Types of Investors

Question 1

Is there a defined industry standard to categorise investors?

Answer 1

No

Question 2

What are the common categories of investors?

Answer 2

Retail
High net worth and/or experienced
Professional / Institutional

Question 3

What is the FCA definition of a high net worth individual?

Answer 3

annual income £100,000 or more and investable assets of £250,000 or more

Question 4

What is the FCA definition of a certified sophisticated investor?

Answer 4

Someone assessed by a firm as being sufficiently knowledgeable to understand the risk of a particular investment

Question 5

What are the types of professional/ institutional clients

Answer 5

o Pension funds
o Insurance companies
o Collective investment schemes

Question 6

What FCA principle for business refers to Treating customers fairly (TCF)?

Answer 6

Principle 6 - pay due regard to the interests of customers and treat them fairly

Question 7

Under the FCA Principles for business what are the 6 consumer outcomes?

Answer 7

 Products and services marketed meet the needs of identified consumer groups (ie. who is the target audience)?
 Where consumers receive advice, the advice is suitable
 Consumers are provided with clear information and kept informed
 Products perform as the firm led consumers to expect
 Consumers do not face unreasonable post-sales barriers
 Fair treatment of customers is central to corporate culture

Question 8

What model may be used to look at risk vs. return?

Answer 8

CAPM

Beta looks at how sensitive risk/reward is to a benchmark.