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1
Q

virtue ethics and natural law are ethical philosophies developed by?

A

Aristotle

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2
Q

which of the following is not a criteria to test whether behavior is ethical?
- fairness
- transparency
- confirmed
- honesty

A

confirmed

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3
Q

how do banks make a surplus?

A

charging higher rates of interest to borrowers compared with the interest paid to savers

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4
Q

equity can be referred to as a form of

A

ownership

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5
Q

which of the following would be the least risky investment
- Greek government bonds
- shares in an established company
- bank account
- shares in a new company

A

bank account

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6
Q

bonds issued by companies are known as

A

corporate bonds

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7
Q

Which of the following investments is likely to be the most risky?
A. Bonds issued by a start-up company
B. Equities issued by start-up company
C. Equities issued by a large oil company
D. Government bonds

A

B. Equities issued by a start-up company

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8
Q

A company paid dividends of 3.60 per share in each of the last 4 quarters. The share price is currently 198.50. What is the dividend yield?
A. 0.90%
B. 1.81%
C. 3.60%
D. 7.25%

A

D. 7.25%

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9
Q

F interest rates increase, what will normally be the effect on a 5% government bond?
A. Price will rise
B. Price will fall
C. Maturity will increase
D. Maturity will decrease

A

B. Price will fall

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10
Q

If a credit card company quotes its interest rate at 20% pa, charged half-yearly what is the effective annual rate?
A. 10%
B. 20%
C. 21%
D. 40%

A

C. 21%

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11
Q

In the event of a company going into liquidation, who would normally have the lowest priority for payment?
A. Shareholders
B. Banks
C. The tax office
D. Bondholders

A

A. Shareholders

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12
Q

A stock market parcipitant has written an algorithm that will automatically place oreder on the exchange system. What can this be described as?
A. Peer-to-peer finance
B. Blockchain technology
C. High- frequency trading
D. Unethical practices

A

C. High frequency trading

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13
Q

Advising companies on M&A is one of the principal activities of a…
A. corporate bank
B. central bank,
C. investment bank.
D. retail bank.

A

C. Investment bank

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14
Q

How does a government typically raise money to fund its national debt?
A. Issuing bonds to individuals and firms.
B. Making an appeal for donations from wealthy citizens
C. Issuing equities on the stock exchange.
D. Doubling taxes for larger corporations.

A

A. Issuing bonds to individual and firms

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15
Q

When would for effective annual rate of loan be higher than quoted rates?
A. When the borrower what is unemployed rather than employed
B. When the interest is charged monthly rather than annually.
C. When the loan is unsecured rather than secured.
D. When the loan is a bank overdraft rather than a personal loan

A

B. When the interest is charged monthly rather than annually

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16
Q

Which of the following has the right to vote at company meetings or assemblies?
A. holders of equities in the company.
B. The cosignatory of a contract of business with a company.
C. The largest clients of the company
D. The holder of bonds issued by the company.

A

A. The holder of equity is in the company.

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17
Q

Which of the following best describes what is meant by ethical conduct?
A. Complying with the law.
B. Maximising the clients profit potential.
C. Minimising the risk to the firm.
D. Doing the right thing

A

D. Doing the right thing.

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18
Q

Banks provide one way of linking savers and borrowers which of the following best describes the way this link works
A. Paying less interest on deposit than and earned on loans
B. Paying more interest on deposit, then earned on loans
C. Paying zero interest on deposits and lending the money for an upfront fee.
D. Earning interest on deposit that is greater than interest paid on loans

A

A. Paying less interest on deposit than earned on loans

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19
Q

Which of the following provides a regular opportunity for savers/investors to seek their equity investments?
A. Stock markets.
B. Equity redemption
C. Government incentives
D. IPOs

A

A. Stock market.

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20
Q

Outside of the US, the term commercial banking is generally used to describe which of the following
A. The way a bank makes money.
B. The bank that specialises in providing banking services to businesses.
C. The bank that only provides advice.
D. A bank that specialises in providing loans and deposit facilities to individuals.

