Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Investment, Risk and Taxation > 1 - Asset Classes (14/80) > Flashcards

1 - Asset Classes (14/80) Flashcards

1
Q

Stamp Duty Land Tax Bands

A

0% on first £125,000

2% on the £125,000 - £250,000

5% on £250,000 - £925,000

10% on £925,000 - £1,500,000

12% on >£1,500,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Stamp Duty Land Tax for Investment Companies

A

15% if costing more than £500,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

A fund whose unit/share price does not change during its life

A

Constant net asset value fund

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Retail Bond settlement time

A

T + 1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Offer For Sale

A

Purchase of bonds by a bank syndicate (underwriting)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Terminal Wealth

A

Capital x (1 + r/Nj) ^ Nj

N = years
j = times interest paid per year
r = interest rate
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Annual Equivalent Rate

A

Takes into account how often interest is paid. More often = higher effective rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Savings Tax Allowances

A

Basic rate = £1000
Higher rate = £500
Additional rate = £0

Starter Rate = £5,000 above income tax personal allowance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Real Rate

A

Nominal Rate - Inflation Rate
(or)
(1 + Nominal) / (1 + Inflation) - 1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Requirement-linked accounts

A

Accounts w/ higher rates but balance/time requirements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Cash risks

A

Capital
Inflation
Interest rate
Operational

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

FOS Compensation

A

£355,000 after April 2020
£350,000 2019-2020
£160,000 before

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

FSCS Compensation

A

£85,000 per account

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Types of Deposit Account

A 
Current
Instant access
Notice
Fixed rate
Term
Money market
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

NAV Types of Money Market Funds

A
  1. Constant NAV - income paid out or buys more units (face value is constant)
  2. Accumulating NAV - income accumulates and increases NAV
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Cash benchmarks

A

LIBOR - rate banks take deposits from each other
LIBID - rate banks lend to each other
Replaced by Sterling Overnight Index Average (SONIA)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Commercial paper

A

Short-term corporate debt
Backed by assets
Can roll over into longer term
Gives access to funding

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

P2P Lending

A

Default risk - spread out among many small lenders
Liquidity risk

Returns higher than others
Not guaranteed by FSCS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Debt Management Office

A

Issue government bonds/gilts

Buy through Computershare

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Gilts

A

Government bonds issued by the Debt Management Office
Used to cover ‘Central Gov. Cash Requirement’
-> Part of PSNCR (public sector)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Gilt types

A

Index-linked (linker)
Convertible - can change terms
Floating rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Bulldog bond

A

Sterling-denominated bond issued by a foreign issuer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Index-Linked Bonds

A

Usually tied to inflation

YTM considered to be real yield (inflation baked in)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Treasury Bills

