things missed Flashcards
what is a feature of convertible bonds?
they are a cheaper source of finance
what is an example of an instrument which has synthetic replication?
Swap
what are the characteristics of investment trusts?
they are used for long-term borrowing and have fixed share capital
what is a feature of imobolised bearers?
they are used for money laundering
what is a characteristic of interest legs swaps?
one leg is fixed, other is floating
what does a fund manager buy/sell to make profits?
sells future contracts, buys put options
what are breeder documents?
identity theft
what is a characteristic of a rights issue?
they are offered at discount, increases liquidity, brings lower share prices
what is the term “exercised price” used for
option
what does private equity allow individuals to do?
buy a direct stake in the company
what are the features of hedge funds?
reduces market risk, has performance related fees, high fees
what is the percentage for a high yield IA?
50%
what is corporation tax used on?
adjusting profits
what is a feature on money markets?
nominal value is preserved
what will low employment cause?
increase gov income and decrease outgoings
what are government bonds called?
strips
what is the index for America tech?
NASDAQ COMPOSITE
what are ordinary shares also called when the nominal value is paid?
Contributing shares
who does the safekeeping of OEIC
Depositary
what must new firms meet?
threshold conditions
what do Index-linked bonds increase?
coupons and redemption amount
how often do AGM need to be held?
Annually
which type of instrument is treated as income rather than capital gains?
Investment trusts (real estate trusts)
who does the registered title apply too?
the shareholders name on the company register in relation to shareholding
how should ETF be priced?
Near their NAV
what are the three exchange rate regimes?
target zone = exchange rate managed by a band
crawling peg = has upper + lower limits
managed = “dirty” float, occasional interference
how are treasury bills issued? and commercial paper?
Issued at discount to par
offered at zero-coupon
how is settlement done on money markets?
Done by CREST, settled on the day or T+2
The advantages of the money market? and risk?
investors get access to better assets, greater returns, MMM wont invest in funds unless AAA rating. But issuers risk
differences between residential and commercial?
residential = landlord repairs, commercial = resident repairs
residential = short leases, commercial = longer
how can hedging be used?
selling future contracts and buying put options
how is trading taken place on options?
Traded on the exchange if dealt on standardized terms, traded OTC for out of these terms
how does trading take place for SWAPS?
Traded over-the-counter and negoatied between parties
what does ICE futures Europe trade?
for UK derivatives, also trades (sugar, weed, cocoa)
what does EUREX trade?
German deriviatives
difference between OTC markets and Exchange markets
Exchange = standardized, involves intermediate central counterparty
OTC = Traded directly between parties without exchange or brocker
what does Intercontential markets trade?
ICE = electronics, energy, crude oil, jet fuel, electric power
what does LME trade?
Plastics, aluminum, Tin, Zinc, Copper, Nickel, Lead
what is single and dual pricing?
single = mid market single price (traditionally OEIC)
dual = bid and offer price (traditionally AUT)
in single pricing, how are costs recouped?
dilution levy
what are the charges involved for OEIC, IT and AUT
UCITS in OCF = audit costs, registration, regulatory fees, does not include exit/initial fees or performance charges
what does the TER of AMC include?
Performance related fees
what’s it called if shares include different share classes?
what is zero-payment dividend
split-capital investment trust.
zero-dividend payment = pays 0 dividends, gets return from difference in price paid and amount at future date.
real-estate investment trust
investment that pools capital into residential and commercial property. no double taxation and REIT pay no PT or CGT, if 90% given to shareholders
why do trading at discounts occur?
Markets view, or it could be winding-up, or merger/takeover happening
what are the participants and roles in ETF
Authorized = financial institutions (create/redeem, maintains balance)
Sponsor = (designing, manages)
what are the different replication methods?
Physical = each part of index is traded with index weight
optimization = using modern techniques
synthetic replication = swap
identity fraud and identity theft
IF = impersonating fraud, uses identify to obtain goods
IT = Obtain goods by deception (documents, passport)
what is the max sentence for bribery?
10 years
what makes real-estate investment trusts less risky than direct property?
diversification
what is the key structure of an offset mortgage?
the interest is charged on a reduced amount
what happens in a buoyant economy
spending tends to be less than tax revenues
why do firms seek commercial loans?
to buy new machinery
why would firms increase their prices in short time?
high inflation
why would decrease occur in cash deposit account?
inflation
Baa to BA meaning
from investment grade to non-investment grade
how often do UK government bonds get paid?
Half-yearly
what does it mean if a bond is high quality?
it is the most liquid
what is a short-term marketable security with a maturity up to five years and issued by commercial banks?
certificate of deposit = negotiable issued by commercial banks in exchange for fixed-term deposit
what is a gig economy?
Treats workers as independent contractors
what are fixed-income securities traded on?
SEATSq
quote-drive system
provides bid and offer prices by market makers. It is used for NASDAQ and SEAQ
order-driven system
provides market makers and electronic books. LSE SETS and NYSE
