Module 14 Flashcards
What different organisations can the term bank apply to?
commercial banks
investment banks
central banks
merchant banks
What is a commercial bank?
collects deposits or money from individuals or companies and lends money if they wish to borrow.
This is called financial intermediation
What are building societies?
operate ina similar way to commercial but without shareholders. instead borrowers and lenders are members
What is NS&I?
OPERATES ONLINE AND in post office. takes deposits and backed by treasury BUT DOESNT LEND
What is peer to peer lending?
by websites- direct. cheaper
What is an investment bank?
- provide advice to raise finance
- M&A
- buy shares and bonds on behalf of clients
What is general insurance?
non-life insurance
e.g. for vehicles, pets, health etc
What is life insurance?
fixed term policy, say for fifteen years
What is life assurance?
not fixed term and provides cover till death.
What is a term insurance policy?
insured for a specific period of time
what is a whole of life policy?
sum upon death of policy holder
What is an endowment policy?
combines life and savings. usually associated with mortgages
What is a collective investment scheme?
invetsors pool their money into large fund and it is invested on their behalf
What are the three types of investment management styles?
active, passive, hybrid
What are unit trusts?
creates new units when investors subscribe and cancels units when investors cash out.
Who monitors unit trusts?
trustees and objectives are outlined in trust deeds. trust deed also sets out charges the investor is subject to.
How are unit trusts priced?
continuously. updated at regular intervals e.g. daily. this is called the valuation point.
What are OEICS?
like unit trusts but structured as a company rather than a trust. this means they can continually issue and redeem their own shares.
Are OEICS listed on an exchange?
may or may not be
What is a depositary?
like a trustee =. must be independent and the assets of the OEIC are registered in the depositary’s name.
What is an investment trust?
-public limited companies with shares on the stock exchange. They are closed end i.e. there is a fixed amount of shares.
What is the net asset value?
calculated by the fund manager each day
NAV= net assets attributable to ordinary / no ordinary shares in issue
What is monetary stability?
prices are stablehand there is confidence in the local currency.
What is financial stability?
can be achieved by identifying threats to the finical system as a whole, therefore maintaining public confidence. Done by the Financial Policy committee
