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PCT Questions Flashcards

1
Q

Which of the following is not a drawback of covariance?
A) The units are squared.
B) The units of measurement are not standardised.
C) A high negative figure may or may not indicate a weak relationship.
D) A low negative figure may or may not indicate a strong relationship.

A

D

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2
Q

A buy-side equity analyst working for an equity growth fund has tended to always
argue that there is significant potential value in shares that the fund already
owns and that she has previously recommended. Her behaviour is most
consistent with which of the following biases?
A) Escalation bias.
B) Prospect theory.
C) Base rate neglect.
D) Confirmation bias.

A

D

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3
Q

A company’s perpetual preferred stock has a par value of UK£100, a current
market price of UK£70, a dividend rate of 4.5% and a required return of 6%. The
company’s earnings are expected to grow at a constant rate of 3% per year.
The preferred stock is
A) overvalued by £5.
B) undervalued by £5.
C) overvalued by £5.15.
D) undervalued by £5.15.

A

B

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4
Q

Which of the following is not an assumption of the Markowitz portfolio model?
A) Investors estimate risk on the basis of the variability of expectedreturns.
B) Investors are risk averse.
C) Market prices are efficient.
D) Investors think about investments in terms of their probability distribution of
expected returns over a particular future time horizon.

A

C

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5
Q 
A decrease in investors’ risk aversion is represented on the security market line 
(SML) by
A) a movement along the line.
B) a change in slope of the line.
C) greater curvature of the line.
D) a parallel shift of the line.
A

B

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6
Q

Daniel Kahneman’s and Amos Tversky’s Prospect Theory does not include
A) a value function that evaluates the outcome of different prospects.
B) a value function that is concave in gains and convex in losses, with a kink at
the reference point that separates the gains- from the loss-region.
C) an overconfidence-factor applied to the value function in the loss-region.
D) a probability weighting function that overvalues small probabilities and
undervalues probabilities close to one.

A

C

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7
Q

Which type of investment income was not subject to income tax at 20% in 2014?
A) Interest on 3.5% War Loan
B) Dividends from company shares
C) Interest on National Savings and Investment (NS&I) bonds
D) Interest on NS&I pensioner bonds

A

B

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8
Q

A portfolio fell from a high of £129,000 to £120,000, rose to £123,000, fell again
to £113,000 and finally increased to £115,000. The maximum drawdown is
closest to
A) -7.0%
B) -8.1%
C) -10.9%
D) -12.4%

A

D

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9
Q

The table below reports performance information about portfolio M and the risk
free rate. Portfolio M is the portfolio of tangency with the capital market line and
efficient frontier. Josephine has a risk tolerance of 1.4 x the risk of a 100%
investment in portfolio M. Josephine decides to hold portfolio M to the extent of
her risk tolerance. What is Josephine’s portfolio return closest to?
Return on portfolio M 6.5%
Standard deviation of portfolio M 11.0%
Risk free rate 1.5%
Standard deviation of risk free rate 0.0%
A) 6.5%
B) 7.1%
C) 8.5%
D) 9.1%

A

C

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10
Q 
Which securities are valued by dividing the annual dividend by the required rate 
of return?
A) Corporate bonds.
B) Preferred stocks.
C) Common stocks.
D) Constant growth common stocks.
A

B

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11
Q

The convexity of a bond is influenced
A) positively by yield and positively by coupon.
B) inversely by maturity and positively by coupon.
C) positively by maturity and inversely by coupon.
D) positively by coupon and positively by its bond rating.

A

C

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12
Q 
The value of a European call option on an asset with no cash flows is positively 
related to all of the following except
A) volatility.
B) exercise price.
C) risk-free rate.
D) time to exercise.
A

B

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13
Q

Which is not a similarity between the Capital Asset Pricing Model (CAPM) and
the Arbitrage Pricing Theory (APT)?
A) In equilibrium both theories suggest shares should plot on the security
market line and the arbitrage pricing line.
B) Both use the risk free rate as theirintercept.
C) Beta in the CAPM is a composite factor which is equivalent to the weighted
average of the betas of the relevant factors in the APTmodel.
D) In equilibrium, there is no unsystematic or idiosyncratic return. All expected
returns derive from systematic, or common, factors.