A

Issued by DMO
Zero-coupon
Min. £500,000

Usually <6 months

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Types of Corporate Bond
Debentures - secured by assets | Convertibles - can be converted to shares (price diff = premium)
26
Eurobonds
Any bond issued in a different country from the issuer
27
Floating Rate Notes
Bond with a variable coupon Tied to a benchmark; usually 3 year terms
28
Contingent Convertibles
Convert due to a specific event e.g. share price hitting X
29
Running Yield / Interest Yield
Gross Coupon / Bond Market Price Doesn't include capital gains/losses
30
Yield to Redemption / Yield to Maturity
[Coupon / Bond Market Price] + [CG / Years to Maturity] CG = (Par - Bond Market Price) / Bond Market Price Includes income and capital gain / loss
31
Duration
Price sensitivity of bonds % price change = -(duration x % change in yield)
32
Yield Curve
Normal = upwards parabola (interest rates increase w/ maturity) Flat = no change with maturity (rates expected to fall) Inverted = downwards parabola (inflation and rates expected to fall)
33
Fixed Income Risks
``` Liquidity Interest rate Inflation Issuer Credit rating Credit enhancement (risk may be passed on) ```
34
Capital Structure Seniority
1. Unsubordinated debt 2. Subordinated debt 3. Preference shares 4. Ordinary shares
35
Clean vs dirty bond price
Clean price = without accrued interest (accrued = x/365) Dirty price = Clean price + ( [coupon/period] x [days since coupon/days between coupons] ) Period usually = 2 as paid twice a year i.e. usually: (coupon/2) x (days/183)
36
Bond indices
Harder to create than equities due to huge universe Pricing: capital index (clean price) or total return index (YTM) Weighted by issuance value FTSE Global Bond series
37
Ordinary share
Voting rights | Lowest in seniority
38
Redeemable shares
Agreed to buy back at a certain date
39
Dual-class shares
Different voting rights and dividends (Class A, B etc.) | Good for founders retaining control
40
Deferred dividend shares
Dividends paid on certain conditions
41
Deferred ordinary shares (founder shares)
Usually given to founders/execs No dividend until others are paid Larger portion of profits later
42
Preference shares
More rights and security/seniority First access to dividends before ordinary shareholders ``` Cumulative dividends (rolls over) Non-cumulative dividends Participating (fixed dividend w right to more profits) Redeemable Convertible ```
43
Types of Private Equity
``` LBOs Venture capital Growth capital Distressed Mezzanine (incl. bridging) - sits in subordinated and preference ```
44
Equity risks
Liquidity Growth Volatility Issuer/company
45
Capitalisation issue / 'bonus' issue
Issue shares to clean balance sheet and increase marketability e.g. 1-for-4 shares issued from reserve share capital, so shouldn't dilute share price Ex-Cap price tends to fall as new shares have no value
46
Stock split
Share price split into X amount of smaller shares
47
Rights issue
Ask investors to buy more shares at a discount (give them the right) Usually one-for-many e.g. 1:3 means 1 share for every 3 owned Ex-rights price = weighted average of old price and rights issue price
48
OTC
Bilateral contract | Usually forwards/swaps
49
Multilateral trading platform
Software matches multiple buyers and sellers | 'Organised trade facilities' a type of MTP - derivatives, structured products etc.
50
Cum and Ex-Dividend Prices
``` Cum = prices slightly higher due to carrying right to dividend Ex = no dividend; usually a week before dividend is issued ```
51
Equity indices
Market-cap weighted Price-weighted Equal-weighted Price return Total return Net total return (after taxes)
52
Equity Metrics
Dividend Yield = Dividend / Share Price (calculated after profits paid to preferred shareholders) EPS = Earnings / Share # Price to Equity = Share Price / EPS Dividend Cover = EPS / Div. per Share (<1.5 considered too low) Gearing = Liabilities / Capital Employed Enterprise Value = MV + Debt - Cash (value if sold)
53
Fund costs
``` Initial / load costs Annual management costs Ongoing charges (comm, accounting etc.) Performance charges Exit charges Unquoted charges (trading, spreads etc.) ```
54
ETF creation
Created by buying securities and exchanging them for a 'creation basket'. Shares are then sold on exchanges. Cheaper, more liquid, daily pricing etc. than mutual funds
55
Property performance factors
Business cycle GDP Inflation
56
Property ownership structures
Freehold Leasehold Commonhold
57
Property Valuation
Rental/Initial Yield = Rent / Total Cost Cap Rate = [All Income - Expenses] / Total Cost Reversionary Value = value at end of the lease
58
Other assets (art, antiques, metals etc.)
Lower liquidity High dealer fees Storage costs Prices change with trends But they can be FUN to collect
59
Stepped Preference Shares
Offer capital growth with predetermined redemption value at wind-up Good for growth
60
Premium Bonds
Guaranteed by government Chance to win up to £1m every month 34,500 to one chance of winning for every £1 Min £25 Max £50,000
61
Overdraft fees
Excessive fees banned in 2020 | Single interest rate
62
NS&I products
No CGT liability | Some have income tax liability
63
NS&I products with income tax
``` Investment account Direct Saver account Guaranteed income bond Income bond Guaranteed growth bond ```
64
Changing inflation measures
Government moving RPI in line with CPIH by 2030
65
French bonds
``` OATs = 2-50 years BTFs = <12 months ```
66
German bonds
``` Bunds = 10-30 years Bobls = 3-5 years Schatz = 2 years ```
67
Italian bonds
``` BTPs = 3-30 years CCTs = 7 years ```
68
Spanish bonds
``` BONOs = 3-5 years OES = 10 years ```
69
Japanese bonds
JGBs = 10 years | Some 'super long' are 20 years
70
International Order Book
Tap into world markets with one order book
71
SETS and SEAQ
SETS = platform/order book for FTSE-listed and top 150 AIM shares SEAQ = non-online book used by market makers for firms not accessed by SETS
72
International Board trading service
UK-Singapore agreement Used to trade STI 30 and MSCI Singapore
73
Residential vs Commercial Property - Repairs
Residential = landlord responsible Commercial = tenant responsible
74
Residential vs Commercial Property - Leases
Residential = short, void periods Commercial = long; 10+ years
75
Property 'scenarios' (best, worst)
Best = high growth, low inflation, low rates Worst = opposite High GDP growth is beneficial unless inflation is also high
76
Property Authorised Investment Funds (PAIF)
Invest in property and REITs Property income exempt from income tax Disposals taxed as CGT (not income like REITs) Must distribute 100% of rent (not 90% like REITs) >60% of income from property >60% of NAV from property Shares must be widely held

Investment, Risk and Taxation (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions