The Financial Services Industry

Question 1

What are the UK’s general Economic Policy aims?

Answer 1

Sustainable growth, Control inflation, full employment, Balance of payments

Question 2

What is Fiscal Policy?

Answer 2

Government policy on taxation and public borrowing / spending.

Question 3

What is the PSNCR?

Answer 3

PSNCR (Public sector net cash requirement) is the short fall between what the government spends and the income (taxes) it receives. The government is usually in a surplus and needs to have gilts to bring in other income.

Question 4

What is Monetary Policy?

Answer 4

The BOE control interest rates and money supply. They do this through setting the Base Rate and Quantitative Easing.

Question 5

What is the governments inflation target?

Answer 5

2%

Question 6

Who sets the interest rates in the UK?

Answer 6

The Monetary Policy Committee

Question 7

How often do the MPC meet to set interest rates?

Answer 7

8 times a year

Question 8

What is the primary market?

Answer 8

New issues of shares. IPO’s. The London stock exchange within the UK.

Question 9

What standards do companies have to meet before they list on the Primary Market?

Answer 9

Their size, no. of securities they are introducing, information they give investors

Question 10

What is the secondary market?

Answer 10

Allows investors to buy and sell securities which are already in the market.

Question 11

What is the balance of payments?

Answer 11

Total of the countries exports and imports

Question 12

Who is responsible for implementing the governments financial and economic policy

Answer 12

The Treasury

Question 13

What is the Lamfalussy Process?

Answer 13

A new framework for implementing EU legislation.

Question 14

What is Level 1 in the Lamfalussy framework?

Answer 14

Framework acts -

Question 15

What is the ESMA and what are its roles?

Answer 15

The European Securities and Markets Authority. Safeguards the stability of the EUs financial system by ensuring the integrity, transparency and efficiency of the securities markets. Tries to converge markets within financial sectors. Created a single rule book in Europe.

Question 16

What is the ECB? And what are its tasks?

Answer 16

The European Central Bank - main task is to maintain the purchasing power of the Euro and have price stability. They authorise the issuance of bank notes, define euro system policies, statutory reports.

Question 17

What are chinas main regulatory bodies? (4)

Answer 17

The China securities regulatory commission (CSRC). The China banking regulatory commission (CBRC). The China insurance regulatory commission (CIRC). The peoples bank of China (PBOC).

Question 18

What are the main regulatory bodies in Hong Kong? (5)

Answer 18

Securities and future exchange (SFC). Stock exchange of Hong Kong (SEHK). Hong Kong futures exchange (HKFE). Hung Kong Monetary Authority (HKMA) . Independent Insurance Authority (IIA).

Question 19

What are the main regulatory bodies in Japan?

Answer 19

Financial Services Agency (FSA). Securities and Exchange Surveillance Committee (SESC).

Question 20

What are the main regulatory bodies in Singapore?

Answer 20

Monetary authority of Singapore (MÁS). Singapore exchange Securites trading (SGX). Securities industry council (SIC).

Question 21

What are money market operations?

Answer 21

The borrowing and lending of highly liquid, short term assets and securities conducted between banks.

Question 22

What is Narrow Money?

Answer 22

All liquid financial assets.

Question 23

What is Broad Money?

Answer 23

Sum of wide range of financial assets, including less liquid assets.

Question 24

Which BoE monetary aggregates is this ‘ the measure of notes and coins in circulation outside the BoE, plus operational deposits at the BoE. ‘Narrow money’

Answer 24

M0

Question 25

Which BoE monetary aggregates is this ‘ the measure of notes and coins in circulation with the public, plus sterling deposits held with UK banks and building societies by the rest of the private sector. (Broader Money)

Answer 25

M4

Question 26

What is the Fischer Equation?

Answer 26

The relationship between Money Supply, Inflation and employment. MV=PT.

Question 27

What is National Income?

Answer 27

The sum of all incomes of residents in the UK which arise as a result of economic activity from the production of goods and services.

Question 28

Why is measuring NI useful? (5)

Answer 28

• Measuring the standard of living in the country.
• Comparing the wealth of different countries
• Measuring the change in national wealth and the standard of living
• Ascertaining long term trends
• Assisting central government in its economic planning

Question 29

What is GDP ( gross domestic product)?

Answer 29

The total value of income / production from economic activity within the UK.
C+I+G+(X-M)
C - Consumer Expenditure
I - Private investment in firms
G - Government spending
(X-M) - Balance of payments

Question 30

Give an example of a direct and an indirect tax.

Answer 30

Direct (tax of incomes of individuals)- Corporation tax
Indirect (products and services) - VAT

Question 31

What is the primary role of the world trade organisation?

Answer 31

Deal with the rules of trade between different nations; among its aims is the liberalisation of trade laws between countries

Question 32

How long does a typical business cycle tend to last in a developed country?

Answer 32

8-10 years.