A

A

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14
Q

Which is not an assumption of the Capital Asset Pricing Model (CAPM)?
A) Mean and variance are sufficient to describe the distribution of future returns
in a portfolio and investors are indifferent about upside and downside
variance.
B) Investors have different expectations about means, variances, and covariances of security returns.
C) Investors prefer higher expected returns to lower expected returns for a
given portfolio risk and prefer lower volatility to higher volatility of portfolio
returns for a given portfolio expected return.
D) All investors can borrow and lend at risk free rate

A

B

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15
Q

Which is least likely to be a reason for the normal expectation that the term
structure of interest rates is upward sloping?
A) Time value of money.
B) Duration.
C) Liquidity.
D) Preferred habitat theory.

A

D

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16
Q

Assume EUR 1 = USD 1. A Eurozone investor has investment exposure in two
currencies: the Euro and the US dollar. The Eurozone risk-free rate is 2 percent.
The US risk-free rate is 1 percent. The expected appreciation of the US dollar is
10 percent. What is the relative foreign currency return?
A) 9%
B) 10%
C) 11%
D) 13%

A

B

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17
Q

Which of the following would not be correct in support for the zero Beta version
of the Capital Asset Pricing Model(CAPM)?
A) The intercept of the Security Market Line is empirically higher than the
CAPM risk-free rate.
B) The zero Beta CAPM can explain returns at least as well as the conventional
CAPM.
C) The zero Beta asset has zero idiosyncratic risk.
D) Empirically many investors hold money market funds rather than cash
deposits or a risk-free Treasury.

A

C

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18
Q

A factor portfolio is a portfolio with
A) factor sensitivities of zero to all factors.
B) a factor sensitivity of zero to a particular factor and one to all other factors.
C) a factor sensitivity of one to a particular factor and zero to all other factors.
D) a specific set of factor sensitivities designed to replicate the factor exposures
of a benchmark index

A

C

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19
Q

If a rating agency increases the probability of default on a bond by one grade,
this can be expected to result in a promised yield to maturity
A) greater than the expected yield.
B) less than the expected yield.
C) equal to zero.
D) equal to the expected yield.

A

A

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20
Q 
An analyst is examining the relationship between variable X and variable Y and 
has the following sample statistics:
Value
∑(X - Xaverage) = 434
∑(Y - Yaverage) = 266
∑(X - Xaverage) x (Y - Yaverage) = 199
Sample size 12
The covariance between X and Y is CLOSEST to
A) 16.6
B) 18.1
C) 19.6
D) 22.2
A

B

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21
Q 
Two variables are MOST likely to be strongly associated yet have a low 
correlation coefficient when the
A) relationship is non-linear.
B) relationship is multivariate.
C) correlation is spurious.
D) variables are non-stationary
A

A

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22
Q

Which is NOT an assumption of the Markowitz mean-variance framework used
to analyse risk and return?
A) Borrowing and lending takes place at the risk free rate.
B) Risk is symmetrically distributed about the average.
C) No transaction costs.
D) Expected returns, variances, and correlations are all that’s needed to identify
optimal portfolios

A

A

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23
Q 
Which multifactor model uses company level attributes to explain stock returns?
A) Statistical factor model.
B) Fundamental factor model.
C) Arbitrage pricing theory model (APT).
D) Macroeconomic factor model
A

B

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24
Q

According to the liquidity preference hypothesis, the yield curve is MOST likely
to
A) show that longer maturity bonds have lower yields.
B) show that forward rates equal spot rates.
C) be upward sloping if the market expects interest rates to fall.
D) be downward sloping if the market expects interest rates to fall.

A

D

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25
Q

According to the preferred habitat hypothesis, when a portion of the yield curve
has excess supply, the risk premium for that portion is MOST likely to be
A) negative.
B) indeterminant.
C) neutral.
D) positive.

