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CISI introduction to securities and investments > things missed > Flashcards

things missed Flashcards

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SIE Exam flashcards
1
Q

what is a feature of convertible bonds?

A

they are a cheaper source of finance

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2
Q

what is an example of an instrument which has synthetic replication?

A

Swap

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3
Q

what are the characteristics of investment trusts?

A

they are used for long-term borrowing and have fixed share capital

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4
Q

what is a feature of imobolised bearers?

A

they are used for money laundering

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5
Q

what is a characteristic of interest legs swaps?

A

one leg is fixed, other is floating

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6
Q

what does a fund manager buy/sell to make profits?

A

sells future contracts, buys put options

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7
Q

what are breeder documents?

A

identity theft

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8
Q

what is a characteristic of a rights issue?

A

they are offered at discount, increases liquidity, brings lower share prices

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9
Q

what is the term “exercised price” used for

A

option

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10
Q

what does private equity allow individuals to do?

A

buy a direct stake in the company

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11
Q

what are the features of hedge funds?

A

reduces market risk, has performance related fees, high fees

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12
Q

what is the percentage for a high yield IA?

A

50%

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13
Q

what is corporation tax used on?

A

adjusting profits

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14
Q

what is a feature on money markets?

A

nominal value is preserved

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15
Q

what will low employment cause?

A

increase gov income and decrease outgoings

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16
Q

what are government bonds called?

A

strips

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17
Q

what is the index for America tech?

A

NASDAQ COMPOSITE

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18
Q

what are ordinary shares also called when the nominal value is paid?

A

Contributing shares

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19
Q

who does the safekeeping of OEIC

A

Depositary

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20
Q

what must new firms meet?

A

threshold conditions

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21
Q

what do Index-linked bonds increase?

A

coupons and redemption amount

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22
Q

how often do AGM need to be held?

A

Annually

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23
Q

which type of instrument is treated as income rather than capital gains?

A

Investment trusts (real estate trusts)

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24
Q

who does the registered title apply too?

A

the shareholders name on the company register in relation to shareholding

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25
Q

how should ETF be priced?

A

Near their NAV

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26
Q

what are the three exchange rate regimes?

A

target zone = exchange rate managed by a band
crawling peg = has upper + lower limits
managed = “dirty” float, occasional interference

27
Q

how are treasury bills issued? and commercial paper?

A

Issued at discount to par
offered at zero-coupon

28
Q

how is settlement done on money markets?

A

Done by CREST, settled on the day or T+2

29
Q

The advantages of the money market? and risk?

A

investors get access to better assets, greater returns, MMM wont invest in funds unless AAA rating. But issuers risk

30
Q

differences between residential and commercial?

A

residential = landlord repairs, commercial = resident repairs
residential = short leases, commercial = longer

31
Q

how can hedging be used?

A

selling future contracts and buying put options

32
Q

how is trading taken place on options?

A

Traded on the exchange if dealt on standardized terms, traded OTC for out of these terms

33
Q

how does trading take place for SWAPS?

A

Traded over-the-counter and negoatied between parties

34
Q

what does ICE futures Europe trade?

A

for UK derivatives, also trades (sugar, weed, cocoa)

35
Q

what does EUREX trade?

A

German deriviatives

36
Q

difference between OTC markets and Exchange markets

A

Exchange = standardized, involves intermediate central counterparty
OTC = Traded directly between parties without exchange or brocker

37
Q

what does Intercontential markets trade?

A

ICE = electronics, energy, crude oil, jet fuel, electric power

38
Q

what does LME trade?

A

Plastics, aluminum, Tin, Zinc, Copper, Nickel, Lead

39
Q

what is single and dual pricing?

A

single = mid market single price (traditionally OEIC)
dual = bid and offer price (traditionally AUT)

40
Q

in single pricing, how are costs recouped?

A

dilution levy

41
Q

what are the charges involved for OEIC, IT and AUT

A

UCITS in OCF = audit costs, registration, regulatory fees, does not include exit/initial fees or performance charges

42
Q

what does the TER of AMC include?

A

Performance related fees

43
Q

what’s it called if shares include different share classes?
what is zero-payment dividend

A

split-capital investment trust.
zero-dividend payment = pays 0 dividends, gets return from difference in price paid and amount at future date.

44
Q

real-estate investment trust

A

investment that pools capital into residential and commercial property. no double taxation and REIT pay no PT or CGT, if 90% given to shareholders

45
Q

why do trading at discounts occur?

A

Markets view, or it could be winding-up, or merger/takeover happening

46
Q

what are the participants and roles in ETF

A

Authorized = financial institutions (create/redeem, maintains balance)
Sponsor = (designing, manages)

47
Q

what are the different replication methods?

A

Physical = each part of index is traded with index weight
optimization = using modern techniques
synthetic replication = swap

48
Q

identity fraud and identity theft

A

IF = impersonating fraud, uses identify to obtain goods
IT = Obtain goods by deception (documents, passport)

49
Q

what is the max sentence for bribery?

A

10 years

50
Q

what makes real-estate investment trusts less risky than direct property?

A

diversification

51
Q

what is the key structure of an offset mortgage?

A

the interest is charged on a reduced amount

52
Q

what happens in a buoyant economy

A

spending tends to be less than tax revenues

53
Q

why do firms seek commercial loans?

A

to buy new machinery

54
Q

why would firms increase their prices in short time?

A

high inflation

55
Q

why would decrease occur in cash deposit account?

A

inflation

56
Q

Baa to BA meaning

A

from investment grade to non-investment grade

57
Q

how often do UK government bonds get paid?

A

Half-yearly

58
Q

what does it mean if a bond is high quality?

A

it is the most liquid

59
Q

what is a short-term marketable security with a maturity up to five years and issued by commercial banks?

A

certificate of deposit = negotiable issued by commercial banks in exchange for fixed-term deposit

60
Q

what is a gig economy?

A

Treats workers as independent contractors

61
Q

what are fixed-income securities traded on?

A

SEATSq

62
Q

quote-drive system

A

provides bid and offer prices by market makers. It is used for NASDAQ and SEAQ

63
Q

order-driven system

A

provides market makers and electronic books. LSE SETS and NYSE

CISI introduction to securities and investments (12 decks)

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