Module 14 Flashcards
What different organisations can the term bank apply to?
commercial banks
investment banks
central banks
merchant banks
What is a commercial bank?
collects deposits or money from individuals or companies and lends money if they wish to borrow.
This is called financial intermediation
What are building societies?
operate ina similar way to commercial but without shareholders. instead borrowers and lenders are members
What is NS&I?
OPERATES ONLINE AND in post office. takes deposits and backed by treasury BUT DOESNT LEND
What is peer to peer lending?
by websites- direct. cheaper
What is an investment bank?
- provide advice to raise finance
- M&A
- buy shares and bonds on behalf of clients
What is general insurance?
non-life insurance
e.g. for vehicles, pets, health etc
What is life insurance?
fixed term policy, say for fifteen years
What is life assurance?
not fixed term and provides cover till death.
What is a term insurance policy?
insured for a specific period of time
what is a whole of life policy?
sum upon death of policy holder
What is an endowment policy?
combines life and savings. usually associated with mortgages
What is a collective investment scheme?
invetsors pool their money into large fund and it is invested on their behalf
What are the three types of investment management styles?
active, passive, hybrid
What are unit trusts?
creates new units when investors subscribe and cancels units when investors cash out.
Who monitors unit trusts?
trustees and objectives are outlined in trust deeds. trust deed also sets out charges the investor is subject to.
How are unit trusts priced?
continuously. updated at regular intervals e.g. daily. this is called the valuation point.
What are OEICS?
like unit trusts but structured as a company rather than a trust. this means they can continually issue and redeem their own shares.
Are OEICS listed on an exchange?
may or may not be
What is a depositary?
like a trustee =. must be independent and the assets of the OEIC are registered in the depositary’s name.
What is an investment trust?
-public limited companies with shares on the stock exchange. They are closed end i.e. there is a fixed amount of shares.
What is the net asset value?
calculated by the fund manager each day
NAV= net assets attributable to ordinary / no ordinary shares in issue
What is monetary stability?
prices are stablehand there is confidence in the local currency.
What is financial stability?
can be achieved by identifying threats to the finical system as a whole, therefore maintaining public confidence. Done by the Financial Policy committee
What is the financial policy committee?
committee of the BoE.
looks at risks and weaknesses in the UK finical system. Made up of 13 member, 6 from BoE. Meet quarterly and at times of crisis.
What can the FPC do?
- set min capital requirements for banks
- set gearing limits
- borrwoing limits
- limits on lending.
What is the Prudential regulation authority?
monitors internal systems and controls of firms, as well as management and finical resources.
What are the objectives of the Prudential regulation authority?
-promote safety and soundness
-degree of proaction of insurance policy holders
-facilitate competition
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What is the difference between FPC and PRA?
FPC- financial system as a whole
PRA- individual firms
what is the FCA?
independent public body which accountable to the treasury. its objective is to ensure the relevant markets function well.
What are the objectives of the FCA?
- appropriate degree of protection for consumers
- protect and enhance the integrity of the financial system
- promote competition
What are some responsibilities of the FCA?
- regulate the conduct of financial services firms
- prudential regulations of those not covered by PRA
- listing rules for admission to LSE
- tackling financial crime
What are regulated activities?
lenders debt collection advising investments dealing investments insurance mortgages
What firms are exempt from FCA?
- professional firms e.g. solicitors, accountants, actuaries - have their ow professional body
- firms offering payments by instalments
- appointed representatives working on behalf of authorised firms
What offences does the Bribery Act Identify?
- paying bribes
- receiving bribes
- bribery of foreign public officials
- failure of commercial organisations to prevent bribery
