IOC Introduction to S&I: Mock 1

Transcription

1 IOC Introduction to S&I: Mock How are shares in an open-ended investment company MOST LIKELY to be priced? Single-pricing based on supply and demand for the shares Bid/Offer spread incorporating the fees and administration costs of the fund Single-pricing based on the value of the underlying shares Single-pricing based on the market value of the shares which are then discounted A company has a market share price of 400p. It announces a 1 for 5 rights issue at 50p per share. What is the nil paid rights price? 90p 67p 292p 342p Money laundering is best described as: Financial profits are made by criminals Illegal profits are made from the financial markets Criminal profits become absorbed into the mainstream financial system The process whereby information not publicly available is used to make a profit The law relating to insider dealing as a criminal offence is contained in: FSMA 2000 The Proceeds of Crime Act 2002 Criminal Justice Act 1993 Companies Act 1985 In a bonus issue the current shareholders receive 2 new shares for every 3 existing shares. How would this bonus ratio be expressed in the UK? 2:3 3:2 3:5 5:3 Rights issues are initially offered to: Existing shareholders The public Institutions Private investors only Which of the following corporate events will raise new funds? Capitalisation Rights issue Introduction Scrip issue Page 1 of 7

2 What is the standard settlement for SETS securities? T + 1 T + 2 T + 10 T + 25 Market abuse occurs in relation to qualifying investments on a: Stock market Recognised market Prescribed market Supermarket Which of the following is the most common form of security for a secured bond? Fixed charge over property Floating charge over stock Floating charge over receivables Nothing as debentures are not normally secured What is standard settlement for gilts? 24-hour cash 10-day rolling 48-hour cash 5-day rolling Which of the following is NOT a function of the DMO? Issue of gilts Issue of Treasury bills Settlement of gilts Approval of gilt-edged market makers Which of the following is TRUE of the currency markets? Trading takes place on exchange Regulated by the Treasury London is the largest centre for trading Spot deals settle T + 1 If a client sells a unit trust at a profit, what type of taxation will apply? Basic and higher rate income tax Basic income tax and capital gains tax Higher rate income tax only Capital gains tax only Which of the following is FALSE in relation to the data protection principles? Records are not to be transferred outside of the EU Records are accurate Records are held securely Records are adequate, relevant and not excessive Page 2 of 7

3 A depositary for an OEIC (ICVC) undertakes the same role as which of the following? Shareholder Trustee Director Manager Which ONE of the following is NOT applicable to unit trusts? Ownership of property is vested in a trustee for the benefit of the beneficiary Unit value is equivalent to the number of shares bought and sold by the company The total number of units can change according to investor demand Investors pass their money to a professional to manage on their behalf Passing on price-sensitive information is primarily what type of offence? Civil Criminal Non-statutory Disciplinary Which statute makes it an offence to conduct investment business in the UK without authorisation or exemption? Investment Authorisation Regulations 1996 Companies Act 2006 Financial Services and Markets Act 2000 Proceeds of Crime Act 2002 Which of the following is TRUE of the Bank of England? It is responsible for economic policy It regulates the foreign exchange markets The Governor is appointed by the FCA It is responsible for setting interest rates Which of the following is NOT associated with a sharp rise in the money supply? Inflation increases Inflation falls Interest rates increase Consumer spending increases Advice on takeovers and corporate finance is usually given by: A wholesale bank An investment bank A central bank A retail bank Which of the following markets use the Nikkei 225 as its main index? London Paris New York Tokyo Page 3 of 7

4 I II III IV Which of the following is governed by the Companies Act 2006? Listing requirements Market abuse Insider dealing The appointment of auditors Which of the following is FALSE in relation to CREST? Operates a delivery vs. payment system Offers different membership levels according to requirements Operates real-time bank accounts for members Offers corporate action processing Misuse of information which is not generally available is a breach of which of the following rules? Market abuse Insider dealing Money laundering Data protection Market abuse is an offence under: CJA 1993 FSMA 2000 Companies Act 2006 Companies Act 1989 Which of the following are TRUE in respect of the procedures of an authorised firm for dealing with customer complaints? Firms must have adequate internal controls put in place Firms must refer all complaints to the regulator The firm must remedy legitimate grievances The firm has a duty to inform customers of other avenues of complaint I and II I, III and IV I, II and IV None of the above How is the Financial Services Compensation Scheme funded? By investment businesses authorised under FSMA 2000 By contributions from the European Central Bank By the Treasury By a small levy on all stock market transactions If interest is charged at an annual rate of 12%, but is calculated on a two-monthly basis, what is the annual effective rate (AER)? 11.8% 12.0% 41.8% 12.6% Page 4 of 7

5 A member of the Stock Exchange whose principal activity is dealing in securities is likely to be regulated by: LCH.Clearnet DTI FCA ICMA In terms of authorisation, a person is defined as: A trader An investment trust Companies only A body corporate or an individual Which of the following types of business would be passed by an ordinary resolution at an annual general meeting? Winding up the company Changing the Articles Reappointing the directors Changing the Memorandum Which of the following is NOT covered by general insurance? Life Motor Marine Property Which of the following is pre-dominantly an order driven market? Nasdaq SEAQ SETSqx SETS A July 100p exercise put option on a share of ABC plc is trading at 15p. What is the breakeven point of the writer of the option? 115p 100p 85p 60p A gilt is priced at 4.00 below its nominal value (i.e per nominal). If the coupon is 9% what is the flat yield? 8.38% 9.00% 9.38% 10.38% Page 5 of 7

6 Which of the following offers tax-free income? Gilts Premium bonds Eurobonds Unit trusts Which of the following is NOT subject to capital gains tax? Shares Options Gilts Antiques What type of risk does a shareholder have if there is no one willing to buy shares that he now wishes to sell? Price risk Liquidity risk Issuer risk Market risk All of the following are TRUE of both fully listed and AIM companies, EXCEPT: Both use a NOMAD Both have to publish accounts Both trade on the LSE Both are described as quoted markets All of the following are features of a zero coupon instrument, EXCEPT: It is issued at a discount to its nominal value It matures at nominal value Interest is paid bi-annually A Treasury bill is an example of a zero coupon instrument If an investor closes a position by selling a futures contract, what position does he have? Long Short Flat Indeterminable from the information given Mr Jones has 18,000 worth of shares in ABC plc. The company announces a 1:4 bonus when the share price is 145p. What should be the theoretical value of the shares after the bonus issue? 22,500 20,000 18,000 13,500 A rise in the PSNCR is MOST likely to cause: Inflation Deflation A reduction of the GDP A reduction in the balance of payments deficit Page 6 of 7

7 An OEIC is typically single-priced. This means its price is based on: The mid-market value of the underlying assets The bid price of the underlying assets The offer price of the underlying assets Either the underlying bid or offer Who sets interest rates in the UK? The government The Treasury The FCA The MPC Where a UK company issues a bond in the USA in dollars, this is an example of: A domestic bond A foreign bond A eurobond A covered bond In the UK monetary policy is the responsibility of: The Bank of England The Treasury The Chancellor of the Exchequer The Prudential Regulatory Authority Which one of the following is true about how Unit Trusts are priced? Supply and demand Price of underlying assets According to the manager Maximum redemption price is cancellation price Page 7 of 7