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Detailed FCA > Securities cram > Flashcards

Securities cram Flashcards

1
Q

Dow jones number of constituents

A

30

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2
Q

Nasdaq number of constituents

A

3200

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3
Q

Nikkei number of constituents

A

225

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4
Q

Dax number of constituents

A

30

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5
Q

CAC number of constituents

A

40

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6
Q

STOXX number of constituents

A

600

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7
Q

MSCI number of constituents

A

1700

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8
Q

Bearer bonds

A

France, Germany, Japan (sometimes)

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9
Q

T+2 bonds

A

Germany, France

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10
Q

Bonds with annual payments

A

Germany, France

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11
Q

OATs life

A

2-50

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12
Q

Schatz life

A

<2

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13
Q

Bobl life

A

5-10

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14
Q

Bund life

A

10-30

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15
Q

Short life

A

<7

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16
Q

Medium life

A

7-15

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17
Q

Long life

A

> 15

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18
Q

T-notes

A

2-10

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19
Q

T-bonds

A

> 10

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20
Q

JGB life

A

2-40 (most common long 10 and superlong 20)

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21
Q

Ratings using +s

A

S&P and Fitch

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22
Q

Fitch/S&P highest junk

A

BB+

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23
Q

Fitch/S&P lowest investment grade

A

BBB-

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24
Q

Moody’s highest junk

A

Ba1

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25
Q

Moody’s lowest investment grade

A

Baa3

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26
Q

S&P and Fitch default

A

D

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27
Q

Moody’s default

A

C

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28
Q

Modified duration

A

Approximate price change in response to 1% change in interest rates (liquidity preference)

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29
Q

When interest rates rise

A

Bond prices fall

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30
Q

FX standard settlement time

A

T+2

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31
Q

Legals structures of CIS

A

OEIC/Inv trust = company; unit trust = trust

32
Q

Open/close of CIS

A

Unit trust/OEIC = open; investment trust = closed

33
Q

Holdings of CIS

A

Unit trust = units; OEIC/investment trust = shares

34
Q

Supervision of CIS

A

Unit trust = trustee; OEIC=depository; Inv trust = independent auditors

35
Q

Management of CIS

A

Unit trust/inv trust = fund manager; OEIC =authorised corporate director

36
Q

Investment rules of CIS

A

Unit trust/OEIC = limited borrowing, fixed rules; investment trust = unlimited gearing, flexible rules

37
Q

Price systems of CIS

A

Unit/Investment trust = Bid-Offer (dual), OEIC = single

38
Q

Value of CIS

A

Unit trust/OEIC = market value; investment trust = NAV

39
Q

Brokertec

A

B2B electronic multitrader platform

40
Q

eSpeed

A

B2B electronic multitrader platform

41
Q

MTS cash

A

B2B electronic multitrader platform

42
Q

MTS Bondvision

A

B2C electronic multitrader platform

43
Q

Tradeweb

A

B2C electronic multitrader platform

44
Q

Equity settlement times

A

T+2 except when shares are newly issued T+1

45
Q

Bond/MM settlement times

A

T+1

46
Q

Settlement model in Europe

A

Gross, Simultaneous settlement

47
Q

Settlement model in US and emerging markets

A

Gross settlement of securities and net settlement of funds

48
Q

Global custody

A

Manages custody arrangements across the full range of foreign markets in which they have invested assets

49
Q

Sub-custody

A

Where a local agent is appointed to provide settlement and custody services for assets that a global custodian holds on behalf of clients in a foreign market

50
Q

Local custodian

A

Market specialist operating in the same market as the custody assets trade

51
Q

What you find at top of order book

A

Highest bid and lowest ask price

52
Q

What is the special ex-trading period for equities?

A

Ten days. The special ex-trading period on the LSE is ten business days prior to the ex-dividend date.

53
Q

Ex-bargain

A

A special ex-bargain allows the investor to perform a trade in the cum-dividend period (where the buyer is entitled to the dividend), but strip the dividend from the share making it ex-dividend (out of dividend). Essentially, the seller keeps the rights to the next dividend and the buyer, having given-up this right, can buy the share more cheaply

54
Q

Omnibus account

A

An omnibus (also known as pooled) nominee is one where individual clients are grouped together within a single nominee registration and is more cost effective than designated, segregated or sole nominees.

55
Q

Clearstream

A

Settle Eurobonds

56
Q

LCH

A

France uses settles as central counterparty

57
Q

Euroclear

A

settles equities/eurobonds as the central depositor

58
Q

Forward rate adjustment

A

If the second price is higher than the first it is DEDUCTED

59
Q

Subscription at nil cost

A

no. of rights x Subscription price / Theoretical ex-rights price

60
Q

Bonus issue

A

Also called Scrip or capitalisation. New shares, nominal value unchanged gap made up from undistributable capital reserves, market cap unchanged

61
Q

Nil-paid value

A

ex-rights share price - price of the new shares

62
Q

Block trades

A

When an investment bank acting for the company will seek to do a small number of large trades with investors

63
Q

Accelerated book build

A

Where investment bank contacts number of institutions, investors in the company to see willingness to sell shares at specific price point and can guarantee the number of shares they will buy at an agreed price if not all are sold

64
Q

Indirect stakebuilding

A

CFD so that they get economic exposure of owning a stake in another entity in a less visible and potentially leveraged way

65
Q

Covered bonds

A

Where no SPV is created

66
Q

UK vs US commercial paper

A

The money market is the term for the market involving cash deposits and short-term instruments that are issued with less than one year to their maturity. CP is the corporate equivalent of a government’s Treasury bill. CP is issued at a discount to its nominal value and can have a maturity of up to one year in Europe and 270 days in the US; however, it is common to find in both territories that CP will be issued for three months.

67
Q

Benefits of cCP

A
  • Reduced counterparty risk - the risk that the other side of the transaction will default is reduced because they are replaced by one of the CCPs, both of which are well capitalised and have insurance policies in place lessening the risk of default. This reduces the risk of systemic collapse of the financial system;
  • Providing total anonymity - both sides of the trade do not discover who is the original counterparty.
  • Reduced administration - all trades are settled with one of the two CCPs, rather than a variety of counterparties improving operational efficiency.
  • Facilitating netting of transactions - because all the trades are with a CCP, receipts and payments for transactions in the same share that settle on the same day can be netted against each other.
  • Improved prices - because more participants are willing to transact anonymously, it is argued that a CCP results in improvements in price.
68
Q

Order of priority

A

Price followed by time. The quantity or size of the order is not used to determine place on the book.

69
Q

Holding where mandatory bid needs to be made

A

30%

70
Q

DJIA divisor

A

changed in price DIVIDED by divisor

71
Q

Conversion ratio

A

Nominal value/conversion price of shares

72
Q

Benefits of dark pools

A

Reducing market impact of large orders, better pricing, lower execution costs

73
Q

Lender rights

A

Borrower receives dividends/coupons
Benefits of corporate actions passed on to the lender
Voting rights lost (unless stock recalled in good time)

74
Q

Cash versus profit

A

Non-cash expenses added back to profits

Any increase in current assets or decrease in current liabilities subtracted and vice versa

75
Q

Capital employed

A

Total assets - current liabilities

76
Q

How T-bills are auctioned

A

Tender

Detailed FCA (7 decks)

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