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G’S CeMAP 1 > Part 1 > Flashcards

Part 1 Flashcards

(71 cards)

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1
Q

How do gilt edged securities differ from corporate bonds

A

Gilts are government backed and are highly secure. Corporate bonds are a loan to a company and involve higher risk

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2
Q

Buying a holding of shares at a high price means…

A

There is a high price/earning ratio (shares are in demand and will offer higher earnings in the future)

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3
Q

Enterprise investment scheme is anything except

A

Anything except ftse’s

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4
Q

The tax treatment of National savings and investments income bonds

A

Paid gross but is taxable

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5
Q

A fixed income unit trust is assessable to what type of tax

A

Income tax

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6
Q

Policy fees are charged in what policy

A

Charged in a life policy but not open ended investment company

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7
Q

Unit linked Endowment do not …

A

Do not provide guarantee minimum return at maturity- it reflects stock market fluctuations

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8
Q

Staff training on anti money laundering does not cover

A

How to liaise with the national crime agency

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9
Q

What inter governmental organisation established to coordinate the internal fight against money laundering

A

Financial action task force

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10
Q

To undertake a certified role you must be

A

Fit and proper

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11
Q

Maximum prison sentence for a senior manager is …

A

7 years

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12
Q

Maximum prison sentence for a individual who recklessly makes a false or misleading statement is

A

2 years

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13
Q

An eligible counterparty

A

An authorised insurance company

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14
Q

A non permitted method of attracting new mortgages

A

Real time promotions (calls)

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15
Q

What report is not necessary for a mortgage

A

Suitability report

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16
Q

How is property defined with regards to money laundering

A

Assets of every kind

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17
Q

Unearned income

A

Interest from savings, dividends from shares, rental income, trust income.

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18
Q

Income not liable for tax

A

Interest from national savings & premium bonds, income from ISAs, proceeds from qualifying life policies

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19
Q

Dividends are what

A

Distribution from company profits to people who own shares

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20
Q

Capital Gains Tax is paid from what

A

Tax payable on a gain or profit made from disposal of certain assets

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21
Q

What are exempt from CGT

A

Private residence, GILTS, gains on qualifying life policies disposed of by the owner,ISAS and other savings accounts

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22
Q

Capital loss

A

Loss on the disposal can be offset against capital gains made on other assets.

Losses first must be offset against gains made that tax year

Any losses still outstanding can be offset against gains to be made in future years

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23
Q

Exempt from VAT

A

Loans/ mortgages
Supply of health, educational services
Insurance policies

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24
Q

How is new style paid

A

Is paid gross and is taxable and paid for 6 months

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25
What are Fixed interest securities
Gilts- interest is paid half yearly
26
Dates gilts according to the financial press
Short - 0-5 years Medium - 5 - 15 Long 15+
27
Dated gilts (UK debt management office)
Short 0 - 7 Medium 7 - 15
28
What are Corporate bonds and what is the rate of interest
Investment into a company and have a fixed rate of interest, redemption date and term Interest paid gross but is taxable No CGT
29
What are GILTS
Low risk into gov Fixed rate of interest for fixed period paid half yearly Can be traded early on the stock market Interest is paid gross but taxable No CGT
30
Script issues
Free shares to existing shareholders
31
Rights issue
More shares to current shareholders at a discount
32
What are Warrants
Give the holder the right to buy the companies ordinary shares at a fixed price with a an agreed future date
33
What can you do with Ordinary shares and what is received
Can vote at shareholder meetings Dividends received without deduction of income tax CGT applies is sold for a gain
34
What is involved in Unit trusts
Trustees over see the trust Open ended Value of fund is divided into units Fund manager buys and sells units and can create more No ability to gear up (borrow further investment)
35
What type of Taxation do you get on unit trusts
Income received from equity unit trust is classed as dividend income and subject to dividend taxation
36
What are Investment trusts
Purchase shares in the investment company Not open ended Available at discount Can fear
37
What is an OEIC
Depositary oversees OEIC Investors purchase shares Open ended No gearing
38
What are Investment bonds
Unit linked, single premium, non qualifying, whole of life policies
39
To be qualifying
Premiums must be payable for 10 years minimum
40
What is a Gift inter vivos and what does it cover
Decreasing term assurance contracts to cover a IHT liability
41
Flexible whole of life
Combines life cover with investment
42
Universal whole of life
Combines life cover with other health insurances
43
Income protection
Regular monthly long term income up to 65% of pre illness income
44
Accident sickness & unemployment
Regular short term income usually lined to mortgage amount for max 2 years
45
What is an Endowment
Savings plan in addition to mortgage payments - equal to mortgage balance on maturity
46
Period of bankruptcy
1 year
47
Intestacy
A person who dies with no will or valid will. The grant of letters of administration will be applied for by the administrator
48
Prudential regulation authority
Has responsibility for the supervision of the banks, building societies and insurance companies
49
Financial conduct authority (FCA)
Has responsibility for the conduct and behaviour of all financial firms
50
The FCAs objectives are
(PIC) Protect, integrity & competition
51
The FCA handbook
Binding obligations High level standards (authorisation rules) Prudential standards (soundness) Business standards (conducting business) Regulatory process
52
FCA is committed to reducing financial crime which is:
Market abuse - insider dealing Market manipulation- false misleading info Money laundering
53
MIFID
Market in financial instruments directive
54
Training records must be kept for:
3 years non mifid 5 years mifid
55
The FCAS disciplinary actions :
Removal of specific permissions Withdrawing authorisation Injunction Restitution Redress
56
What advice is give to Eligible counterparts
No advice given
57
Professional client
Advice given
58
Retail client
Little knowledge of financial services
59
Client agreement is for
Designated investment business
60
Product disclosure is for who
For those selling packaged products must provide a key features document
61
When should a Key information document (KID) be given to
Must be provided if a customer is buying a packaged retail and insurance based investment product - products subject to risk
62
What is a Suitability letter required for
Are required for life policies, pensions and unit trusts
63
Under EU rules criminal activity is:
Any criminal activity specified in the Vienna convention or by a member state of the eu
64
Money laundering offences
Concealing criminal property Arranging relating to criminal property Acquiring or using criminal property
65
Evidence of ID must be kept for
5 years minimum after the relationship has ended
66
Each firm has a what
Money laundering reporting office who reports to the national crime agency
67
Anyone convicted of concealing, arranging or acquiring could sentenced up to
14 years in prison or unlimited fine or both
68
Failing to disclose or tipping off will get you
5 years in prison and or an unlimited fine
69
If a company fails to comply with an enforcement notice what is the maximum fine
Higher of 17.5m or 4%
70
Firms must aim to resolve complaints in how long
8 weeks
71
Pension ombudsman can decide about complaints in relation to
The running of a pension not the marketing or sale of one

G’S CeMAP 1 (1 decks)

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