Mocks Flashcards
Modified duration of a bond
Measure on approximating how much the price of a bond could decline with an increase in interest rates.
What collective investment offers a discount to the net asset value?
Investment trust
Downside risk
Risk of price declining
Junior ISA max. age
18
Fixed interest securities
Loans to government or companies
Reinvestment risk
When fixed rate expires then will not be a comparable return on reinvestment
Void risk on a property
Risk of leaving property vacant as unable to find a tenant
SDLT on rent received rate and min. value
1% of rental excess above £125k for resi.
1% of rental excess above £150k for resi. Then 2% above £5m
E.g. rent of £2,00pm x 12 x 5yr tenancy = £15,000 so would be taxed on £25k if resi.
Hard commodity and soft commodity
Hard undergoes an extraction process
Soft is typically grown rather than mined
Disadvantage to globalisation
Political landscape is likely to mirror its economic prospects
Uk capital account
Deals with investments and loan in and out of the UK
Event risk
A natural disaster
Net asset value
Value of all of the shares added together is equal to the value of the assets held
Information association
Determine sectors within funds
Index tracking fund:
Full replication
Stratified sampling
Optimisation/synthetic
Full replication - match index as best as possible
Stratified sampling - hold sample of funds within index
Optimisation/synthetic - use computerised system to buy and sell shares
4 diversification rules of a UCIT
No more than 10% in one fund
No more than 4 companies have max share of 10%
Max. Of 5% there after
Min. Number of shares possible is therefore 16
2 Expemptions of UCIT rules
If a tracker fund the max of 20% in most cases. 35% in extreme cases.
Lower limit of 6 securities of fund for gov. bonds
Is gearing allowed on a permanent basis within a UCIT?
No, only temporary
Gearing limits for UCIT, non-UCIT, QIS
UCIT - Max. Of 10% and non-permenant
Non-UCIT - max. Of 10%
QIS - Max. Of 100% of NAV
Unit trust
Trust manager buys and sells bonds or shares.
Protected by the trustees and legal owner of assets
Fund split into units
How to remove a manager within a unit trust
Majority unit holder vote
How to calculate CGT if takes income from basic to higher tax bracket?
Use up basic income tax bracket and tax at 10% then 20% there after
Is a unit trust open ended?
Yes
Is stamp duty paid on a unit trust or OEIC?
No