PAST PAPER 1 Flashcards
A retail client is considering investing in precious metals and has identified two collective
investments as per the following table
In respect of the risks associated with them, she should be aware that
A. the ETC may expose her to additional counterparty risk.
B. she will have to pay an additional charge to the ETC for the storage costs of the underlying
investment.
C. she will have to hold both on a direct basis as neither can be held within a stocks and shares ISA.
D. the ETF will always have greater liquidity risk because of the economic sensitivity of the
underlying investment.
A
A retail client has just purchased three investments, as shown in the following table
From this information, it can be deduced that
A. the purchase of the direct equity was exempt from Stamp Duty Reserve Tax.
B. the commercial property fund will have the most volatile price.
C. the net asset value of the investment trust may be more than £10,000.
D. both the equity assets will be priced on a daily basis.
C
A company makes a net profit of £1,000,000. It pays £250,000 interest to bondholders and wishes
to retain £400,000 as cash reserves. If it elects to pay the balance as a dividend, what would be the
dividend cover?
A. 1.33
B. 1.67
C. 2.14
D. 2.86
B
. A retail client wants to sell a conventional gilt he owns. The gilt is showing both clean and dirty
prices. The client should be aware that the
A. clean price assumes that the gilt is held until redemption.
B. clean price assumes that the seller retains the accumulated interest to the date of the sale.
C. dirty price assumes that the buyer receives the accumulated interest.
D. dirty price assumes the maximum spread that can be charged by the market maker on the sale.
C
Adrian is keen to purchase shares in a company traded on AIM. He should be aware that
A. all dividends received are not subject to the dividend allowance.
B. shares traded on AIM are not eligible to be held within a stocks and shares ISA.
C. the shares will be exempt from Capital Gains Tax after five full years of holding.
D. the shares will be exempt from Inheritance Tax after two full years of holding.
D