A

D. A bank that specialises in providing loans and deposit facilities to individuals.

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21
Q

Which of the following is an example of a secured loan?
a. Mortgage
b. Overdraft
C. Credit card borrowing
D. Payday loan

A

A. Mortgage

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22
Q

Which of the following best describes an IPO?
A. A company raising capital by selling equity or bonds.
B. A company generating its first profit.
C. A company raising money by selling shares to the public for the first time.
D. Accompany reaching levels of profit for growing year-on-year

A

C. Accompany raising money by selling shares to the public for the first time.

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23
Q

A shareholder typically has the right to all of the following except
A. Dividends from the company.
B. Vote at general meetings.
C. Sell their shares
D. Regular coupons

A

D. Regular coupons

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24
Q

When compared to equities, which of the following is considered an advantage to invest in bonds?
A. More scope for income growth.
B. Greater potential for capital gain.
C. Voting rights.
D. Regular and predictable income.

A

D. Regular and predictable income.

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25
Q

Which of the following best describes the function of a stock exchange?
A. To generate market indices.
B. To arrange the payment of dividends on shares.
C. To facilitate trading in financial instruments.
D. To provide a location for listed companies, general meetings.

A

C. To facilitate trading in financial instruments.

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26
Q

What’s the ER for quoted rate is 6% and interest is charged quarterly

A

6.14%

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27
Q

What type of bank specialises in helping companies for his money and advise them on strategies, for example, mergers and acquisitions
A. Central bank.
B. Commercial bank
C. Corporate bank
D. Investment bank.

A

D. Investment bank.

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28
Q

What type of bank is described as the banker to banks?
A. Central bank.
b. Commercial bank
C. Corporate bank
d. Investment bank.

A

A. Central bank.

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29
Q

Tom wants to borrow from the bank in a form that is flexible. In particular he wants to be able to draw repay, and then we draw a borrowing whenever he wants which one of the following is most appropriate.
a. The mortgage
B. Secured personal loan.
C. An overdraft
D.An unsecured personal loan

A

C. An overdraft

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30
Q

I need to find £500 which you could pay back within two years. There are four options open to you, which of the following is likely to be the cheapest form of borrowing for you.
A. A payday loan
B. An overdraft facility.
C. A credit card
D. An unsecured bank loan

A

D. An unsecured bank loan 

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31
Q

Which of the following is normally not provided by bank
A. Overdraft
B. Payday loan
C. Mortgage
D. Unsecured loan.

A

B. Payday loan

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32
Q

Bonds are tradable instruments. What does that mean?
A. They can be bought and sold on the market.
B. They can be exchanged for other financial instruments.
c. The investor must keep the bond until it matures.
D. They have fluctuating coupons.

A

B. They can be exchanged for other financial instruments.

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33
Q

Bonds issued by companies are known as
A. Gilts.
B. Corporate bonds
C. Premium bonds
D. Floating-rate notes.

A

B. Corporate bonds

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34
Q

All of the following a potential sources of return from shares, except
A. Regular dividends
B. Capital gain.
C. Increasing dividends.
D. Coupons

A

D. Coupons

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35
Q

An unsuccessful company collapses, and falls into bankruptcy, which of the following best describes what will happen to the unpaid debts
A. The companies bankers will pay them.
B. The companies shareholders will pay them.
C. They will be paid by the government.
D. They will remain unpaid.

A

D. They will remain unpaid.

36
Q

The four key principles and test to assess whether or not behaviour is ethical revolve around whether the action taken was open and honest transparence, and which of the following
A. Fair
B. Balanced.
C. Legal
D. Harmless

A

A. Fair

37
Q

If a company borrow some money by issuing IOUs in return for the money loaned, how are these IOUs typically described
A. Shares.
B. Bonds
C. Equity
D. Loans

A

B. Bonds

38
Q

Some governments, such as the US and the UK have substantial amounts of national debt, its usually funded
A. Using equity
B. Using bonds
C. Using loans
D. Using shares

A

B. Using obnds

39
Q

Is the holder of a bond winners to realise their investment before the scheduled repayment date which of the following with a normally do?
A. The range in early repayment with a bond issuer
B. Exchange for bond for equities.
C. Sell the bond and stock market.
D. Sell the bond OTC.

