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Securities > mock 3 > Flashcards

mock 3 Flashcards

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SIE Exam flashcards
1
Q

Which of the following financial statements will show dividend payments made?

A

Cash flow statement

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2
Q

Which of the following is ALWAYS true for participating preference shares?

A

Can participate in the profits of the company

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3
Q

For a convertible bond holder who does not wish to convert the bond into shares, what happens at maturity of the bond?

A

The holder receives the redemption value of the bond

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4
Q

Which of the following would be FALSE when investing in overseas bonds?

A

In the event of liquidation the investor will be covered by FSCS

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5
Q

What is the significant difference between the P/E ratio and EV/EBITDA?

A

EV/EBITDA includes the market value of debt

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6
Q

An investor receives a provisional allotment letter in relation to an offer for sale. This would suggest which of the following?

A

The investor is an existing shareholder

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7
Q

Which of the below is a definition of a dealer member of an exchange?

A

A member who trades for the firm’s own books

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8
Q

A shareholder increases its proportion of shares in a company from 28.6% to 30.9%, what are they obliged to do?

A

Make an offer under takeover laws

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9
Q

A company wishes to raise capital through the issuance of shares through an IPO, but does not wish to lose control of the company. Which of the following would be most suitable?

A

Float 20% of issued share capital on AIM as cumulative preference shares

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10
Q

Which of the following is a service that is typically offered by a prime broker?

A

Leveraged trade execution

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11
Q

How are shares held when using a corporate nominee account?

A

Shares of all investors are pooled together

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12
Q

Where a cum-dividend equity trade fails to settle on contractual settlement what will happen?

A

The broker of the client buying will make a claim on the broker of the client selling

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13
Q

A benefit of a central counterparty service is:

A

Reduced administration

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14
Q

Which of the following best outlines the main role of a nominated adviser after the company has been admitted for trading?

A

Provide advice on exchange rules

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15
Q

Who is involved with advising their clients on debt financing strategies relating to structuring?

A

Origination team

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16
Q

Which of the following offers a guaranteed yield?

A

UK gilts

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17
Q

What was the primary reason for the introduction of the Continuous Settlement Bank system?

A

To mitigate default risk

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18
Q

Which of the following is required for a company seeking to be admitted to a premium market of an exchange?

A

Independently audited accounts covering at least three years.

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19
Q

A firm or investor aims to buy a substantial holding in the takeover-target company’s equity by buying the shares as soon as the stock markets open. This technique is known as:

A

Dawn raid

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20
Q

John is less than 30 years old and is in a good health. John’s personal pension is most likely to be predominently invested in?

A

Emerging markets equities

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21
Q

What might be a main benefit for holding money market instruments for a private investor?

A

Price stability

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22
Q

When global depositary receipts are issued, whose name appears on the company’s register of owners?

A

Depositary bank

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23
Q

[1067797] ABC plc’s 3 year bond has a yield of 4.5% and its 10 year bond is yielding 6.5%. If an investor believes that the yield spread between the two bonds will increase to 250 basis points. If he is correct, which of the following strategies would be profitable?

A

Buy the 3 year and sell the 10 year

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24
Q

Which of the below would NOT appear on a company’s financial statements?

A

Disclosures in relation to contingent liabilities

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25
Q

The Bank for International Settlements identifies different models for delivery versus payment. Which of the following is most likely used in the US?

A

Model 2 - a system that settle transfer instructions for securities on a gross basis, with final transfer of assets occuring throughout the processing cycle and funds instructions on a net basis with the final transfer of funds at the end of the cycle

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26
Q

Which of the following is an example of revenue expenditure?

A

Purchases that have an immediate impact on the income statement

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27
Q

A company is looking to be listed in the UK, to whom would the application be made?

A

The United Kingdom Listing Authority

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28
Q

What trades on a ‘request for quote’ system?