A

A

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26
Q

A Fama-French model is used to analyse the returns of a portfolio. The portfolio
has positive high minus low sensitivity and negative small minus big sensitivity.
The sensitivities suggest the portfolio has more exposure to
A) growth stocks and large size stocks.
B) growth stocks and less exposure to large size stocks.
C) value stocks and large size stocks.
D) value stocks and less exposure to large size stocks.

A

C

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27
Q 
The information ratio of a portfolio’s benchmark is
A) 0
B) 0.5
C) 1
D) infinity
A

A

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28
Q

Using Treasury bond yields rather than Treasury bill yields for estimating the
equity risk premium will MOST likely result in
A) a larger risk premium.
B) a smaller risk premium.
C) the same risk premium.
D) a larger or smaller risk premium depending on the maturity of Treasury
bonds used

A

B

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29
Q 
When market volatility is low the valuation of the stock market is often 
A low
B rising 
C high
D falling
A

C

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30
Q

A convertible bond issued by a company has a conversion ratio of 25 ordinary
shares per £100 nominal. The market price of the convertible is £28. The ordinary
shares are current trading at 64p. The conversion price and conversion premium
are respectively closest to
A £1.12 and 75%
B 89p and 40%
C £4.00 and 170%
D 25p and 156%

A

A

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31
Q

Which active management strategy does research suggest underperforms?
A A contrarian strategy.
B A continuation strategy based on investing in recent momentum.
C A continuation strategy based on investing in past winners.
D A strategy of small not big companies.

A

C

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32
Q

When analysing the suitability of bonds for a portfolio you MOST likely to be highly
interested in a bond’s yield to call if
A the bond’s yield to maturity is insufficient.
B the investor only plans to hold the bond until its first call date.
C interest rates are expected to rise.
D interest rates are expected to fall.

A

D

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33
Q

The Panel on Takeovers and Mergers (POTAM) Levy is a flat rate charge of
A) £1.00 collected on all UK share purchases on London Stock Exchange
(LSE) and other London exchanges over £10,000.
B) £1.00 collected on all UK share sales on LSE and other London exchanges
over £10,000.
C) £1.00 collected on all UK share trades on LSE and other London exchanges
over £10,000.
D) None of the above.

A

C

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34
Q 
Which is NOT a limitation of the traditional Capital Asset Pricing Model (CAPM)? 
A) Security specification. 
B) Estimation of beta. 
C) Poor predictor of returns. 
D) Homogeneity in investor expectations.
A

A

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35
Q

A shift in the security market line (SML) can be caused by a change in all of the
following EXCEPT
A) expected real growth in the economy.
B) capital market conditions.
C) expected rate of inflation.
D) a change in the attitudes of investors towards risk.

A

D

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36
Q

All of the following are factors that influence the real risk-free rate EXCEPT
A) time preference of individuals for saving versus consumption.
B) investment opportunities available in the economy.
C) expected rate of future inflation.
D) the real growth rate in the economy.

A

C

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37
Q

The policy effect when measuring bond portfolio performance refers to the
A) incremental return from buying bonds mispriced relative to their risk.
B) difference in portfolio duration and index duration.
C) impact of short-run changes in the portfolio during the sample period.
D) return difference from changing portfolio duration within the sample period.

A

B

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38
Q

A ‘runs test’ on successive stock price returns will support the efficient market
hypothesis if the number of multiple runs is within the range
A) expected of an asymptotic series.
B) expected of a dependent series.
C) expected of a random series.
D) approximated by the square root of the sample.

A

C

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39
Q

A defined contribution pension fund whose base currency is not the Euro is
concerned about Euro depreciation and decides that market circumstances
justify active currency risk management to hedge its Euro exposure. The fund
decides that the amount of portfolio Euro exposure to hedge should be enough
to leave the fund in a neutral position in which no strong directional view on the
Euro currency is expressed. What percent of total portfolio Euro exposure is the
fund MOST likely to hedge?
A) 25%
B) 50%
C) 75%
D) 100%

A

B

40
Q

Key empirical results of studies about Beta suggest all of the following EXCEPT
A) in the long run, estimated betas are fairly stable.
B) in some short periods, investors may be penalised for taking on more risk.
C) in the long run, investors are not rewarded enough for high risk and are
overcompensated for buying securities with low risk.
D) in all periods, some unsystematic risk is being valued by the market.

