Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

RO2 keys > Top-up > Flashcards

Top-up Flashcards

(85 cards)

Start Studying
1
Q

Investment limits for

EIS
SEED
VCT

A

EIS - 1m
SEED - £100k
VCT - £200k

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Income tax relief and tax relief clawback length

A

EIS - 30% - 3yrs
SEED - 50% - 5yrs
VCT - 30% - 3yrs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Tax free dividends for

EIS
SEED
VCT

A

Yes for all but limit of £200k for SEED

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Tax free capital gains for EIS, SEED, VCT?

A

EIS - yes after 3yrs
SEED - yes after 3yrs
VCT - yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Tax relief for losses and IHT business relief for EIS, SEED, VCT

A

EIS - yes
SEED - yes
VCT - no

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Top down portfolio construction

A
  1. Asset allocation
  2. Geographical spread
  3. Sector weighting
  4. Choose stocks and preferences
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

When should an investment be replaced?

A

Only when genuine underperformance is shown or circumstances changed making them unsuitable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Discretionary management service

A

Gives advisor authority to carry out trades on your behalf within your risk profile

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Advisory management service

A

Must get clients permission for each trade

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Capital preservation investment objective

A

Risk averse and wants an investment equal to or above inflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Capital appreciation investment objective

A

Growth is the priority

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Total return investment objective

A

Long term aspiration for growth from gains and income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is stochastic model sensitive to?

A

Small changes to input data

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Within a split capital investment trust that has zero dividend preference shares. This may contain what?

A

Negative hurdle rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How do investment platforms help with tax?

A

They produce annual consolidated statements each year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Both strategic and tactical asset allocation are based upon what?

A

Capital preservation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Man advantage to a client of using a trading platform?

A

Simplified admin.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

High risk has what relationship with volatility

A

High volatility and positive correlation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Correlation co-efficient being positive or negative has what effect on volatility

A

Positive - reduced volatility

Negative - increased volatility

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Min. Guaranteed earnings in a cash ISA?

A

95% within a 5yr period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Money market funds and short term money market funds weighted average maturity and weighted average life

A

Money market funds weighted average maturity of 6 months and weighted average life 12 months

Short term money market funds weighted average maturity of 60 days and weighted average life of 120 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Bond pricing. Payment will be quoted at the mid price but what will buyers and sellers pay/receive

A

Sellers receive less than mid price

Buyers pay more than mid price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

A 10yr GILT could be stripped into how many payments and why?

