Unit 1 And 2 Mixed

Question 1

What type of shares are convertible

Answer 1

Preference shares

Question 2

What is considered short medium and long term gilts by the debt management Office and financial institutions

Answer 2

Short dated are 0-5
Medium are 5-15
Long are 15+

DMO considers it as

Short 0-7
Medium 7-15
Long 15+

Question 3

In relation to gilts what is a coupon

Answer 3

The coupon is the interest rate paid on the par value

Question 4

What age can you take out ns and I direct saver

Answer 4

16

Question 5

Rubina is buying a 3% treasury 2020 gilt at current price of £107 what is the running yield

Answer 5

£3÷£107=2.8

Question 6

What’s the difference between corporate bonds and gilts

Answer 6

Corporate bonds = higher risk

Question 7

Is Interest on ns and I income bonds tax free?

Answer 7

No interest is paid gross but is taxable

Question 8

What is a eurobond

Answer 8

Eurobond is a bond issued in a country other than the one in which the bond is denominated

Companies and governments can issue these

Question 9

What is the difference between a rights issue and a scrip issue

Answer 9

Rights issue = existing shareholders must get priority when issuing new shares to raise additional funds.

Scrips issues = additional shares free of charge to existing shareholders effectively reduces the number of shares and the price proportionately

Question 10

What is the difference between directive and regulations in terms of eu

Answer 10

Regulations are fully binding and must be done by a certain date

Directives are up to each state to action how they wish by a certain time

Question 11

Bank deposit accounts are not generally considered to be suitable for long term investment because

Answer 11

Have proven to be unattractive compared to asset backed investments

Question 12

On an index linked gilt what is the index linked part

Answer 12

Coupon and redemption price

Question 13

When banks offer deposit accounts with a higher rate of return they will usually

Answer 13

Apply a notice period for withdrawals

Question 14

What is the attraction kof direct investment in the ordinary shares of quoted companies

Answer 14

Potential capital growth medium to long term

Question 15

Ns and I fixed rate bond is coming to the end of its term if you want to continue with the investment what rule will apply

Answer 15

You can continue the bond but the interest rate may change

Question 16

Best discription of most investment bonds

Answer 16

A single premium unit linked whole of life assurance

Question 17

Which insurance product ensures all essential outgoings are paid for if you are sick medium to long term

Answer 17

Permanent Health insurance

Question 18

If a partner of a firm makes a profit of 30k and he has a 60% stake his tax liability is..

Answer 18

18k in that fiscal year

Question 19

What affects the amount of taper relief that can be used to reduce a capital gains tax liability on the disposal of a chargeable asset

Answer 19

The number of years the asset has been held

Question 20

Thre specialist source book section of the FCA handbook includes arrangements for?

Answer 20

Professional firms I. E sols and accountants

Question 21

In the context of FCA supervision the term flexible portfolio means…

Answer 21

Firms are supervised through a mixture of targeted supervisory work and programmes of education and communication

Question 22

Christo undertakes a controlled function for a small firm of financial advisors to do this he needs to…

Answer 22

Deemed fit and proper by his firm

Question 23

In seeking to promote competion the FCA does not

Answer 23

Offer light touch regulation

Question 24

For a firm involved in non mi-fid business training and competence should be kept for how long after they have ceased the activities

Answer 24

3 years

Question 25

What is the main reason why the senior managers of an authorised firm need a report from the money laundering officer

Answer 25

To review any problems the firm may have and strengthen controls

Question 26

What’s the difference between market manipulation and insider dealing

Answer 26

Market manipulation =giving a false impression as to the status of a business to change market

Insider dealing using information only available to certain people for gain

Question 27

Which of the following is not one of the stages when assessing need prior to making a recommendation

Explore
Discuss
Quantify
Review

Answer 27

Review.

Question 28

The self employed can have what pensions

Answer 28

Basic state pension and a personal pension plan

Question 29

A gilt has a 10% coupon what does that mean

Answer 29

10% interest paid annually

Question 30

Explain each of the following, Conduct Regulation, Prudential Regulation and systematically important providers.

Answer 30

Conduct Regulation= make sure the products and services firms provide are suitable for the customers needs and they TCF.

Prudential Regulation= Make sure firms have adequate systems in place to minimise risk to customers should they fail.

Systematically important firms= Usually bigger companies can have impact nationally or globally should they fail.

Question 31

What are the 3 operational objectives of the FCA

Answer 31

1. Protect Consumers
2. Protect financial markets: Make it attractive to investors improve integrity.
3. Promote Competition.

Consumers
Market
Competition

Question 32

Describe what is meant by ‘with profits business’

Answer 32

with profits are usually issued by certain life policies issued by the life assurance companies. basically the policy holder receives a share of the profits can be paid as an annual(reversionary bonus) or a terminal ( at the end of the policy)

Question 33

What are the FCA’s powers

Answer 33

Competition powers: They can conduct market studies and refer this to the CMA.

Product Intervention: Ban or restrict financial products.

power of disclosure: To publish details of warnings, notices and diciplinary action.

Power to take formal action action against misleading financial promotions.

Question 34

Difference between FCA guidance and Rules

Answer 34

Similar to EU directives and regulations, The rules need to be followed and if not the FCA can take action the guidance suggests how the rules can be implemented no action to be taken if guidance is not taken on board.

Question 35

Explain the structure of Business standards (Sourcebooks)

Answer 35

Business Standards.

Conduct of business sourcebook(COBS) General conduct standards.

BCOBS = Banking conduct of business 
ICOBS= Insurance conduct of business 
MCOBS = Mortgage conduct of business

Question 36

What are senior management function and certified functions

Answer 36

Senior Management Functions= People who perform significant roles, these individuals must be pre approved by the FCA/PRA

Certified Functions ( Significant Harm Functions) = People must be certified as fit and proper i.e mortgage /investment advisers.

Question 37

According to tcf of customers the firms must ensure there are no unreasonable barriers to..

Answer 37

Switching product or provider making a claim or complaining

Question 38

When undertaking investment business the charges to the client should reflect…

Answer 38

The service provided

Question 39

What is true in relation to training and competence

Answer 39

Firms must continually monitor competence of employees

Question 40

What’s the rate on bearer instruments and purchase of shares

Answer 40

Bearer instruments charged on market value of 1.5%

Purchase of shares market value only if shares more than 1k 0.5%

Bearer = possession is only proof of ownership and title passes by physical delivery.