A

A

41
Q 
The MOST appropriate equation for the single-index market model is 
A) Rit = ai + bRmt + et
B) Rit = ai + bRFRt + et
C) Rit = ai + bRit + et
D) Rit = ai + b(Rmt − RFRt) + et
A

A

42
Q

A strong positive signal is given to a technical analyst when the 50-day moving
average crosses the 200-day moving average from
A) above with high volume.
B) above with stable volume.
C) below with high volume.
D) below with stable volume.

A

C

43
Q

Empirical evidence suggests that asset allocation accounts for how much of the
variation in fund returns across all funds, and how much of the variation in
returns for a particular fund over time?
A) 99 and 90 percent respectively.
B) 90 and 90 percent respectively.
C) 50 and 90 percent respectively.
D) 40 and 90 percent respectively.

A

D

44
Q

What type of investment style would be MOST expected to outperform if the
bond yield curve is between flat and steep?
A) Growth investing.
B) Value investing.
C) Low volatility investing.
D) Momentum investing.

A

B

45
Q

An investor has a large, fixed amount to invest into a balanced fund. With other
things equal, in a relatively efficient market, the empirical evidence suggests the
investor should invest based on?
A) Pound cost averaging.
B) Value averaging.
C) Exponential weighting.
D) Single lump sum.

A

D

46
Q 
All of the following are active bond investment management strategies EXCEPT 
A) interest rate anticipation. 
B) yield curve positioning. 
C) relative value. 
D) duration matching.
A

D

47
Q

Which of the following statements about setting a strategic asset allocation and
then leaving the investment weights alone is correct?
A) “Leave alone” is a pro-cyclical asset allocation strategy.
B) “Leave alone” is well suited for an investor more concerned with investment
risk than investment return.
C) Leaving the investment weights alone is most suited to achieving an
absolute return investment objective.
D) A “leave alone” asset allocation strategy has no automatic stabiliser to
control risk. (1 mark)

A

A

48
Q

Where the benchmark return for a portfolio is defined as the risk-free rate, the
Sharpe Ratio will be
A) greater than the information ratio.
B) equal to the information ratio.
C) less than the information ratio.
D) only spuriously related to the information ratio.

A

B

49
Q 
Given an annual information ratio of 0.9, the monthly information ratio is 
CLOSEST to 
A) 0.26 
B) 0.42 
C) 0.99 
D) 3.29
A

A

50
Q

Which of the following is FALSE for a basic-rate taxpayer with a portfolio of
equity and fixed-interest unit trusts and OEICs?
A) Any losses from the portfolio are allowable for Capital Gains Tax
calculations.
B) All share buyback proceeds are not subject to 10% tax credit.
C) All coupons received are subject to 10% tax credit.
D) The taxation of share buybacks on the OEICs held will be treated the same
way as the unit trusts.

A

C

51
Q

A one factor Arbitrage Pricing Model has the following expected returns and
factor sensitivities for two portfolios, x and y:
Portfolio Factor sensitivity Expected return
x 1.5 5%
y 0.5 3%
The risk free rate is closest to
A) 0%
B) 1%
C) 2%
D) 3%

A

C

52
Q 
An adjusted beta is often calculated for stocks when using the market model 
because 
A) betas tend to mean revert. 
B) betas tend to be procyclical. 
C) betas tend to follow a random walk. 
D) beta requires a risk-free rate.
A

A

53
Q

Two unrelated variables may appear to have a statistical negative correlation
coefficient because of
A) error terms being correlated across the observations.
B) error terms being normally distributed.
C) a small number of outliers.
D) truncation of the outliers.

