IM Questions

Question 1

What service would you use for Non-Equity exposure?

Answer 1

Alternative Allocation, Alternative Income, UK Fixed Income

Question 2

Maximum sector allowance within Global Large Cap

Answer 2

30%

Question 3

Minimum market cap for not covered/monitored investment -

Answer 3

$20 Billion or £10bn FTSE 100

Question 4

What is the maximum exposure to an individual equity?

Answer 4

10%

Question 5

What is the maximum equity allocation in a Cautious AIA ?

Answer 5

40%

Question 6

Which AIA correlates to a medium NATR?

Answer 6

Balanced or Steady Growth

Question 7

What is the minimum Fixed Income requirement for Cautious ?

Answer 7

50% of total portfolio has to be in Fixed income and that equates to £35,000 (min £70k for MIS)

Question 8

Name the core stocks?

Answer 8

Unitedhealth, ASML, Alphabet, Linde, Danaher, Orsted, Nestle, Visa, Thermo Fisher, Costco, Amazon & Microsoft [AAACUNMOLDTV]

Question 9

3 growth buckets in which our model portfolio equities fall into?

Answer 9

Fast Growth, Cyclical & Defensive

Question 10

Economies of scale?

Answer 10

When a firm gets larger - costs decrease

Question 11

FX Charge ?

Answer 11

0.5% for trades under £30,000 and 0.35% thereafter

Question 12

Pricing power

Answer 12

The ability to raise prices without affecting demand (monoply in an industry) ASML, LINDE.

Question 13

Operational Gearing

Answer 13

The effect that fixed costs can have on the relationship that exists between sales and your operating profits - good example - https://moneyterms.co.uk/operational_gearing/

Question 14

What are the segregated services for MIS? N.B segregated services are now called INVESTMENT STRATEGIES All

Answer 14

Global Emerging Markets, Global Smaller Companies, Global Technology Innovation, Large Cap Global Equity, Global Mid Cap Equity, PMS, Sustainable PMS, Special Situations

Question 15

Name 3 cyclical sectors?

Answer 15

Financials, Industrials, Materials

Question 16

Name 3 defensive sectors?

Answer 16

Utilties, Consumer staples, Health care

Question 17

Name 3 fast growth sectors?

Answer 17

Tech, Consumer discretionary, Communication services

Question 18

Last time to trade?

Answer 18

LSE opens 8am to 4.30pm

Question 19

What is systematic risk?

Answer 19

Is the risk inherent to the entire market, attributable to a mix of factors including economic, socio-political, and market-related events. N.B cannot be eliminated by diversification. e.g - inflation, interest rates, war, recessions, currency changes etc

Question 20

What is un-systemic risk?

Answer 20

Is the risk that a company or industry level risk could trigger a huge collapse. N.B can be dwindled through diversification.

Question 21

What form has to be completed by all US persons

Answer 21

W9

Question 22

What is modified duration?

Answer 22

Modified duration is a formula used to express the change in value of a bond from a 1% change in interest rates, illustrating that bond prices and interest rates move in opposite directions- higher interest rates lower bond prices, and lower interest rates raise bond prices.

Question 23

If interest rates rise, bond prices…

Answer 23

Fall

Question 24

If inflation rises, fixed coupon bond yield will

Answer 24

Rise

Question 25

Objective of Fixed Income Service

Answer 25

To provide a reasonable and predictable level of income with less risk of investing in direct equities

Question 26

What is a callable bond

Answer 26

Is when the issuer can redeem the bond before maturity (it is just an option, not obligation)

Question 27

Min investment for FI

Answer 27

£30K

Question 28

What happens to corp bond yields if Gilt yield rise

Answer 28

Corp bond yield also rises

Question 29

What is perpetual bond

Answer 29

No maturity date

Question 30

What is the income yield

Answer 30

The annual income on a bond as a % of its price

Question 31

Name three credit ratings

Answer 31

Fitch, Moody's, S&P

Question 32

Characteristics that make a bond more susceptible to movements in interest rates

Answer 32

Long maturity, low coupon

Question 33

purpose of W8 Ben purpose of W9 Ben

Answer 33

W8 Ben - UK Residents to claim back tax if they own US stocks W9 Ben - US citizens, allows you to reclaim 15% tax

Question 34

A client moves residency to the US from the UK. What documents do we need?

Answer 34

Change of circumstance form, W9-BEN, Passport, address confirmation

Question 35

Do corp bonds have voting rights

Answer 35

No

Question 36

Bond holder or shareholder rank first in liquidation

Answer 36

Bond holders

Question 37

What is a derivative

Answer 37

Asset which derives value form price of another asset such as gold, or index

Question 38

How many sectors are there

Answer 38

11

Question 39

How many core stocks

Answer 39

12