Learning objective 1 Flashcards
M1. Which of the following statements is correct regarding the evolution of building societies in the UK?
A. Building societies are required to pay dividends to their shareholders
B. Building societies were originally set up to lend money to other banks
C. Building societies are owned by their shareholders
D. Building societies do not have shareholders to pay dividends to
D
M2. Insurance protects and safeguards assets from the financial effects of damage or loss. What can be insured?
A. Physical assets. goodwill and earnings potential
B. Physical assets. financial transactions and profit potential
C. Financial transactions. earnings potential and goodwill
D. Financial transactions. profit potential and goodwill
B
M3. Which of the following statements regarding bonds (fixed interest investments) is true?
A. Interest earned on a bond is lower than that earned from a bank
B. Bonds allow private investors to borrow from a company in exchange for interest
C. Bonds are in the form of high interest loans with no capital repayment
D. Bonds allow companies to raise money without having to borrow from a bank
D
M4. Where an investment manager establishes and manages a portfolio of assets taking all the decisions to meet the investor’s objectives, this is known as:
B. a discretionary service
- this sounds like advice but the wording “manager” and “manages” for the portfolio are the giveaway, also the manager never does any KYC
M5. The term ‘bancassurer’ is used to describe:
B. a life office owned by a bank to distribute products via their branches
M6. Which of the following is an example of a global regulatory body? A. The European Systemic Risk Board B. The Prudential Regulation Authority C. The Financial Action Task Force D. The Bank of England
C - FATF IOSCO IAIS BCBS ISDA TBMA ISMA
P1. How does the UK financial market operate in respect of both investments and loans?
A. All short-term investments are used to create short-term loans.
B. Financial intermediaries help transform short-term savings to long-term loans.
C. Long-term risk is transformed to short-term risk via financial intermediation.
D. Small investments are grouped together to facilitate larger loans via financial disintermediation.
B
P2. How do the financial markets across the various EU Member States operate?
A. As a single market governed by European Parliament.
B. As independent markets regulated by bodies in each Member State where capital may flow in and out without restriction.
C. As independent markets regulated by the European Central Bank where capital may flow in and out without restriction.
D. As independent markets regulated by bodies in each Member State where capital flow is restricted by limits set centrally.
B
P3. Within the UK economy, an example of disintermediation would be the
A. arrangement of a life assurance policy through an independent adviser.
B. arrangement of a personal loan with a bank.
C. purchase of securities from a stockbroker.
D. purchase of UK gilts from the Debt Management Office.
D
P4. A UK life assurance company is establishing a separate offshore company in the Isle of Man. In respect of the relevant EU Directives, the UK company should be aware that
B - EU Directives will not apply in respect of the company in the Isle of Man.
Isle of man is an EEA place I think not an EU place so different rules apply idk just learn it
P5. How do EU Directives affect UK financial services companies, if at all?
A. Directives are binding on companies immediately and must be implemented as prescribed in the Directive.
B. Directives are binding on all companies and the methods of implementation will be prescribed by the Government.
C. Directives do not affect UK financial services companies.
D. Directives may be considered by the Government and implemented only if it is considered appropriate to do so.
B - old paper before Brexit happened
P6. With respect to UK short-dated gilts, index-linked gilts and National Savings & Investments products, a financial adviser should be aware that they
A. are always tax free for the investor.
B. are all issued by the Debt Management Office.
C. are all used by the Government to raise funds.
D. cannot be purchased by corporate investors.
C
P7. When the Bank of England announces it will undertake quantitative easing, a financial adviser should consider that typically
D. the Bank of England will purchase an amount of gilts that are in circulation.
The bank of England want to control interest rates etc. so it’s them who buy them back but the DMO issues them
P8. The tripartite regulators of UK financial firms, when considering issues relating to financial stability will report to
A. the European Systemic Risk Board.
2021m 2. Gilts are loans to the UK Government. Which of the following statements accurately describes one aspect of how gilts work? A. They pay a variable level of interest once a year B. They pay a fixed level of interest at regular intervals C. At the end of the term a percentage of the original capital is returned D. They are issued by HM Revenue and Customs
B - Remember gilts as reliable, they pay out fixed, regular income.