A

C

54
Q 
An analyst evaluating a company’s ability to pay its credit obligations is LEAST 
likely to consider the company’s 
A) gearing ratio. 
B) interest coverage ratio. 
C) bond indenture provisions. 
D) level of profitability.
A

C

55
Q

Aimee is an additional rate taxpayer. She has received £800 net interest from
her Gilt holding this tax year. How much more tax will she have to pay on this
interest?
A) £250
B) £125
C) £62.50
D) £0

A

A

56
Q

Your asset management company manages discretionary, segregated mandates
for private individuals. On which of the following services would VAT be
charged?
A) Stock lending.
B) Clearing and settlement.
C) Foreign exchange.
D) Registrar and depositary services.

A

D

57
Q

A fund manager with an information ratio of 0.8 has recently stated she intends
to take a more aggressive, higher beta approach to the portfolio next year.
Other things equal, in a relatively efficient market, what is the information ratio
MOST likely to do?
A) Stay the same.
B) Rise.
C) Fall.
D) Cannot suggest in advance.

A

A

58
Q

A security has a recent historical beta of 1.4 which is above its own long-run
beta. A statistical arbitrage strategy is most likely to forecast that beta in the
next period is
A) < 0
B) = or > 0 <1
C) 1
D) >1

A

D

59
Q 
A black swan event is an example of 
A) Platykurtosis. 
B) Leptokurtosis. 
C) Positive skewness. 
D) Negative skewness.
A

D

Black Swan = Negative Skew
Fat Tails (leptokurtic) = Positive skew
Platykurtosis = thinner
60
Q

The complement of an event occurring means that
A) the event does occur.
B) the event does not occur.
C) a second event similar to a first event occurs.
D) a second event dissimilar to a first event occurs.

A

B

61
Q 
In a covariance matrix, the covariance of the returns of a security on the returns 
of the same security is equal to 
A) 1 
B) 0 
C) the variance of the security. 
D) the R2 of the security.
A

C

62
Q 
Compared to the arithmetic return of a security, the geometric return for the 
same security is 
A) always less. 
B) less or the same but never higher. 
C) always more. 
D) more or the same but never less.
A

B

63
Q

An analyst compares a 20-year index-linked Gilt yield to a CPI adjusted 20-year
normal Gilt yield. The analyst should expect to find that the
A) index-linked Gilt yield is higher.
B) index-linked Gilt yield is lower.
C) index-linked Gilt yield equals the CPI-adjusted 20-year normal Gilt yield.
D) two are unequal, but randomly so.

A

B

64
Q

In equilibrium, all the following are true for the arbitrage pricing theory (APT)
EXCEPT:
A) There is no under or overvaluation.
B) Non-systematic risk is priced.
C) No arbitrage opportunities exist.
D) Return is explained by a multifactor model

A

B

65
Q

Which of the following statements about private equity is MOST correct?
A) Private equity companies’ greater use of debt increases company efficiency
but transfers risk to debt holders.
B) Private equity companies with high leverage will not benefit from an
increased interest tax shield.
C) The impact of changes in interest rates and exchange rates on private equity
investments is referred to as capital risk.
D) One source of potential value added in a private equity firm is the alignment
of the economic interests of the limited partner and the portfolio managers.

A

D

66
Q

Peter follows a disciplined approach to investing and has in place a ‘collar’ to
selling stocks. He sells a stock once the price today has appreciated by 20%
above the purchase price. He also sells a stock once the price today has
declined by 30% from the initial purchase price. Peter’s investment behaviour is
most consistent with:
A) Modern portfolio theory.
B) Expected utility theory.
C) Behavioural portfolio theory.
D) Prospect theory.

A

C

67
Q

Which of the following is not a vote in law?
A) A vote for the management resolution.
B) An abstain vote on the management resolution.
C) A vote against the management resolution.
D) A shareholder resolution.

A

B

68
Q

All the following are FCA operational objectives EXCEPT:
A) Securing an appropriate degree of protection for consumers.
B) Promoting efficiency and choice in the market for financial services.
C) Ensuring markets work well for consumers.
D) Protecting and enhancing the integrity of the UK financial system.

