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CISI: Securities > Things I got wrong > Flashcards

Things I got wrong Flashcards

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SIE Exam flashcards
1
Q

What is the term for expressing the value of a future sum in terms of its value today by considering the prevailing interest rate?

A

Present value

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2
Q

What is the typical settlement period for Eurobond transactions?

A

T+2

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3
Q

What is the main limitation of using flat yield as a measure of bond returns?

A

It doesn’t consider capital gains or losses

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4
Q

Which type of bonds typically pay interest gross, making the buyer responsible for paying their own tax?

A

Eurobonds

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5
Q

Why were investors willing to buy bonds with negative yields in early September 2021?

A

To preserve the security of their capital

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6
Q

What does a puttable bond give the bondholder right to?

A

Redeem the bond early at a pre-agreed amount

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7
Q

What is the minimum number of shares required by a predator to gain control of a company?

A

> 50%

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8
Q

Which two terms can be used to describe a bonus issue?

A

Scrip issue and capitalisation issue

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9
Q

Would a company buy back its shares to execute orders from a number of investors?

A

No, this is called aggregation

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10
Q

Pre-emptive rights are associated with which type of offer?

A

Secondary offering

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11
Q

Why would a organisation choose to offer an introduction?

A

To increase liquidity of shares

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12
Q

After what period of time would a company on AIM be removed without a nomad or broker?

A

One month

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13
Q

What does a best-efforts agreement imply about the securities being offered?

A

High risk securities

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14
Q

How does underwriting benefit the issuing company?

A

It ensures that there is sufficient demand for the shares

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15
Q

Which organisation sets the rules to to becoming listed on the LSE?

A

The FCA

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16
Q

Why would investor confidence in a recently listed company suffer?

A

Volatility circuit breaker

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17
Q

How does an over-allotment option allow underwriters to achieve a more successful offering?

A

It allows underwriters to sell shares if they rise and buy back shares if they fall

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18
Q

How often are listed companies generally required to provide audited accounts?

A

Annually

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19
Q

When would investors accept a negative yield on a government bond?

A

When they require a safe place to deposit their funds.

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20
Q

Why would a company issue Global Depository Receipts?

A

To attract overseas investors

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21
Q

Why would a buyer of a government bond pay more than nominal value?

A

Available rates are lower than the rates available on the bond

22
Q

Many cryptocurrencies are decentralised, what effect does this have?

A

Lowers counterparty risk and liquidity.
No need for centralised exchange.

23
Q

Why is gross redemption yield more useful than flat when comparing bonds?

A

GRY accounts for gain or loss through to maturity

24
Q

Why would a yield curve become inverted?

A

Through the expectation of a significant reduction in future interest rates

25
Q

What is the usual shape of the yield curve when investors prefer more liquidity?

A

Normal, shape is upwards sloping and to the right
Will accept lower yield on shorter dated bonds

26
Q

Are investment trusts allowed to borrow money?

A

Yes, they are companies.

27
Q

How is the share price of an investment trust determined?

A

Supply and demand, they are closed ended so price may not be the underlying.

28
Q

How do structured deposits benefit investors?

A

Protection of capital whilst having exposure to investments which may provide higher returns

29
Q

Which type of US government security is zero coupon?

A

T-bills

30
Q

What criteria is required to have a CIS described as regulated?

A

Local financial regulator must authorise local CISs and recognise foreign CISs

31
Q

What is a income statement sometimes known as?

A

The profit and loss statement

32
Q

What is the calculation for capital employed?

A

Equity + long term loans (liabilities)

33
Q

Where would EPS be found on a financial statement?

A

Income statement

34
Q

Which figure typically constitutes a company’s distributable earnings?

A

Net profit

35
Q

Which entity in the EU issues EU bonds to cover its funding needs?

A

The European Commission

36
Q

What is the maximum maturity period for Japanese Government bonds (JGBs)?

A

40 years

37
Q

Which market is NOT considered as an example of a decentralised market?

A

Equities

38
Q

Why might a strategic stake be accumulated in a company?

A

To influence the company and its operations

39
Q

What do “quantity adjusting” (Quantos) structured products protect investors against?

A

Currency fluctuations

40
Q

What does the quick ratio, also known as the acid test, exclude from its calculation?

A

Inventory

41
Q

Which section of the cash flow statement typically includes interest paid?

A

Operating activities

42
Q

Why has the volume of bonds traded on single dealer platforms fallen?

A

Banks have become less willing to allocate capital in the bond market

43
Q

What is the formula for asset turnover?

A

Revenues / Total net assets

44
Q

What is the formula for return on shareholders equity?

A

Net Income / Shareholders Equity

45
Q

What is the formula for ROA/ROCE?

A

Operating Profit / Total net assets

46
Q

What is the formula for the quick ratio?

A

(current assets - inventory) / current liabilities

47
Q

What is capital expenditure?

A

Money spent to buy non-current assets, such as PPE.

48
Q

How are bond ratings ordered?

A

More letters the better e.g. AAA > AA+
Letter takes priority, e.g. A- > BBB+

49
Q

What does NYSE have that LSE doesn’t?

A

Open outcry trading

50
Q

What is measure is used to target inflation?

A

CPI (Consumer Price Index)

51
Q

Which of the measures of profit is stated after deduction of only the cost of goods sold?

A

Gross Profit

CISI: Securities (10 decks)

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