A

High yielding bonds

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29
Q

A secondary issue would take place to serve which purpose?

A

To satisfy a large debt

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30
Q

Which one of the following is an electronic platform to facilitate dealer-to-customer trading in bonds?

A

TradeWeb

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31
Q

Which of the following German Government bonds has the shortest maturity at issuance?

A

Schatz

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32
Q

wo 10-year, 5% coupon bonds are being quoted at a spread to the benchmark, X at 50 b.p. and Y at 80b.p. Which of the following statements is true?

A

Y is riskier than X

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33
Q

An investor chooses to buy a bond and sell it before maturity. Which of the following poses a risk for them?

A

Price falls below the nominal value

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34
Q

A prime broker provides all but which of the following services?

A

Advice

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35
Q

Which of the following is not a function of the UK Debt Management Office (DMO)?

A

To regulate the money markets

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36
Q

An investor holds a position in UK equity and decides to hedge by buying put options. Which of the following statements is true?

A

The value of this right will be increasingly valuable as the price falls

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37
Q

Which of the following would BEST describe the point when a pension fund interest in shares of another company would no longer be considered in the free float?

A

5%

38
Q

Which of the following is a secondary information provider?

A

Thomson Financial

39
Q

Which one of the following statements about hybrid trading platforms e.g. SETSqx is false?

A

The minimum number of market makers required for a stock is one

40
Q

A broker might use which one of the following system to trade bonds with an investor?

A

BondVision

41
Q

Ex-price

A

Ex-price is the price after the scrip issue which is the reduced price to get to the original price:

42
Q

Upon liquidation of a company, which would rank above subordinated loan stock?

A

Unsecured debt

43
Q

A company is in the process of issuing its shares and there is an origination team working on their behalf. Who would assess the best method for bringing the company to the market?

A

Sponsor

44
Q

Gilts

A

Gilts are paid semi-annually so the investor will receive on the next coupon payment date half of the annual coupon.

45
Q

With regard to a unit trust, who retains the names of the unit holders?

A

The trustee

46
Q

An investor has bought ordinary shares in a company that has now become insolvent. What pay-out will the investor’s ordinary shares receive if there are sufficient funds?

A

Any surplus after all others have been paid

47
Q

Which of the following bond issuances would ensure the bonds purchased were at the highest price at which they could ALL be sold?

A

Tender

48
Q

When shares are held together in an omnibus account the name on the company’s register will be:

A

The nominee

49
Q

Diversification will help to deal with what type of risk?

A

Unsystematic

50
Q

What shows the expected change in a fixed income instrument’s price, given a specified change in interest rates?

A

Modified duration

51
Q

The credit rating of a particular corporate bond has changed from A3 to A1, what is the likely effect on the bond?

A

Increase in price

52
Q

Which of the following is a Primary Information Provider?

A

Newswire

53
Q

A firm has received a sell limit order from a professional client. The order is the tenth order received from that client over a period of three months. The order cannot be executed immediately through the firm.
Which of the following reasons would justify the firm not making the order public on the LSE?

A

The client has instructed otherwise

54
Q

Which of the following would least likely account for the higher risk associated with hedge funds?

A

Diversification

55
Q

With which of the following are payment in kind notes issued?

A

Mezzanine debt

56
Q

A company is unlikely to have a secondary offer under what circumstances?

A

Bear market

57
Q

Which of the following would account for increased volatility in the foreign exchange markets on the first Friday of every month?

A

Issuance of the Non-Farms Payroll

58
Q

The UK government is about to undertake a long-term project of spending on the public sector that will cause a budget deficit for some time. What would the government issue to cover this?

A

Long-dated gilts

59
Q

A listed company wishes to announce some information regarding a new project it has undertaken. How should this be disclosed?

A

Through a primary information provider

60
Q

Which of the following is the most likely reason why hedge funds are attractive to sophisticated investors?

