questions - mix of topics Flashcards
Someone decided to invest in cumulative preference shares as they:
Wanted some certainty regarding future dividend payment
For what minimum period of time must the training and competence records of an individual carrying out non-MiFID business be retained after they have stopped carrying out regulated activities?
3 years
Under the FCA Senior Managers Regime, where a senior manager is found guilty of reckless misconduct, what maximum prison sentence may apply?
7 years
Martin has set up a trust fund for the benefit of his three grandchildren and has appointed two trustees with discretion to exercise their powers. In these circumstances, which of the following is true?
Both trustees must agree, before exercising their discretionary powers
A new gilt issue has received wide publicity in the financial press, in which it has been referred to as ‘medium-dated’. However, the UK Debt Management Office has described it as ‘short-dated’. It will therefore be for which of the following terms?
6 years
If Chris and Kim opt for a joint repayment mortgage, the most suitable way to ensure that the loan will be repaid if either of them dies is by:
taking out a mortgage protection assurance policy
A building society has liabilities of £900m. What maximum amount, if anything, is the building society permitted to raise on the wholesale markets?
£450m
(Building societies can raise funds on the wholesale markets up to 50% of the value of their liabilities)
On a with-profits endowment policy, what is a reversionary bonus?
- A payment that is declared regularly and once allocated to the policy, cannot be removed
- A reversionary bonus is not pre-set; it is dependent on investment performance
A chargeable lifetime transfer is made, and the donor is informed that inheritance tax will be payable:
Immediately
A sole trader with no employees may be subject to which class, or classes, of National Insurance contributions?
Class 4 only
What is Gross Domestic Product? A measure of the value of:
goods and services produced within a country over a specified period of time.
How is property defined under the Third Money Laundering Directive (2005) in relation to money laundering?
Assets of every kind, including legal documents giving title to such assets.
In respect of mortgage advice, which of the following pieces of information is not required as part of the initial disclosures under MCOB 4?
Arrears arrangements
David has arranged a life policy for his customer, Jane. Assuming that Jane does not require immediate cover and that details of suitability are not provided orally, what is the latest date that the suitability report can be sent to Jane?
Before conclusion of the transaction.
Under the Fourth Money Laundering Directive, beneficial owners of legal entities are defined as those who own or control what minimum percentage of the legal entity?
25%
Simon has undergone his initial training as an investment adviser but has not yet passed the regulatory module of an appropriate qualification. Under what circumstances might he be allowed to advise customers about regulated products, if at all?
Under no circumstances can he offer advice to customers.
Within an authorised firm, the Financial Conduct Authority considers that responsibility for ensuring the fair treatment of customers lies with:
the firm’s senior management.
When a pension transfer specialist leaves that role or leaves the firm, for what minimum period of time must records of their competence in this field be retained by the firm?
Indefinitely.
Which oversight group would most likely provide reasonable assurance that financial reports published are free from material misstatements?
external auditors.
After arrears have arisen, within what period should mortgage customers be provided with specific information from their lender.
15 working days
The FCA requires that a firm’s systems and controls must:
be regularly reviewed.
Under the Certification Regime, individuals performing a specific function that isn’t a senior management function but that can have a significant impact on customers must be approved by:
their employing firm only.
The maximum size of loan, if any, regulated by the Consumer Credit Act 2006 is:
Unlimited
The FCA Training and Competence Sourcebook applies to:
financial advisers, supervisors of those advisers and supervisors of certain ‘back office’ functions.
the specialist sourcebooks section within the FCA Handbook includes arrangements for:
professional firms.
Which of the following is a main advantage of commercial real estate investments over residential real estate investments?
Longer leases than for residential property
What is the primary objective of fiscal policy as utilised by the UK government? To:
influence the economy through adjustments in public spending and taxation
Amanda has a permanent interest-bearing shareholding. This means:
she has no guarantee that her original investment will be repaid
Peer-to-peer lending is…
not protected by the Financial Services Compensation Scheme
The inter-governmental organisation established to co-ordinate the international fight against money laundering is the:
Financial action task force
The options available for handling a dispute under an alternative dispute resolution scheme include the following, except:
Litigation
Paul was prosecuted under the Proceeds of Crime Act 2002 and received the maximum sentence of five years in prison and a fine. This means that he must have been convicted of which money-laundering offence?
Tipping off
The increase in the Consumer Prices Index has fallen from 4% to 2.5% in the past 12 months. This is an example of:
Deflation
The government takes more in taxation than it spends on public services. This is most likely to result in the economy:
Expanding
Which of the following is true in relation to real estate investment trusts?
At least 90% of profits must be distributed to shareholders.
Which function is responsible for overseeing the operation of an open-ended investment company and safeguarding investor interests?
The depositary
What percentage of a unit trust’s fund must be in cash or fixed-interest investments for distributions to be treated as interest payments?
More than 60%
In relation to investment trusts, which of the following is true?
The trust can borrow for investment purposes.
Andrea has private medical insurance, paid for by her employer as part of her employment package. Which of the following would not apply?
An income tax liability for Andrea on the value of the premiums.
Which of the following statements is true in relation to income protection insurance (IPI)?
Benefits are paid for a maximum of 12 or 24 months.
Equity release is regulated by:
The FCA only
The Capital Requirements Directives (CRDs) apply to banks, building societies and insurers.
False – applies to banks, building societies and investment companies
When looking at capital adequacy, a firm’s solvency ratio is its:
capital as a percentage of its risk-adjusted assets.
The EU Directive, Solvency II, aims to:
reduce the risk of an insurance company being unable to meet its claims
Although it has adequate assets, Blazing Bank is unable to meet customers’ demands to withdraw cash. This means it has a:
Liquidity problem
The Basel III net stable funding ratio, requires that a bank’s:
long term financial resources exceed long term commitments
