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finance unit 4 > topic 1 > Flashcards

topic 1 Flashcards

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1
Q

Competition and
Markets Authority
(CMA

A

The body responsible for strengthening business competition and
preventing and reducing anti-competitive activities

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2
Q

Counterparties

A

People and organisations (eg companies) who lend money to and borrow
from financial intermediaries (ie financial institutions such as banks)

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3
Q

Credit union

A

A mutual organisation (that is, owned by its members) that provides a
range of financial products to members, eg savings accounts and personal loans. Members of a credit union must share a common bond,
eg all work for the same employer or all work in the same district.

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4
Q

Divestment

A

The process of selling off parts of a company to make it smaller, eg the
Lloyds sell-off that created new TSB branches.

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5
Q

Financial Conduct
Authority (FCA)

A

The organisation that regulates financial firms providing services to
consumers, and maintains the integrity of the UK’s financial markets

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6
Q

Financial
intermediary

A

A financial institution that facilitates the process of lending and
borrowing, by taking deposits from those with a surplus and lending
those funds out to those who need to borrow

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7
Q

Financial
intermediation

A

the process of taking in deposits from those with a surplus and lending
those funds out to those who need to borrow (see financial intermediary)

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8
Q

Financial
Ombudsman
Service (FOS)

A

An independent body set up by Parliament that settles customer
complaints about providers at no charge to consumers.

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9
Q

Financial Policy
Committee (FPC)

A

A part of the Bank of England that monitors and responds to risk posed to
the entire financial services market. Its focus on the whole market makes
it a macro-prudential authority.

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10
Q

Financial Services
Compensation
Scheme (FSCS)

A

A compensation scheme that pays compensation to account holders of up
to a certain amount per provider if the provider goes into default (so
cannot pay account holders the money they have in their accounts)

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11
Q

Friendly society

A

A mutual organisation that offers its members a wide range of financial
products, which can include savings, investments, insurance, pensions
and annuities

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12
Q

HM Treasury

A

Her Majesty’s (HM) Treasury, the government department responsible for development and implementation of financial and economic policy

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13
Q

Independent
financial adviser
(IFA)

A

A professional who makes financial recommendations to clients, based on
products offered by a wide range of providers

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14
Q

investment banks

A

Banks that raise funds on the financial markets, rather than accepting deposits as a retail bank does. They use these funds to provide special services to large corporations and to governments. Also known as wholesale banks.

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15
Q

Lloyd’s insurance
market

A

An insurance marketplace where members (corporations and individuals) employ underwriters to come together and accept insurance risk, dividing
it out between the members

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16
Q

Long-term capital
markets

A

Financial markets where long-term debt (ie bonds) and shares in the bank (equity) are bought and sold. This provides a source of funding for banks.

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17
Q

Monetary policy

A

The manipulation of interest rates to maintain low inflation

18
Q

Monetary Policy
Committee (MPC)

A

The Bank of England committee responsible for keeping inflation under control by the manipulation of interest rates

19
Q

Mutual
organisation

A

An organisation owned by its customers, who are also its members, rather than by shareholders

20
Q

Oligopoly

A

A market dominated by a few large firms, eg the financial services sector

21
Q

Payday loan
companies

A

Online firms that provide instant, very short-term (ie for a few days or weeks), unsecured cash advances of small amounts to customers who need cash immediately, and who are in employment and have payroll records.

22
Q

Peer-to-peer (P2P)
lenders

A

Online marketplaces that enable people to lend to and borrow from each other without using a traditional financial institution such as a bank or
building society.

23
Q

Prudential
Regulation
Authority (PRA)

A

One of the two main regulators of financial services in the UK (the other is the Financial Conduct Authority).

24
Q

Restricted financial
adviser

A

A professional who can only recommend certain types of product from one or a limited number of providers. They are not allowed to use the
word ‘independent’ to describe their advice.

25
Q

Retail banks

A

Banks that deal directly with consumers, eg providing current accounts and mortgages

26
Q

Retail ring-fencing

A

Separating the deposit-taking part of a bank or building society from the rest of its business so that, in the event of financial difficulties, the ring-
fenced deposits of retail customers cannot be used to pay the debts of the more risky investment section of the bank

27
Q

Short-term money
markets

A

Financial markets where banks borrow over short periods (ie months,weeks or even days), especially from the interbank market, where banks
with short-term surpluses lend to banks with short-term deficits.

28
Q

Which of the following is an example of a large public limited company?
a bank, credit union or friendly society

A

a bank

29
Q

The government department that has overall responsibility for financial stability in the UK is the ?

A

HM Treasury

30
Q

what do retail banks do ?

A

provide services to individuals and to small and medium-sized businesses

31
Q

The largest building society in the UK is:

A

Nationwide Building Society

32
Q

The providers of insurance can be subdivided into two main categories:

A

individual insurance companies and Lloyd’s insurance market.

33
Q

Credit unions are regulated by

A

the Prudential Regulation Authority and the Financial Conduct Authority

34
Q

The Bank of England’s Monetary Policy Committee (MPC) is responsible for

A

carrying out government monetary policy

35
Q

An independent financial adviser is permitted to sell the products of

A

any provider

36
Q

An objective of the Financial Policy Committee is to

A

support the government’s economic policy

37
Q

An example of a payday loan company is

A

Lending Stream

38
Q

UK Financial Investments (UKFI) was set up to manage the shareholdings of banks rescued by the government in the 2007/8 financial crisis

A

true

39
Q

In relation to financial intermediation, those in the deficit sector have more money coming in than going out.

A

false

40
Q

People who lend money to intermediaries and borrow from them are known as counterparties

A

true

finance unit 4 (9 decks)

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