CISI INTRODUCTION TO SECURITIES
AND INVESTMENTS CORRECT 100%
Wholesale / Professional financial sector - ANSWEREquity markets, Bond markets,
Forex, Derivatives, Insurance, fund management, IB, Custodian banking
Retail banking - ANSWERInsurance, Pensions, Investment services, Financial planning
Building Society / Saving institution - ANSWERSimilar products to retail banks - Jointly
owned by depositers & Borrowers (members). Known also as mutual societies.
Custodian Banks - ANSWERSpecialise in safe custody services, looking after portfolios
for others.
Activities such as -
Holding assets, settlement, processing corporate actions, Providing info on companies,
managing cash transactions, performing forex, providing regular reporting.
Third Party Administrator (TPA) - ANSWERUndertake admin on behalf of other firms.
Types of financial advice - ANSWERIndependant advice. Restricted advice.
Independand financial advice - ANSWERFirm must make recommendations based on
fair analysis of all products available in the market.
Restricted advice - ANSWERWhen a firm only gives advice on their products. This must
be made clear.
Execution only - ANSWERWhere a firm will only buy/sell for customer when asked -
w/out giving any advice. The firm must have evidence that 1) they gave no advice, and
2) made it clear at time of sale it was not responsable for products performance.
PSNCR (Public Sector Net Cash Requirement) - ANSWERWhen the government has a
budget deficit they need to borrow money to bridge the gap between tax's and
spending. This is the PSNCR
WTO - ANSWEROrganisation in charge of reducing trade barriers.
Two documents required to form a company - ANSWERMemorandum of association,
Articles of association
Memorandum of association - ANSWERConfirms the subscriber (firms) intention to form
a company, legal statement signed by all initial shareholders.
, Articles of association - ANSWERDetail the relationship between the company and the
owners. States the rules of running the company. Such as shareholder rights, company
meetings.
Proxy vote - ANSWERWhere a shareholder allows someone else to vote on their behalf
at an annual general meeting.
Ordinary shares - ANSWERShares of a company providing the owner with a right to
vote. If the company goes into liquidation they will be paid last.
Preference shares - ANSWERHybrid between equity and debt. Non-voting shares, but
are paid back before ordinary shares in case of liquidation.
Cumulative shares - ANSWERIf dividend cannot be paid one year, added to next years
dividend.
Dividend yield formula - ANSWERDividend / Market cap * 100 OR Dividend per share /
Share price * 100.
Rights issue - ANSWERA method to raise capital. Allows existing shareholders the
option to subscribe for new shares. Shareholders must be given the option to buy new
shares before public to prevent share dilution.
Liquidity risk - ANSWERUnable to sell as no buyers
Issuer risk - ANSWERFirm may liquidate.
Mandatory corporate action - ANSWERMandated by firm, not requiring intervention
from holders. E.G. dividend.
Mandatory corporate action w/ options - ANSWERAn action that has a default option
that will occur without holder intervention. Until date that the default option occurs,
holder has the option to choose differently.
Voluntary corporate action - ANSWERRequires holder to make a decision. Such as a
takeover bid - shareholder offer or not.
Bonus / Scrip / Capitalisation issue - ANSWERGives existing shareholders extra shares
without them paying. So the firm can increase number of shares.
AIM - ANSWERA market for smaller firms without trading history. Has no minimum
market cap, no requirment for minimum public shares.
CAC 40 - ANSWERFrench
Xetra DAX - ANSWERGerman
AND INVESTMENTS CORRECT 100%
Wholesale / Professional financial sector - ANSWEREquity markets, Bond markets,
Forex, Derivatives, Insurance, fund management, IB, Custodian banking
Retail banking - ANSWERInsurance, Pensions, Investment services, Financial planning
Building Society / Saving institution - ANSWERSimilar products to retail banks - Jointly
owned by depositers & Borrowers (members). Known also as mutual societies.
Custodian Banks - ANSWERSpecialise in safe custody services, looking after portfolios
for others.
Activities such as -
Holding assets, settlement, processing corporate actions, Providing info on companies,
managing cash transactions, performing forex, providing regular reporting.
Third Party Administrator (TPA) - ANSWERUndertake admin on behalf of other firms.
Types of financial advice - ANSWERIndependant advice. Restricted advice.
Independand financial advice - ANSWERFirm must make recommendations based on
fair analysis of all products available in the market.
Restricted advice - ANSWERWhen a firm only gives advice on their products. This must
be made clear.
Execution only - ANSWERWhere a firm will only buy/sell for customer when asked -
w/out giving any advice. The firm must have evidence that 1) they gave no advice, and
2) made it clear at time of sale it was not responsable for products performance.
PSNCR (Public Sector Net Cash Requirement) - ANSWERWhen the government has a
budget deficit they need to borrow money to bridge the gap between tax's and
spending. This is the PSNCR
WTO - ANSWEROrganisation in charge of reducing trade barriers.
Two documents required to form a company - ANSWERMemorandum of association,
Articles of association
Memorandum of association - ANSWERConfirms the subscriber (firms) intention to form
a company, legal statement signed by all initial shareholders.
, Articles of association - ANSWERDetail the relationship between the company and the
owners. States the rules of running the company. Such as shareholder rights, company
meetings.
Proxy vote - ANSWERWhere a shareholder allows someone else to vote on their behalf
at an annual general meeting.
Ordinary shares - ANSWERShares of a company providing the owner with a right to
vote. If the company goes into liquidation they will be paid last.
Preference shares - ANSWERHybrid between equity and debt. Non-voting shares, but
are paid back before ordinary shares in case of liquidation.
Cumulative shares - ANSWERIf dividend cannot be paid one year, added to next years
dividend.
Dividend yield formula - ANSWERDividend / Market cap * 100 OR Dividend per share /
Share price * 100.
Rights issue - ANSWERA method to raise capital. Allows existing shareholders the
option to subscribe for new shares. Shareholders must be given the option to buy new
shares before public to prevent share dilution.
Liquidity risk - ANSWERUnable to sell as no buyers
Issuer risk - ANSWERFirm may liquidate.
Mandatory corporate action - ANSWERMandated by firm, not requiring intervention
from holders. E.G. dividend.
Mandatory corporate action w/ options - ANSWERAn action that has a default option
that will occur without holder intervention. Until date that the default option occurs,
holder has the option to choose differently.
Voluntary corporate action - ANSWERRequires holder to make a decision. Such as a
takeover bid - shareholder offer or not.
Bonus / Scrip / Capitalisation issue - ANSWERGives existing shareholders extra shares
without them paying. So the firm can increase number of shares.
AIM - ANSWERA market for smaller firms without trading history. Has no minimum
market cap, no requirment for minimum public shares.
CAC 40 - ANSWERFrench
Xetra DAX - ANSWERGerman