A

D. Sell the bond, OTC.

40
Q

The date at which a bond’s life ends and the nominal value is paid by the issuer to the bondholder is known by all of the following except:
A. Repayment date
B. Maturity date
C. Sale date
D. Redemption date

A

C. Sale date

41
Q

An investor holds $1000 nominal value of a 7% UK government bond trading at $970. What is the next half yearly gross interest payment that the investor can normally expect to receive?
A. $33.95
B. $34.70
C. $35.00
D. $36.08

A

C. $35.00
1000 x 7% x 6/12 = $35.00

42
Q

You wish to invest money is some bods. You wish to take as high as risk as possible in order to maximise your return. However, yuo do not want to bu bonds that are slassifiedas ‘non investment grade’. According to the credit ratings given by major agencies Standra & pools and fthc’s ratings, which class of bodns should you buy?
A. BB
B. C
C. B
D. BBB

A

D. BBB

43
Q

Interest rates are suddenly and surprisingly increased by the central bank. What is most likely to happen to a price of fixed-coupon bonds?
A. It will increase
B. It will decrease
C. It will remain the same
D. The response depends on the credit rating of the issuer

A

B. It will decrease

44
Q

When compared to equities, which of the following is considered an advantage to na investor in bonds?
A. more scope for income growth
B. Greater potential for capital gains
C. Voting rights
D. Regular and predictable income

A

D. Regular and predictable income

45
Q

A company wishes t raise money to fund its overseas expansions plans, widen its public profile and increase the inquisitor of its shares. Which of the following actions is likely to achieve all three things?
A. Issuing international bonds
B. Investing in a global marketing campaign
C. Undertaking an IPO
D. Seeking more international trades

A

C. Undertaking an IPO

46
Q

Outside of the US the term “commercial banking” is generally used to describe which of the following?
A. The way a bank makes money
B. A bank that specialises in providing banking services to business
C. A bank that only provides advice
D. A bank that specialises in providing loans and deposit facilities to individuals

A

B. A bank that specialises in providing banking services to businesses

47
Q

Interest rates are sunddely and surprisingly increased by the central bank. What is mostl ikely to happen to the price of fixed-coupon bonds?
A. It will increase
b. It will decrease
C. It will remain the same
D. The response depends of the credit rating of the issuer

A

B. It will decrease

48
Q

Which one of the following derivatives gives the buyer a choice as to whether to go head with the contract or not?
A. Forward contract
B. Futures contract
C. Option contract

A

C. Option contract

49
Q

Which of the following derivatives is/are traded in standardised sizes on derivatives exchanges?
A. Forward contract
B. Futures contract
C. Option contract

A

B and C

50
Q

Which one of the following derivatives requires the buyer to pay a non-returnable premium?
A. Forward contract
B. Futures contract
C. Option contract

A

C. Option contract

51
Q

A speculator wants to have the choice as to whether to buy an underlying asset or not. Which one of the following is the most appropriate?
A. Buying future contracts
B. Buying call options
C. Buying put options

A

B. Buying call options

52
Q

A speculator wants to have the choice as to what ether to sell an underlying asset or not. which one f the following derivatives is the most appropriate?
A. Selling future contracts
B. Buying call options
C. Buying put options

A

C. Buying put options

53
Q

What is normally used to ascertain whether share prices generally are moving up, down or sideways?
A. Bank interest rates
B. Stock market indices
C. Bond yields
D. Credit ratings

