresholds?

Answer 16

Basic rate - 8.75%
Higher rate - 33.75%
Additional rate - 39.35%

Question 17

What are the capital gains tax rates?

Answer 17

Basic rate - 10%
Higher rate - 20%

Basic rate on property - 18%
Higher rate on property- 28%

There is no CGT on qualifying bonds: bonds that pay coupons inc. gilts, corporate bonds, local authority bonds, permanent interest bearings shares (PIBS)

Question 18

What is the inheritance tax rate and inheritance tax allowance?

Answer 18

Inheritance tax is 40%

Inheritance tax allowance is £325,000

Question 19

What are the corporation tax rates?

Answer 19

Corporation tax is 19%

Question 20

What are the EIS and VCT tax rates?

Answer 20

EIS tax relief is 30% up to to £1m if held for 3 years

Seed EIS tax relief is 50% up to £200,000

VCT tax relief is 30% up to £200,000

Question 21

What is a high net worth investor?

Answer 21

Income over £100,000 or net assets of £250,000

Question 22

What are the annual allowances for Pensions and ISAs?

Answer 22

Pensions annual allowance is £60,000 tax free up to 75

ISA annual allowance is £20,000

Question 23

What is the capital gains allowance?

Answer 23

Capital gains allowance is £6000

Question 24

What is the dividend tax allowance?

Answer 24

Dividend allowance is £1000

Question 25

How do you find the median?

Answer 25

Median is the middle number after ordering them.

Question 26

What is the mode value?

Answer 26

The mode is the value that appears the most.

Question 27

How do you calculate the mean?

Answer 27

The mean is calculated by adding all of the values together and dividing by the number of values present.

Question 28

How is the range calculated?

Answer 28

The range is calculated by subtracting the smallest number from the biggest.

Question 29

What is the rate and threshold for SDRT?

Answer 29

SDRT is 0.5% for the purchase of shares above £1000 (gilts are exempt).

Question 30

Principles for Business

Answer 30

• Integrity
• Skill, care & diligence
• Management & control
• Financial prudence
• Market conduct
• Customers interests
• Communication with clients
• Conflicts of interest
• Customers: relationships of trust
• Clients assets
• Relations with regulators
• Consumer duty

Question 31

FCA Conduct Rules

Answer 31

Integrity
Skill, care and diligence
Cooperative with the FCA, the PRA and other regulators.
Interests of customers and treat them fairly.
Observe proper standards of market conduct

Question 32

CFA Code of Ethics

Answer 32

Professionalism
Integrity of capital markets
Duties to clients
Duties to employers
Investment analysis, recommendations and actions
Conflicts of interest
Responsibilities as a CFA member or candidate