A

C

69
Q

When analysing the suitability of bonds for a portfolio, a bond’s yield to call may
be important to know if:
A) Interest rates are expected to remain unchanged.
B) Interest rates are expected to rise.
C) Interest rates are expected to fall.
D) The investor only plans to hold the bond until its first call date.

A

C

70
Q

Stock lending may occur for all the following reasons EXCEPT:
A) Dividend taxation.
B) To cover delivery against payment.
C) In order to vote at company general meetings.
D) To facilitate ‘naked’ short selling.

A

D

Naked short selling is illegal!

71
Q

Stamp duty land tax (SDLT) for non-residential property applies to all the
following EXCEPT:
A) Commercial property such as shops or offices.
B) Agricultural land and forests.
C) Any other land or property which is not used as a residence.
D) Three or more residential properties bought in a single transaction.

A

D

page 643

72
Q

All the following about double top price patterns are true EXCEPT:
A) The two market tops are at a similar level.
B) It indicates a significant level of resistance.
C) It triggers the reversal of an uptrend.
D) It marks the continuation of an uptrend.

A

D

73
Q

Which of the following tax reliefs is available to investors in venture capital trusts
(VCTs)?
a. Income tax relief if the shares are acquired via initial subscription.
b. Relief from tax on dividends if the shares are acquired at issue but not if
they are acquired subsequently via a stock exchange trade.
c. Income tax relief if the shares were acquired via initial subscription or via a
stock exchange trade.
d. Relief from tax on dividends if the shares acquired are preference shares.

A

A

74
Q 
Dividends paid to individual investors in real estate investment trusts (REITs) will
predominantly be taxed as? 
a. Property rental income. 
b. Dividend income
c. Savings income.
d. Earned income.
A

A

75
Q

If asset returns have significant negative skewness or excess kurtosis, the right
measure of risk is most likely to be?
a. Gaussian distribution-based Value at Risk.
b. Value at Risk.
c. Cornish Fisher Value at Risk.
d. Conditional Value at Risk.

A

C

76
Q 
Which portfolio performance measure normalises the client portfolio return in 
terms of the benchmark risk?
a. Sharpe ratio.
b. M2 measure.
c. Appraisal ratio.
d. Sortino ratio.
A

B

77
Q 
All of the following yields are used to help identify opportunities to switch 
between bonds and equities except?
a. earnings yield.
b. dividend yield. 
c. cash yield.
d. flat yield.
A

C

78
Q

Barber and Odean (2000) rank retail investors portfolios by turnover and report
that the difference in return between the highest and lowest turnover portfolios is
-7% per year. They attribute this to:
a. Prospect theory.
b. unstable preferences.
c. extreme aversion.
d. overconfidence.

A

D

79
Q 
A retired non-UK resident individual is liable to UK income tax on income arising 
in the UK of: 
a. 100% of pension income. 
b. 90% of pension income.
c. 60% of pension income.
d. 50% of pension income.
A
80
Q

A straight line drawn from the risk-free rate on the Y-axis to a risky fund on the
efficient frontier has a gradient that is the:
a. Alpha
b. Beta
c. Jensen measure
d. Sharpe ratio.

A

D

81
Q

Tax relief is available on gross interest paid on all of the following loans except
loans to?
a. Purchase commercially let property.
b. Develop land to be sold for residential property.
c. Buy shares in a closely held company.
d. Buy shares in an employee-controlled company.

A

A

82
Q

Stamp Duty Reserve Tax (SDRT) is paid when?

a. Purchasing a contract for difference (CFD) on the FTSE 100 index.
b. Purchasing a new issue of shares in a public limited company.
c. Purchasing shares in an exchange-traded fund (ETF).
d. Purchasing an option to buy shares.

A

D

83
Q

Which of the following services is normally exempt to VAT?

a. Discretionary investment management.
b. Trustee and depositary.
c. Safe custody.
d. Global custody.

A

D

84
Q

All of the following are features of quadratic programming outputs within portfolio
construction except?
a. The expected return should be no less than a minimal rate of portfolio
return that the investor desires.
b. Short (negative) and long (positive) positions.
c. Each coefficient is constrained to lie between 0 and 1.
d. The sum of the coefficients should add up to a total of 1.

