1. Role And Structure Of Financial Markets Flashcards
Name the 4 asset classes
Cash
Bonds
Shares
Property
What are the 4 characteristics of money
Sufficient in quantity
Generally accepted by all parties
Divisible into small units
Portable
What are the 6 roles of the Bank of England
Issuer of banknotes
Banker to gov’t
Banker to banks
Adviser to gov’t - sets base rate
Manages gold and FC reserves
Lender of last resort
Difference between money markets and capital markets?
Money markets are short term e.g commercial papers, treasury bonds
Capital markets are for raising long term finance e.g shares
What is the Running Yield calculation of a bond
Return (coupon)
_________________
Pride paid (not par value)
What are the 4 main reasons to trade currencies
International trade
Short term investment - convert to currency paying highest interest rate
Long term investment
Hedging FX risk
What 4 problems does intermediation solve?
Geographic location
Aggregation
Maturity transformation
Risk transformation
How much can building societies raise on wholesale markets?
Up to 50% of their liabilities
Objectives of the Payment Systems Regulator? (4)
Ensure UK payment systems are:
Reliable
Efficient
Competitive
Innovative
What are the 4 main types of financial crime?
Fraud or dishonesty
Misconduct / misuse of information relating to a financial market
Handling proceeds of crime
Financing of terrorism
Name of the international organisation created to combat fraud?
Financial Action Task Force on Money Laundering (FATF) - 1989
What are the 3 main areas the FCA look at to prevent crime? Include legislation.
Fraud - Fraud Act 2006 and Theft Act 1968
SFO has primary responsibility
Money laundering - Proceeds of Crime Act 2002 and Sanctions and Money Laundering Act (SAMLA) 2018
Bribery & Corruption - Bribery Act 2010
SFO has primary responsibility
