PCIAM Flashcards
Allowance amounts
X 5
- share purchases and loans to companies, involving loans to small close companies / or shares in them
- partnership investment where partner pays interest on a loan to benefit partnership
- payment of iht where a loan was taken to pay. 1 years benefit
- ISA
- pension
Powers of regulatory decisions committee (RDC)
X 7
- private warnings
- variation of permissions
- withdrawal of authorisation
- withdrawal of approval
- prohibition of individuals
- public censure and statement if misconduct
- financial penalties
Upper tribunal with 28 days
Business asset rollover
- cgt deferral can be claimed by incorporated and unincorporated businesses when they sell assets send buy new assets
- must be trading
- new asset must be purchased staring one year before and three years after disposal
Dividend yield
Dividend per share /
Share price
X 100
- assess current yields with previous to determine progress
- cannot compare like to like as will have different div policies
- growth stocks may not pay a dividend
Equity based options
X 7
- Predetermined expiry dates quarterly
- physically settled
- through ICE futures Europe on around 100
- expiry date is American style
- pricing is pence per share
- call option holder - not eligible fir dividend unless exercised prior to ex- dividend
- stock specific risk
Margins futures
X 5
- Initially- deposit
- variation- loser pays each day
- spot month
- intra-day - if initial too low on volatile day
- maintenance - higher initial
Holding period return / mwr
(D + V1 - V0) / Vo
(D + v1 - v0 - c) / Vo + ( c x n/12)
V0 = starting V1 = selling D = income C = net new money in or out N = no of months remaining in year when taken or added
VCT
Income tax free
CGT free
30% tax relief on £200k
Held 5 years
- listed on stock exchange
- income must be from shares / securities
- 70% qualifying holdings
- not more than 15% in one company
- at least 30% of qualifying holdings must be new ordinary shares and at least 10% per company
- cannot invest more than £1m in any single qualifying conpany each year
- not exempt from IHT
Preference shares types
X 5
- cumulative
- non cumulative
- participating
- redeemable
- convertable
FSA
FSMA 2000
Financial service act 2012
2013
Split to fca and pra
Retail distribution review
Level 4 by 31/12/12
LSE listing requirements by fca
X 8
- market cap of 700k+ & 25% shares free
- market cap of bonds 200k
- no restrictions on shares
- no more than 30% voting rights
- 3 years audited accounts
- directors experience
- pre-vetted prospectus by UKLA
- less stringent in science based
Capital requirement directive
3 pillars 1/1/14
To ensure that firms (eg banks, building societies and investment firms) hold adequate resources and have adequate systems and control to manage both business and associated risks
1 - quantification of risks arising for financial firms trading and credit business
2- robust requirements on public disclosure to encourage stronger market discipline in ensuring firms hold appropriate capital for their business
3 - stronger constructive dialogue between firms and regulator on risks and the level of capital which should be held
Business asset disposal relief
5 qualifying
- Introduced in April 2008
- cgt at 10% up to £10mill now £1mill
- disposal of sole trader business
- disposal of partnership share
- dis of shares in trading g company where they are employed and gave 5% share or more
- assets that have been loaned to business
- shares bought through enterprise management scheme
Chattels CGT
Exempt if value less than £6k or wasting assets (less than 50 years)
If sold for less than 15,000 gain limit
5/3 (sale price - 6000)
Treynor ratip
(Rp - Rf) / B
Six stage performance review
- benchmark
- benchmark asset allocation
- asset class returns
- comparison of asset classes
- compare benchmark with portfolios
- compare stock selection
Formula of profi loss of a future
No of ticks × tick value × no of futures
Ftse 100
Tick size 0.5 point
Tick value £5
Backwardation
- future price is below cash price
- bid price is greater than ask price
REITS
- closed ended
- listed on recognised exchange
- uk resident
- 1 class of share
- 75% profits from rental
- at least 3 properties
- min interest cover 1.25
Ring fenced property let
- exempt from corporation tax
- 90% rental profits paid 12 months
- payments paid net 20%
Non ring fenced
- subject to 19% corporation tax
Covered warrant
Gives the right to buy or sell underlying asset a specified price on or before date
Option issued by 3rd party will cover / hedge exposure by buying underlying stock or futures/options
Cover ratio eg 25 :1 share
Working capital ratio (current ratio)
Current assets /
Current liabilities
1.5 and 2 acceptable
ORB - order book for retail bonds
X 5
- London stock exchange 1/2/10
- liquid and transparent market in retail bonds
- all listed on London main markets
- provides a similar facility to that which is used for share dealing for a select number of gilts
- directly as sophisticated or via broker
- fixed interest T+2
New issue methods
X 6
- fixed price offer
- tender offer
- offer for sale
- offer for subscription - invest trusts
- placing (selective marketing)
P/E Price earning ratio
Market price for shares /
EPS earning per share
High ratio indicates do well and grow, low lower growth more established. Extremely low could mean undervalued