A

21 because of 20half yearly interest payments then payment on redemption

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

FTB SDLT max. allowance

A

£425k

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
SDLT on rent
1% on rent excess of NPV exceeding £125k for resi. 1% on rent excess of NPV exceeding £150k for commercial upto £5m then 2% thereafter
26
Second homes or BTL purchases are subject to X% surcharge for properties purchased at or above £X
3% for properties purchased at £40k or more. So 3% on top of all bands including 0%
27
What is an added benefit if you have it within a commercial property?
A tenant
28
Monetary and fiscal policy for inflation
Monetary - supply of money supply and interest rates Fiscal - taxation and gov. Spending
29
Tightening or easing monetary policy means what and what effect?
Tightening - increasing rates - reduced general wealth and fall in asset prices Easing - rise in general wealth and increase in asset prices
30
Quantitative easing
Releasing money so buys back some GILT’s so releases money to public and encourages public spending
31
A countries current and capital account
Current - goods and services, interest, dividends and rent Capital - investments and loans
32
What type of risk cannot be removed by diversification?
Systematic
33
Efficient frontier
Helps an investor find out if they’re exposing themselves to unnecessary risk
34
CAPM is based upon what theory?
Modern portfolio theory
35
CAPM is for what
Investor would want to be compensated for amount of risk taken over risk free return
36
Tendencies of people based upon prospect theory
People hold onto losses hoping they’ll rise again Over confidence for own skills and underestimate likelihood of bad outcomes
37
Stochastic modelling for risk
Plots out range of possible returns using asset allocation based upon risk profile
38
Positive screening Negative screening Neutral approach
Pos. - seeks out firms making an effort to be as ethical as possible but has a tolerance for unethical practices Neg. - avoids unethical practices Neut. - choosing socially responsible firms
39
Investment objectives for a client are set out in what?
Investment policy statement
40
Stratified sampling for index tracker funds
Hold sample of index funds but not full replication
41
Synthetic fund for index tracker funds
Computerised model buying and selling stocks within the index
42
What states an investment trusts restrictions?
Articles of association
43
Conventional and Split capital investment trust
Conventional - one main class of shares Split capital - multiple classes of shares so have different priorities on wind-up
44
Hurdle rate
Rate which must grow at to repay each class of shares at wind-up
45
Rate of tax for dividends after tax exemption of £X?
Tax exemption of £2k Basic rate - 8.75% Higher rate - 33.75% Additional rate - 39.35%
46
Costs higher or lower for an investment trust compared to an OEIC or Unit trust?
Lower
47
Non profit and with profit policy
Non profit - pays a fixed sum assured on death providing premiums are paid With profit - sum assured increases each year as receives bonuses
48
Traditional with profits Low cost with profits Low start, low cost with profits
Traditional - receive bonuses on top of sum assured Low costs - has a lower investment sum assured than death benefit. Fixed death benefit with a DTA and investment sum assured rises with bonuses paid along with DTA aims to have X amount upon death when combined Low start, low cost with profits - Low costs - same as low cost but premiums start low and increase over time
49
Unit linked bonds
Measured by number of units held No maturity date so has a whole of life policy Not tradeable an must be sold back to life company
50
Are unit linked bonds tradable?
No. Must be sold back to life company
51
Other than guaranteed return bonds do bonds have a term?
Usually no and can be surrendered at any time
52
Max. amount allowed to withdraw from a bond
5% of original investment, also cumulative
53
High income bond
Based on packages of derivatives but higher risk as can return less than original investment
54
Distribution bond
Split income received as this is paid to the investor leaving capital intact Must have equity content of 60% and yield of atleast 110%
55
Guaranteed equity and protected bonds
Guaranteed return on capital of 100% for equity and 90% for protected bonds Guarantee achieved with zero coupon bond
56
Segmentation
Each class of asset is identical in value and asset composition
57
Tracking error from fund to index is caused by what?
Charges
58
Exchange traded product
Aims to mirror performance of an index
59
Property unit trust Property investment trust
UT - cannot borrow and must match NAV IT - can borrow and dare price is independent to NAV
60
How long does a spouse or civil partner have to use allowance of deceased partner?
3yrs from date of death
61
HTB ISA
25% bonus paid £12k max. investment Max. initial contribution of £1k Max. monthly contribution of £200
62
Put and call option
Put - option buyer right to sell Call - option buyer right to buy
63
Structured product
If investment drops then will return money. If rises will receive growth and if rise a lot then will split gains with product runners
64
Zero coupon bond
gives a guarantee of return with no income
65
Non correlation on a table
Closest to 0
66
If inflation rises what will happen to the price of GILT’s?
Drop in price
67
What plays a major factor in sharpe ratio and CAPM?
Sharpe - standard deviation CAPM - Beta (benchmark)
68
Bond taxation rules
5% cumulative withdrawal limit then income tax paid at 20% less than their bracket
69
Unit trust, OEIC & investment trust income tax and CGT
Usual dividend rules, CGT and income tax after PSA
70
Offshore reporting and non-reporting fund tax rules
Offshore reporting - usual rules apply but pay CGT not income tax Non-reporting fund - Pay CGT but at income tax rates with no exemptions allowed
71
Bond taxation calculation help
Can withdraw cumulative 5% Then charged income tax but -20% and consider all costs and anything already taxed
72
SDLT for non UK residents
2% surcharge on purchases over £40k
73
Pg. 33, 90 & 53
74
AIM benefit when holding shares
Exempt from IHT after 2yrs of holding
75
Clean price and dirty price
Clean - interest not included Dirty - interest not included for buyer
76
Alpha
Shows fund manager ability to pick good investments
77
FTSE AIM has what within it?
FTSE 5, 100, all-share and specialist stocks
78
What is FTSE AIM?
Peivides primary and secondary market for smaller or newer companies
79
2 Benefits to FTSE AIM
Less costly and less rules
80
Effective annual rate when relevant to compound interest
Nominal rate compounded (the actual rate of interest from the beginning to now)
81
Nominal returns Real returns
Nominal - ignores inflation Real - accounts for inflation
82
In a deflationary environment what will happen to the value of real value of money?
Increase over time
83
Fettered and unfettered funds
Fettered - funds from host provider only unfettered - funds from other companies can be used
84
Financial investments are designed to stimulate what?
Demand
85
Non resi. property SDLT
extra 2% bracket between £150k - £250k

RO2 keys (13 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions