CISI Chapter 1: The Financial Services Sector || True Solutions
100%.
What does the financial services sector do? correct answers Provides the link between
organisations needing capital and those with capital available for investment
What is the Global Financial Centres Index? correct answers Produced by z/Yen and evaluates
the rankings and future competitiveness of 111 major financial centres
What are the 5 areas of competitiveness? correct answers Business environment, human capital,
infrastructure, financial sector development and reputation
What are the 2 key areas in financial services? correct answers Wholesale (professional/
institutional) and retail
What activities take place in wholesale? correct answers Equity markets, bond markets, foreign
exchange, derivatives, insurance markets (also fund management, UB and custodian banking)
What is custodian banking? correct answers Provision of services to asset managers
What activities take place in retail? correct answers Retail banking, insurance, pensions,
investment services and financial planning/advice
What does World Federation of Exchanges do? correct answers Provides data from the global
stock exchanges
What is global market capitalisation? correct answers Total value of shares quoted through the
world's stock exchanges
What are multilateral trading facilities? correct answers Rivals to traditional stock exchanges and
operated by IBs- they are systems that bring together multiple parties that are interested in
buying and selling financial instruments including shares, bonds and derivatives
aka crossing networks or matching engines
What are bond markets? correct answers Allow governments or companies to raise loans or debt
finance directly from investors and then make secondary trades with the securities
What is larger, bond or equity markets? correct answers Bond but the volume of trading is lower
What are foreign exchange markets? correct answers Facilitate the trading of currencies as well
as determining exchange rates- largest of all financial markets
Is FX exchange traded or OTC? correct answers OTC
What are derivative markets? correct answers Trade a range of complex products based on
underlying assets e.g. options and futures
, What is Llyod's of London? correct answers Large insurance marketplace that brings together a
range of insurers, both individual and companies, each of whom accepts insurance risks as a
member of one or more underwriting syndicates
What are 'names'? correct answers A small number of individual members who are liable to the
full extent of their private wealth
Are corporations fully liable? correct answers No- limited liability
How do names work? correct answers They join together in syndicates and each syndicate will
write insurance. There are many syndicates and each name will belong to one or a number of
these.
What do retail banks do? correct answers Provide services such as taking deposits from and
lending funds to retail customers- similar services to business customers
What are savings institutions? correct answers Originally specialised in offering savings products
to retail customers but now tend to offer a similar range of services to those offered by banks
AKA building societies
Jointly owned by the individuals who have deposited money or borrowed money from them
(mutual societies)
What is P2P lending? correct answers P2P lending cuts out the banks to reduce borrowing rates
and savers get better interest rates
What is crowdfunding? correct answers Practice of funding a project by raising small amounts of
money from a large number of people.
What are the forms of crowdfunding? correct answers Donation, debt crowdfunding or equity
crowdfunding
What are IBs? correct answers Provide advice and arrange finance for companies that want to
float on a stock market, raise additional finance through issuing shares or bonds, carry out M&A
or help those who want to invest in shares/bonds like pension fund and asset managers
What are the typical divisions in IBs? correct answers Corporate finance and advisory work,
banking, treasury dealing, investment management and securities trading
What are pension funds? correct answers A way of making provisions for retirement through
large, long-term investments in shares, bonds and cash
How do insurance companies work? correct answers Collect premiums for cover, and then invest
the premiums in shares and bonds so they are a huge player in the stock market. They
subsequently realise these investments to pay any claims that may arise on the various policies.
100%.
What does the financial services sector do? correct answers Provides the link between
organisations needing capital and those with capital available for investment
What is the Global Financial Centres Index? correct answers Produced by z/Yen and evaluates
the rankings and future competitiveness of 111 major financial centres
What are the 5 areas of competitiveness? correct answers Business environment, human capital,
infrastructure, financial sector development and reputation
What are the 2 key areas in financial services? correct answers Wholesale (professional/
institutional) and retail
What activities take place in wholesale? correct answers Equity markets, bond markets, foreign
exchange, derivatives, insurance markets (also fund management, UB and custodian banking)
What is custodian banking? correct answers Provision of services to asset managers
What activities take place in retail? correct answers Retail banking, insurance, pensions,
investment services and financial planning/advice
What does World Federation of Exchanges do? correct answers Provides data from the global
stock exchanges
What is global market capitalisation? correct answers Total value of shares quoted through the
world's stock exchanges
What are multilateral trading facilities? correct answers Rivals to traditional stock exchanges and
operated by IBs- they are systems that bring together multiple parties that are interested in
buying and selling financial instruments including shares, bonds and derivatives
aka crossing networks or matching engines
What are bond markets? correct answers Allow governments or companies to raise loans or debt
finance directly from investors and then make secondary trades with the securities
What is larger, bond or equity markets? correct answers Bond but the volume of trading is lower
What are foreign exchange markets? correct answers Facilitate the trading of currencies as well
as determining exchange rates- largest of all financial markets
Is FX exchange traded or OTC? correct answers OTC
What are derivative markets? correct answers Trade a range of complex products based on
underlying assets e.g. options and futures
, What is Llyod's of London? correct answers Large insurance marketplace that brings together a
range of insurers, both individual and companies, each of whom accepts insurance risks as a
member of one or more underwriting syndicates
What are 'names'? correct answers A small number of individual members who are liable to the
full extent of their private wealth
Are corporations fully liable? correct answers No- limited liability
How do names work? correct answers They join together in syndicates and each syndicate will
write insurance. There are many syndicates and each name will belong to one or a number of
these.
What do retail banks do? correct answers Provide services such as taking deposits from and
lending funds to retail customers- similar services to business customers
What are savings institutions? correct answers Originally specialised in offering savings products
to retail customers but now tend to offer a similar range of services to those offered by banks
AKA building societies
Jointly owned by the individuals who have deposited money or borrowed money from them
(mutual societies)
What is P2P lending? correct answers P2P lending cuts out the banks to reduce borrowing rates
and savers get better interest rates
What is crowdfunding? correct answers Practice of funding a project by raising small amounts of
money from a large number of people.
What are the forms of crowdfunding? correct answers Donation, debt crowdfunding or equity
crowdfunding
What are IBs? correct answers Provide advice and arrange finance for companies that want to
float on a stock market, raise additional finance through issuing shares or bonds, carry out M&A
or help those who want to invest in shares/bonds like pension fund and asset managers
What are the typical divisions in IBs? correct answers Corporate finance and advisory work,
banking, treasury dealing, investment management and securities trading
What are pension funds? correct answers A way of making provisions for retirement through
large, long-term investments in shares, bonds and cash
How do insurance companies work? correct answers Collect premiums for cover, and then invest
the premiums in shares and bonds so they are a huge player in the stock market. They
subsequently realise these investments to pay any claims that may arise on the various policies.