A

B. Stock market indices

54
Q

At a company’s general assembly, individual shareholders can typically vote on which of the following subjects?
A Registration for regulatory approval
B Activities of the company’s competitors
C Pay awards for the directors
D Sale of holdings of other individual shareholders

A

C Pay awards for the directors

55
Q

The flat yield under a corporate bond is calculated by dividing the:
A coupon by the nominal value
B coupon by the purchase price
C purchase price by the nominal value
D nominal value by the purchase price

A

B coupon by the purchase price

56
Q

When comparing bonds to equities, as a general rule bonds have a:
A higher level of risk and a higher potential return
B lower level of risk and a higher potential return
C higher level of risk and a lower potential return
D lower level of risk and a lower potential return

A

D lower level of risk and a lower potential return

57
Q

XYZ has paid quarterly dividends of 80 cent a share over the last few years. If the share price is currently $86.50, what is the dividend yield?
A 0.92%
B 1.85%
C 2.70%
D 3.70%

A

D 3.70%

58
Q

if interest rate decrease, what will normally be the effect in a 5% government bond?
A. Price will rise
B. price will fall
C. Coupon will rise
D. coupon will fall

A

A. Price will rise

59
Q

using a stock market index, to determine whether a portfolio has performed well is an example of which function of an index
A. assessing price movements
B. assessing liquidity
C. benchmarking
D. derivative contracts

A

C. benchmarking

60
Q

an investor has bought a put option on some shares, which is true?
A. they are obliged to take delivery and pay the exercise price, if the buyer exercises the option
B. they are anticipating the share price will rise
C. they are anticipating the share price will fall
D. they are obliged to deliver if the buyer exercises the option

A

C. they are anticipating the share price will fall

61
Q

what is the effect of high levels of leverafe on the shareholders of a company that fails to gennerate any profits
A. profits are magnified
B. losses are magnified
C. debt levels are icnreased
D. nothing, as it affects bondholders only

A

B. losses are magnified

62
Q

insurance company decides to transfer part of the risk by entering into a contract with another insurer. this is an example of
A. future
B. option
C. reinsurance
D. syndication

A

C. reinsurance

63
Q

which of the following best describes the function of a stock exchange
A. to provide a venue for trading in financial instruments
B. to regulate the trading of financial instruments
C. to enable investors to exchange one financial isntruemtn fro another
D. to enable investors to eachange information and trading ideas

A

A. to provide a venue for trading in financial instruments

64
Q

John is a single shareholder, he brings in two new investors they want 25 and 35 share. what percentage of a company does John own
A. 40%
B. 60%
C. 62.5%
D. 100%

A

C. 62.5%

64
Q

advert state if you borrow 330 fro 2 months, total amount repayable is £369.34 including interest at 292%. what type of loan is this?
A. bnak loan
B. credit card loan
C. pay day loan
D. secured loan

A

C. pay day loan

65
Q

which type of bank does not provide services to individual or non-bank companies?
A. central
B. corporate
C. investment
D. retail

A

A. central

65
Q

a trader buys a call option as they anticipate price rising. what purpose is this for?
A. anticipating cash flow
B. arbitrage
C. hedging
D. speculation

A

D. speculation

66
Q

According to the definition of a future contract, which elements are agreed at the outset
A. Quantity and price only.
B. Price and delivery date only.
C. Quantity and delivery date only.
D. Quantity price and delivery date.

A

D. Quantity price and delivery date.

67
Q

According to the definition of a future contract, which elements are agreed at the outset
A. Quantity and price only.
B. Price and delivery date only.
C. Quantity and delivery date only.
D. Quantity price and delivery date.

A

D. Quantity price and delivery date.

68
Q

Company a wishes to purchase a new head office building and approaches an investment bank for advice is the time of economic uncertainty and nervousness in the banking sector. What is the investment bank most likely to advise?
A. If she shares to investors.
B. Issue bonds to investors.
C. take out a loan from a commercial bank.
D. Seek angel investors.

