Things I got wrong Flashcards
What is the term for expressing the value of a future sum in terms of its value today by considering the prevailing interest rate?
Present value
What is the typical settlement period for Eurobond transactions?
T+2
What is the main limitation of using flat yield as a measure of bond returns?
It doesn’t consider capital gains or losses
Which type of bonds typically pay interest gross, making the buyer responsible for paying their own tax?
Eurobonds
Why were investors willing to buy bonds with negative yields in early September 2021?
To preserve the security of their capital
What does a puttable bond give the bondholder right to?
Redeem the bond early at a pre-agreed amount
What is the minimum number of shares required by a predator to gain control of a company?
> 50%
Which two terms can be used to describe a bonus issue?
Scrip issue and capitalisation issue
Would a company buy back its shares to execute orders from a number of investors?
No, this is called aggregation
Pre-emptive rights are associated with which type of offer?
Secondary offering
Why would a organisation choose to offer an introduction?
To increase liquidity of shares
After what period of time would a company on AIM be removed without a nomad or broker?
One month
What does a best-efforts agreement imply about the securities being offered?
High risk securities
How does underwriting benefit the issuing company?
It ensures that there is sufficient demand for the shares
Which organisation sets the rules to to becoming listed on the LSE?
The FCA
Why would investor confidence in a recently listed company suffer?
Volatility circuit breaker
How does an over-allotment option allow underwriters to achieve a more successful offering?
It allows underwriters to sell shares if they rise and buy back shares if they fall
How often are listed companies generally required to provide audited accounts?
Annually
When would investors accept a negative yield on a government bond?
When they require a safe place to deposit their funds.
Why would a company issue Global Depository Receipts?
To attract overseas investors
Why would a buyer of a government bond pay more than nominal value?
Available rates are lower than the rates available on the bond
Many cryptocurrencies are decentralised, what effect does this have?
Lowers counterparty risk and liquidity.
No need for centralised exchange.
Why is gross redemption yield more useful than flat when comparing bonds?
GRY accounts for gain or loss through to maturity
Why would a yield curve become inverted?
Through the expectation of a significant reduction in future interest rates
