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Finance U4 > Topic 3 > Flashcards

Topic 3 Flashcards

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1
Q

What is the conduct of a business

A

the way in which a business is run

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2
Q

Who enforces the conduct of business regulation

A

FCA

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3
Q

What is deleveraging

A

reducing the amount of debt in relation to assets

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4
Q

What is an example of deleveraging

A

paying of credit cards

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5
Q

What is economic stability

A

ensuring economic activity is carried out in a way that ensures it can continue in the long term

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6
Q

What is environmental stability

A

Reducing the negative impacts of human activity on the environment so that natural resources can be sustained

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7
Q

What is an example environmental stability

A

using renewable resource

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8
Q

What are equator principles

A

a set of ethical benchmarks for banks to follow when taking decisions to finance infrastructure

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9
Q

give an example of an equator principle

A

dams

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10
Q

What is ethical lending

A

lending money to companies with good ethics

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11
Q

What is an example of ethical lending

A

Lending money to a company that invests in green technology

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12
Q

what is financial contagion

A

where debt works its way through the global financial system

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13
Q

what is an impact of financial contagion

A

threats to confidence and sustainability of financial systems

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14
Q

what is leverage

A

the amount of borrowing a company has in relation to its assets

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15
Q

what is liquid assets

A

cash or assets that can easily be converted into cash without losing value

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16
Q

what is liquidation

A

the process by which a company or a part of is brought to an end

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17
Q

what happens to the assets and property of a company when forced into liquidation

A

they are redistributed

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18
Q

what is a moral hazard

A

a situation in which there is lack of incentive to guard against risk because the risk take believes that they will be protected from negative consiquences

19
Q

what is an example of a moral hazard

A

banks believing that the government would bail them out if they got into any financial difficulty

20
Q

what the mortgage market review

A

reforms made to the mortgage market to ensure it is sustainable and works better for consumers

21
Q

when was the reforms made to the mortgage market

A

april 2014

22
Q

what is perilous debt

A

a situation in which someone is spending more than half of their monthly income on debt repayments

23
Q

what is provider sustainabilty

A

a company with a sustainable business model

24
Q

what is an example of provider sustainability

A

a bank willing to take less risk even if it means giving up the chance to make additional profits

25
Q

what is prudential regulation

A

regulation that is designed to ensure financial services providers do not fail and if they do fail, they failure does not impact the wider financial system

26
Q

what is social sustainability

A

a concern with creating communities that foster well being, peace security and justice for the people who live in them

27
Q

what are speculators

A

People who buy and sell the shares of many companies in order to make quick profits on the deals

28
Q

what are stakeholders groups

A

the groups of people upon whom financial services providers have an impact

29
Q

what is sustainable development

A

development that meets the needs of the present without compromising the ability of future generations to meet their own needs

30
Q

what is a sustainable financial product

A

a financial product that is designed to meet the long-term requirements of the who buy it

31
Q

what is a sustainable financial system

A

a system in which financial services are delivered in a way that means they can continue to be delivered and meets the needs of customers over the long term

32
Q

what is systemic risk

A

risk that affects an entire system

33
Q

what are systemically important financial institutions

A

the large firms within the financial services sector that would cause serious problems for the whole economy if they fail

34
Q

what is ‘too big to fail’

A

believing that the consequences of one or more of the big banks failing would be too great for any government to allow it to happen

35
Q

what are the 3 pillars of sustainability

A

environmental, social, economic

36
Q

systemic risk is highest when the financial providers are…

A

large companies

37
Q

what were the banks placed in when the government purchased failed banks in 2007/08

A

temporary public ownership

38
Q

what is the procedure that takes place when a bank is in trouble

A

resolution

39
Q

what a failing bank may receive since regulations were put in place

A

help from the government and bank of england but may be allowed to fail

40
Q

what are directors

A

those who make the company’s strategic decisions

41
Q

what is a sustainable financial product designed to meet

A

long term consumer requirments

42
Q

What is self-insurance

A

regularly setting aside a sum of money to cover unexpected events

43
Q

What do people do when deleveraging

A

stop spending and start saving to pay of existing debts

44
Q

Who is fully responsible for assessing whether a potential mortgage customer can afford the loan and verify there income as a result of the mortgage market review

A

the lender

Finance U4 (10 decks)

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