A

The ability to take on more speculative positions than traditional open-ended schemes

61
Q

A share offer is made on the junior market of an exchange, which of these offers warrants the need to produce a prospectus?

A

An offer of £9m to the general public

62
Q

Which of the following is TRUE of an ICEBERG order?

A

Only part of it is visible

63
Q

An issuer of convertible and exchangeable bonds is considering a greenshoe option.
Which of the following is TRUE?

A

This would be allowed on both types of bond

64
Q

An investor places a bid in a tender offer. Which of the below BEST explains their allocation of shares?

A

They will only be successful if their price is above the acceptance level

65
Q

What is the purpose of a trading platform providing liquidity rebates?

A

To encourage market makers to use their systems by offering them commission on trades

66
Q

What of the following is NOT a benefit of indirect property investment?

A

Higher Returns

67
Q

Aiden is an adventurous 28 year old and has disposable income to invest for future rewards. Which of the following would be the most suitable investments in his portfolio?

A

Medium and high-risk equity investments

68
Q

A company wishes to raise capital cheaply. From the company’s point of view, which of the following would be seen as the BEST advantage of issuing warrants?

A

To delay the payment of dividends until some time in the future

69
Q

Which of the below is a benefit of using a central counterparty service?

A

Improved prices

70
Q

An investor sells Malaysian shares and wants to exchange the proceeds into Brazilian currency. If the currencies are not quoted against each other directly, using which type of rate would the investor be able to convert?

A

Cross rate

71
Q

Which one of the following is not a method of a company buying back its own shares?

A

Payment in kind

72
Q

A bond’s annual income is based on which of the following?

A

Capital value of the bond

73
Q

Who decides whether a company is appropriate to apply for a quotation on the junior market of an exchange?

A

Listing agent

74
Q

Which of the following nominee accounts would best facilitate proxy voting at a company’s annual general meeting?

A

Designated

75
Q

When can an investor sell an OEIC?

A

Any period specified by the OEIC prospectus

76
Q

A company performs a 2:1 bonus issue, which of the following is most likely?

A

The share premium account will fall

77
Q

Which one of the following institutions would most likely manage cash transactions and perform foreign exchange transactions on behalf of clients, whilst also looking after secutrities which belong to those clients and ensuring they are properly protected.

A

Custodian

78
Q

What does immobilisation mean in the context of Eurobonds?

A

They are held in depositaries

79
Q

Why might an investor be more interested in using net debt to equity ratio instead of total debt to equity?

A

To see if the company holds substantial cash and short term investments

80
Q

An investor relinquishes their investment directly with an authorised corporate director. Which investment vehicle are they using?

A

OEIC

81
Q

Which of the following is NOT an advantage of REITs?

A

Shareholders do not pay tax on income received

82
Q

All of the following are excluded from the calculation of free float EXCEPT:

A

Representative shares held within a sponsored ADR

83
Q

Inflation is expected to rise from 1.9% to 2.9% how or when could an investor achieve real returns?

A

There is an increase in the nominal rate of interest

84
Q

What is the name given to the firm that has been given joint responsibility to co-ordinate the issue of securities in a particular geographical region?

A

Co-lead manager

85
Q

Preference shares can come in a variety of forms, which of the following is LEAST likely about a participating preference share?

A

In liquidation they rank equally with mezzanine debt

86
Q

A bond’s price, as it reaches maturity, will:

A

Approach its nominal value

87
Q

Any company traded on an exchange must, according to company legislation do which of the following?

A

Hold annual general meetings

88
Q

Which of the following processes is used primarily to increase the marketability of a company’s shares?

A

Introduction

89
Q

When is an investor able to find out the price of shares of exchange traded funds?

A

Continuously

90
Q

The term ‘high water mark’ relates to which of the following in a fund?

A

The performance fee

91
Q

Which of the following does not lead to an increase in the number of shares of a company?

A

A call on partly paid shares

Securities (19 decks)

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