A

B. Issue bonds to investors.

69
Q

Company a wishes to purchase a new head office building and approaches an investment bank for advice is the time of economic uncertainty and nervousness in the banking sector. What is the investment bank most likely to advise?
A. If she shares to investors.
B. Issue bonds to investors.
C. take out a loan from a commercial bank.
D. Seek angel investors.

A

B. Issue bonds to investors.

70
Q

What key factor has driven a growth of peer to peer lending
A. Volatile interest rates.
B, widespread Internet uses
C. Solvent rule changes.
D. Corporate mergers

A

B. Widespread Internet use.

71
Q

What key factor has driven a growth of peer to peer lending
A. Volatile interest rates.
B, widespread Internet uses
C. Solvent rule changes.
D. Corporate mergers

A

B. Widespread Internet use.

72
Q

Notes are used in connection with distributed leisure technology in order to enable the
A. Use of two factor authentication.
B. Operation of robust antivirus software.
C. Assignment of ownership through a silos system.
D. Implementation of changes by consensus.

A

D. Implementation of changes by consensus.

73
Q

When carrying out estate planning what legal instrument can be used to protect for clients interest if it leaves the capacity to manage their own affairs?
A. Deed of trust.
B. Power of attorney.
C. Codell to Will.
D. Grant of administration.

A

B. Power of attorney.

74
Q

Tony took out a loan to buy a motorbike for loan must be paid back in monthly payments at fixed rate over three years. What kind of loan is this?
A. Unsecured bank loan.
B. Secured bank loan.
C. Overdraft.
D. Payday loan.

A

A. Unsecured bank loan.

75
Q

If a company goes bankrupt, he will be the first in line to get their money
A. Lenders.
B. Shareholders.
C. Directors.
D. Staff

A

A. Lenders.

76
Q

if a client with significant assets causes to be of sound mind and no legal documentation to cover this eventually exist, what action will normally be required
A. obtain a doctor’s authority to transfer control
B. apply to the courts for authority to act
C. convert ownership of all assets to join status
D. implement the provisions of the intestacy rules

A

B. apply to the courts for authority to act

77
Q

the main function of a stock exchange is to bring which two parties together
A. agents and principals
B. clients and advisors
C. regulators and members
D. buyers and sellers

A

D. buyers and sellers

78
Q

what was the most unethical aspect of the LIBOR rigging scandal?
A. individual traders made significant profits
B. had a negative effect on consumers
C. it benefited the banks involved
D. increased the creditworthiness of some banks to the detriment of others

A

C. it benefited the banks involved

78
Q

reinsurance is best described as a type of insurance which enables:
A. insurers to share the risk with other insurers
B. brokers to be tied to a single insurer
C. uninsurable parts of a risk package to be declined
D. large companies to fully self insure their risks

A

A. insurers to share the risk with other insurers

79
Q

Wayne buys a bond for 5,000 in a year when the general interest rate is 4%. 3 years later, he wants to sell the bond, interest rates have risen, and are now 6%. Whats the likely consequence
A. coupon payments on the bond will fall
B. new buyer will expect to pay less for the bond
C. capital gain on the bond a maturity date will be reduced
D. coupon payments on the bond will rise

A

B. new buyer will expect to pay less for the bond

80
Q

all of the following are reasons why a stock exchange index is used, except:
A. as a benchmark to judge the performance of a portfolio
B. highlight the investors which individual company’s shares are performing the best
c. provide a single number that tells investors whether prices are generally increasing or decreasing
D. to make it easier for investors to see how the market is performing generally

A

B. highlight the investors which individual company’s shares are performing the best

81
Q

which one of the following is not normally provide of a personal pensions scheme
A. employer
B. insurance companies
C. state
D. central bank

A

D.central bank

82
Q

which of the following is the most likely to be true of the yield if the market price of a bond is less than tis nominal value
A. same as the coupon rate
B. greater than the coupon rate
C. lower than the coupon rate
D. impossible to calculate

A

B. greater than the coupon rate

finance (5 decks)

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