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RO2 keys > 1 > Flashcards

1 Flashcards

1
Q

Personal savings allowance for interest on cash within their tax brackets

A

Basic - £1k
Higher - £500
Additional - £0

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2
Q

FSCS limit with cash deposits

A

£85k

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3
Q

Restricted access cash account

A

Have to give notice in order to access cash or cash tied in for period of time

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4
Q

ISA annual limit and min. investment

A

£20k and £1

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5
Q

What % must the ISA guarantee is returned in order to be classed as a cash ISA not a stocks and shares ISA

A

95%

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6
Q

Limit allowed in premium bonds

A

£50k

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7
Q

Fixed interest savings certificate

A

Lump sum investment with a guaranteed return over a term. Minimum of £100 and max. of £15k or issue.

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8
Q

Index linked savings certificate

A

Lump sum investment with return linked to an index over a set term. Min of £100 and max. of £15k per issue.

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9
Q

Child bond

A

Can only be bought by a relative and this is a rolling 5yr contract that terminates on first 5th anniversary after 16th birthday.

Min investment of £25 and max. Of £3k per issue.

Penalty of 90daysbinterdt for early encashment

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10
Q

Direct saver NS&I consists of what 2 bonds and what is their min. and max. Investment?

A

Guaranteed growth bond and guranteed income bond. Min. investment £500 and max. £1mil per issue.

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11
Q

Treasury bill

A

Sold below face value and bought back at face value. Aimed at the short term and weekly auctions are held. Guaranteed return applies.

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12
Q

Who are treasury bills managed by?

A

Debt management office

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13
Q

Certificates of deposit

A

Fixed term and fixed return over very short term. No guarantees apply and can be sold on stock market

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14
Q

Commercial bills

A

Sold below face value and bought back at face value. Focused for very short term. Highest risk when compared to treasury bills and certificates of deposit.

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15
Q

What time frame are treasury bills, certificates of deposit and commercial bills aimed at?

A

TB - 12 months
CD - 1-3 months
CB - 1-3 months

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16
Q

Can treasury bills, certificates of deposit and commercial bills tradable on the stock market?

A

Yes

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17
Q

What is the difference between money market funds and short term money market funds?

A

Money market funds - weighted average maturity of no more than 6 months and weighted average life of no more than 12 months

Short term money market funds - weighted average maturity of no more than 2months and weighted average life of no more than 4 months

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18
Q

Weighted average maturity

A

Average time til maturity of security. Eg if has multiple with 2 and 4 month maturity date for different investments then average is 3 months

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19
Q

Weighted average life

A

Average time til the original investment repaid in full. So average time of every penny lent to be repaid.

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20
Q

Nominal value

A

Price at redemption (PAR value)

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21
Q

Stocks coupon

A

Rate of interest paid

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22
Q

Clean price of an asset

A

Price if no adjustments were made for any interest due from the bond

23
Q

How often does interest accrue and when is it paid

A

Accrues daily and paid 6 monthly

24
Q

Cum dividend and ex dividend for a bond

A

Cum - traded with dividend

Ex - traded without dividend

25
Q

GILTS are issued by

A

Debt management office of HM treasury

26
Q

What happens to bond prices and bond yields if interest rates rise?

A

Bond drives drop and bond yields increase

27
Q

What happens to bond prices and bond yields if interest rates fall?

A

Bond prices rise and bond yields fall

28
Q

Unsystematic risk

A

Risks that effect a particular stock

29
Q

Market or systematic risk

A

Risks that effect the whole market

30
Q

What level is a investment grade bond?

A

Anything higher than a BBB- or BBB3

31
Q

Short medium and long term GILTS as classified by DMO and financial press?

A

DMO FP
S Less than 7yrs Less than 5yrs
M 7-15yrs 5-15yrs
L Over 15yrs Over 15yrs

32
Q

Index linked GILTs were created to tackle what?

A

Inflation

33
Q

Index linked GILT

A

Both interest payment and capital on maturity paid in line with inflation(RPI) from 3months prior

34
Q

Indexation lag

A

Delay of 3months for calculating RPI paid to bond on an index linked GILT

35
Q

Strips market for GILTS

A

Market to trade and sell interest payments and redemption payment separately

36
Q

Is a corporate bond secured or unsecured?

A

Can be both

37
Q

Debenture

A

Secured loan with trustees to represent the lender and a deed which sets the rules.

38
Q

Fixed charge debenture

Floating charge debenture

A

Fixed - Charge over a specified asset so sale is restricted

Floating - General charge over a companies assets so sale not restricted

39
Q

What has higher priority Floating charge debenture or fixed charge debenture?

A

Fixed

40
Q

Convertable loan stock

A

Able to convert loan into stock

41
Q

Floating rate notes and who are they issued by?

A

Often issued by banks

Pay interest linked to money markets

42
Q

Permenant interest bearing shares (PIBS) and who are normally issued by?

A

Building society and returns are high but interest payments could be missed. Also not covered by FSCS

43
Q

Perpetual subordinate bonds

A

Any demutualised building societies PIBS turn into these

44
Q

Preference shares

A

Paid a fixed amount of dividends each year that isn’t related to performance of company but have no voting rights

Convertable - change to ordinary shares at pre-set date and pre-set date if they wish

Cumulative - any missed dividend must be made up in following payment

Redeemable - can be purchased back by company

45
Q

Alphabet shares

A

Ordinary shares with different rules

46
Q

What ranks first out of preference and ordinary shares should the company go into liquidation?

A

Preference

47
Q

How often are preference shares paid and what if payments fall short of fixed agreement?

A

Every 6 months and they are made up in the following payment

48
Q

Private equity firms

A

Take out shares in a private company that isn’t listed in the stock exchange

49
Q

Dow Jones
Standard and poor composite
NASDAQ

NIKKEI 225
TOPIX

DAX 30

Hang seng

CAC 40

FTSE/JSE

S&P all ordinary shares

A

USA
JAPAN
GERMANY
HONG KONG
FRANCE
SOUTH AFRICA
AUSTRALIA

50
Q

Rent a room relief 6 sets of criteria

A
  • must be in the UK
  • must be owners main residence
  • one exempt amount per residence
  • must not be self contained
  • must be furnished
  • owner must be resident
51
Q

Panel of takeover and mergers charge a flat fee of £X? And this applies to purchases above £X?

A

£1 above £10k

52
Q

SDLT FTB allowance?

A

£300k

53
Q

6 Tax free NS&I products

A

Junior ISA
Premium bonds
Fixed interest savings certificates
Index linked savings certificates
Children’s bonds
Direct ISA

54
Q

What is the penalty levy for early withdrawal on a children’s bond?

A

90days of interest

RO2 keys (13 decks)

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