A

B

85
Q

When exercising investment stewardship and firmer action is considered, the
expected order of activity would normally be?
a. Company engagement, share ownership, voting, divestment.
b. Share ownership, voting, divestment, company engagement.
c. Share ownership, company engagement, voting, divestment.
d. Share ownership, voting, company engagement, divestment.

A

D

86
Q

The international capital asset pricing model (CAPM) assumes that?
a. The risk-free rate is the investor’s domestic risk-free rate, and the market
portfolio is the market capitalisation weighted portfolio of all public-listed
risky assets in the world.
b. The risk-free rate is the investor’s domestic risk-free rate, and the market
portfolio is the market capitalisation weighted portfolio of all public-listed
and private risky assets in the world.
c. The risk-free rate is the best currency-hedged Treasury bill rate in the
world, and the market portfolio is the market capitalisation weighted
portfolio of all public-listed risky assets in the world.
d. The risk-free rate is the best currency-hedged Treasury bill rate in the
world, and the market portfolio is the market capitalisation weighted
portfolio of all public-listed and private risky assets in the world.

A

B

87
Q

In a situation where there is a risk of corporate insolvency, and where the equity
value of the company is low, which is most likely?
a. Bondholders prefer the company to take additional risk.
b. Bondholders prefer the company to pay back unsecured loans.
c. Equity holders prefer the company to cut the dividend to conserve cash.
d. Equity holders prefer the company to take additional risk.

A

D

88
Q

Which active management strategy does research suggest underperforms?

a. A continuation strategy based on investing in recent momentum.
b. A continuation strategy based on investing in past winners.
c. A contrarian strategy.
d. A strategy of small rather than big companies.

A

B

89
Q

What are the aims of the UN Sustainable Development Goals (UN SDGs)?
a. To make business and governments more sustainable.
b. To reduce poverty and improve the environment.
c. To make economies more productive, socially inclusive, and
environmentally conscious.
d. To increase sustainable economic growth.

A

C

90
Q

For an employed UK tax payer with a portfolio of directly held FTSE 100 shares:
a. realised losses from the portfolio cannot be set against realised gains for
Capital Gains Tax (CGT).
b. the annual CGT exemption, if not fully used, may be carried forward one
year.
c. holdover Relief for CGT is unavailable if the shares are transferred to a
discretionary trust.
d. two different CGT rates may apply to realised gains in the same year.

A

D

91
Q

The main purpose of the January 2020 revision to the UK Stewardship Code is
to:
a. ensure that institutional investors manage investments fairly.
b. strengthen governance, transparency, and reporting.
c. address investor concerns.
d. align with the Corporate Governance Code.

A

B

92
Q 
A company has earnings per share of 16p, dividend per share of 4p, used onequarter of earnings to buyback shares, and has a share price of 200p. The 
company has a:
a. price earnings ratio of 10.
b. dividend yield of 8%. 
c. buyback yield of 25%. 
d. total yield of 4%.
A

D

93
Q

In order to remain a FTSE 350 company director, the UK Corporate Governance
Code requires existing directors to stand for re-election:
a. every nine months.
b. annually.
c. every two years.
d. every three years.

A

B

94
Q

The January 2020 revision to the UK Stewardship Code did not integrate:

a. the UN Principles for Responsible Investment.
b. the EU Shareholder Rights Directive.
c. the Paris Agreement on climate change.
d. extensive investor and stakeholder feedback.

A

C

95
Q

A common concern about green bonds is:

a. the definition of green has not yet been properly defined.
b. they are not well understood by retail investors.
c. they are not well regulated.
d. low investor interest.

A

A

96
Q

A company has a current price of USD25 a share, an expected growth rate in
perpetuity of 4% and expected dividend per share next year (D1) of USD1. You
have a required rate of return of 5%. The expected return minus the required
return is equal to:
a. 8%.
b. 5%.
c. 3%.
d. 1%.

A

C

PCT (1 decks)

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