Unit 1 And 2 Mixed Flashcards
What type of shares are convertible
Preference shares
What is considered short medium and long term gilts by the debt management Office and financial institutions
Short dated are 0-5
Medium are 5-15
Long are 15+
DMO considers it as
Short 0-7
Medium 7-15
Long 15+
In relation to gilts what is a coupon
The coupon is the interest rate paid on the par value
What age can you take out ns and I direct saver
16
Rubina is buying a 3% treasury 2020 gilt at current price of £107 what is the running yield
£3÷£107=2.8
What’s the difference between corporate bonds and gilts
Corporate bonds = higher risk
Is Interest on ns and I income bonds tax free?
No interest is paid gross but is taxable
What is a eurobond
Eurobond is a bond issued in a country other than the one in which the bond is denominated
Companies and governments can issue these
What is the difference between a rights issue and a scrip issue
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
What is the difference between directive and regulations in terms of eu
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
Bank deposit accounts are not generally considered to be suitable for long term investment because
Have proven to be unattractive compared to asset backed investments
On an index linked gilt what is the index linked part
Coupon and redemption price
When banks offer deposit accounts with a higher rate of return they will usually
Apply a notice period for withdrawals
What is the attraction kof direct investment in the ordinary shares of quoted companies
Potential capital growth medium to long term
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
You can continue the bond but the interest rate may change
Best discription of most investment bonds
A single premium unit linked whole of life assurance
Which insurance product ensures all essential outgoings are paid for if you are sick medium to long term
Permanent Health insurance
If a partner of a firm makes a profit of 30k and he has a 60% stake his tax liability is..
18k in that fiscal year
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
The number of years the asset has been held
Thre specialist source book section of the FCA handbook includes arrangements for?
Professional firms I. E sols and accountants
In the context of FCA supervision the term flexible portfolio means…
Firms are supervised through a mixture of targeted supervisory work and programmes of education and communication
Christo undertakes a controlled function for a small firm of financial advisors to do this he needs to…
Deemed fit and proper by his firm
In seeking to promote competion the FCA does not
Offer light touch regulation
For a firm involved in non mi-fid business training and competence should be kept for how long after they have ceased the activities
3 years
What is the main reason why the senior managers of an authorised firm need a report from the money laundering officer
To review any problems the firm may have and strengthen controls
What’s the difference between market manipulation and insider dealing
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
Which of the following is not one of the stages when assessing need prior to making a recommendation
Explore
Discuss
Quantify
Review
Review.
The self employed can have what pensions
Basic state pension and a personal pension plan
A gilt has a 10% coupon what does that mean
10% interest paid annually
Explain each of the following, Conduct Regulation, Prudential Regulation and systematically important providers.
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.
What are the 3 operational objectives of the FCA
- Protect Consumers
- Protect financial markets: Make it attractive to investors improve integrity.
- Promote Competition.
Consumers
Market
Competition
Describe what is meant by ‘with profits business’
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)
What are the FCA’s powers
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.
Difference between FCA guidance and Rules
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.
Explain the structure of Business standards (Sourcebooks)
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
What are senior management function and certified functions
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.
According to tcf of customers the firms must ensure there are no unreasonable barriers to..
Switching product or provider making a claim or complaining
When undertaking investment business the charges to the client should reflect…
The service provided
What is true in relation to training and competence
Firms must continually monitor competence of employees
What’s the rate on bearer instruments and purchase of shares
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.
