Test Questions

Question 1

The accrual convention for gilts is

Answer 1

Actual/actual

Question 2

The London FOREX market is

Answer 2

An order driven market

Question 3

The long run Phillips curve is vertical at which level of unemployment

Answer 3

Natural

Question 4

A contract for difference is best defined as an agreement between two parties to exchange the difference between:

Answer 4

The opening and closing price of the contract

Question 5

A certificate of deposit

Answer 5

Is a tradeable time deposit

Question 6

Which of the following statement an about an OEIC are correct

Answer 6

There is a single price for buying and selling shares in the company

The assets of the company are looked after by a depository

Question 7

If a CDO (collateralized debt obligation) is made up of credit derivatives, what is it called

Answer 7

A synthetic CDO

Question 8

In the UK, covered warrants are traded

Answer 8

On the London Stock Exchange

Question 9

Tactical asset allocation refers to

Answer 9

Short term departures from strategic portfolio weights

Question 10

A convertible bond will usually have a price which is

Answer 10

At least as great as the price of an equivalent non- convertible issue

Question 11

Who issues gilts

Answer 11

The debt management office

Question 12

What is pure expectation theory

Answer 12

The shape of the yield curve can be explained in terms of expected future interest rates

Question 13

Commercial paper has the following characteristics

Answer 13

Maturity varies from seven days to one year

Question 14

Who regulates collective investment schemes

Answer 14

Financial conduct authority

Question 15

What is the maximum proportion of an investment trust company’s (ITCs) funds that can be invested in a single company

Answer 15

15%

Question 16

Who is responsible for the safe keeping of assets for an open ended investment company (OEIC)

Answer 16

Depository Institution

Question 17

The option sensitivity ‘theta’ represents the movement of the option value as which of the following charges

Answer 17

Time to expiration

Question 18

What best describes a bullet portfolio

Answer 18

Where bonds are selected with duration close to the liabilities duration

Question 19

A budget deficit is also known as

Answer 19

A positive public sector net cash requirement (PSNCR)

Question 20

Which of the following are included in M0

Answer 20

Notes coins in circulation, banks till money and banks balances at the BoE

Question 21

What best describes R2

Answer 21

The amount of variation explained by the regression line

Question 22

The accounting equation is best defined as which of the following?

Answer 22

Shareholders fund + current liabilities - non-current assets = current assets - non-current liabilities

Question 23

If goodwill is believed to have a limited life, how should this be reflected in the accounts

Answer 23

Annual impairment review

Question 24

The Financial Times Ordinary Share Index (FT30 - Share Index) is calculated using which calculation approach

Answer 24

Equally weighted geometric index

Question 25

Which of the following indices is an unweighted arithmetic index?

Answer 25

Nikkei 225

Question 26

I’m a product life cycle, profits are maximized during

Answer 26

The growth phase

Question 27

Accounting standards in the UK are issued by?

Answer 27

Financial Reporting Council

Question 28

Which of the following methods of issuing shares allows the public to purchase them?

Answer 28

Offer for sale

Question 29

The most direct way to invest in commodities is by using

Answer 29

Futures contracts

Question 30

An investor who owns commodity futures will earn a positive roll yield if

Answer 30

The market is in backwardation

Question 31

The hedonic method of valuing a property investment is an aspect of which broad valuation approach?

Answer 31

The sales comparison approach