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77 Cards in this Set
- Front
- Back
What time does the IOB auction start |
Starts at 8:50 continuous trading at 9am |
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Normal gilt maturity |
5 years- considered short |
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What is the fairest way to raise funds for shareholders |
Rights issue - as will protect against dilution |
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Pips |
0.00xx |
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Eurobonds pay coupon how frequently? |
Annual |
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How is an OEIC priced Who manages it |
Single price Managed by ACD |
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Where do ADRs trade? |
On the IOB which is not part of SETS |
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Which orders can remain on the order book |
Limit orders |
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If settlement is delayed and the exchange happens after the ex date who is responsible for the dividend |
The buyer. The buyers broker should make a claim to get the dividend |
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If gilt is below par |
At maturity it will be making a gain. Therefor GRY>FY |
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An introduction to the LSE |
Involved introducing the shares for trading. Does not raise funds for company as shares already owned |
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What is a competitor to the LCH |
SISxclear |
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Lowest NMS on the LSE |
100 shares |
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Can gilts be traded special ex |
No. but they can be special cum Up to 7 days |
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Take over panel applies to who? |
All public companies |
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Who managed a unit trust |
A fund managed ( not an ACD) |
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For FX where does the money go to |
BoE received payment to and from CIS bank |
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At expiry what does the warrant loose |
Time value |
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Talk about risk associated with the following: Future Option Blue chip Small tech company |
Future - buyer/seller are obligated Options - have option but not obligated Blue chip - fairly safe Small tech company - less safe then blue chip |
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How is an investment trust price set |
By supply and demand (market) |
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Who decides ex div date |
Stock exchange |
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Is an ADR a bearer instrument |
Yes |
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What happens when a gilt is stripped ? |
Each payment (coupon and redemption) are treated as separate securities, zero coupon bonds, and freely traded |
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Zero coupon pref shares may have... |
Voting rights to compensate for no divs. |
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Number of days and accrued interest till next coupon |
Amount bought x coupon x freq x (no of days left/total in period) |
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Purpose of a syndicate |
Mainly to ensure all rights are taken up. Also to insure the rights issue |
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What is the tick multiple on SETS if price below £5 |
0.25p increments |
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Section 798 gives a company the right to what? |
Find out who has held interest in the company for the last 3 years |
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Can UK corporate bonds be traded special cum? |
Yes, from ex date but not including payment date. |
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How is GRY calculated |
Based on before tax cash flows and ignored income tax on annual coupons |
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What can be done with nil paid rights? |
Can be bought off other shareholders (not the company!) If you don't do anything with your rights- the company will sell them and give you the proceeds but take a charge |
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In a takeover bid who must disclose and how much |
Both shareholders of bid and acquiree must disclose any shareholdings over 1% |
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NCA - NCL = |
EQUITY - CA + CL |
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A director earning £50000 will prefer what sort of investment |
As it is a higher tax payer, prefer low coupon bonds. |
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At what levels is effective control and legal control? |
Effective - 30% Legal - 50% + 1 share |
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Order of risk Blue chip shares, local authorities bonds, convertibles, warrants |
Least risk: Local authority bonds Convertible Blue chip Warrants |
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Define ROCE |
Profit before interest payable and tax / capital employed As a % |
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What will a rights issue and loan stock do for a firm |
Raise funds |
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If in a question about future rates it's not USD based. What do you do? |
Work out forward Rates as normal (premium = deduct, discount = add on) And then find the inverse I.e 1/forward rate. To work out USD amount |
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What type of market it SETS |
Order driven and therefor does not have set market makers |
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What powers does the takeover panel have if you don't stick to the rules? |
Can only 'cold shoulder' you |
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What happens to limit orders during uncrossing |
Cannot be settled, but will Be AFTER algo is done |
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Broker dealers cannot use what to trade gilts? |
Inter broker dealers |
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How to work out the tax credit amount |
Div amount/0.9 x 0.1 For a normal tax rate payer |
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Who has to submit a trade report |
Made by the senior party. I.e GEMM is senior to IDB Seller will report if both parties equal. |
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What is it called where currencies are not quoted against each other. |
Cross rate |
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Max trade size on LSE |
200000 |
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GEMMs have what informal unwritten obligation? |
To buy any unsold bonds during auction. |
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Japanese government bond has normal life of? |
10 years |
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If a clash of principle and rules for take over code |
Principles may overide rules |
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Conversion premium |
Effective price through rights
EP - P / P |
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If dividends are not paid on preference shares |
On cumulative shares- if dividends are not paid this year, ordinary shareholders cannot receive a dividend until all arrears of the pref div have been paid |
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Iceberg order- how does it work? |
The maximum amount is matched. And then the peak amount will be left on the order book with the rest hidden |
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Suitable investment for retail client, to earn capital gains with low risk |
Index linked gilts, nominal value is linked to inflation, almost definitely increase in value so give a capital gain at a low risk |
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Bonus issue/rights issue. X to Y |
Y is the amount of shares you need to hold to get X amounts of rights/bonus shares
Formula: Current amount = Y @ price > T Amount added = X @ price Totals = Y + X = T Derive price |
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Best way to diversify |
Choose shares that are uncorrelated |
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Who can use the DMO standing repo facility |
Any DMO counterparty |
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How many principles underpin the U.K. takeover code |
Six |
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Working out accrued interest and amount paid for bond at dirty price |
Work out no of days in time period (Dp) and no of days accrued (Da) Number of bonds how many at nominal value
Accrued int Purchase amount x rate x freq x (Dp/Da) Add to nominal value * no of bonds |
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Requirement to join AIM |
Changes of major shareholders should be reported (important announcements) |
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What is used to determine if a bond can be traded electronically? |
Liquidity |
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What effect would an increase in the equity risk premium have on the share price? |
Share price would fall. |
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What key feature of an investment trust automatically increases the potential volatility of th returns? |
Gearing |
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Stabilization benefits investors as it prevents... |
Substatial losses from occurring |
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Companies authorized share capital provides a limit on |
Total number of shares issued to new and existing shareholders in aggregate at any one point in time |
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Why would a company choose the share trustee route when appointing a trustee a debenture stock issue |
To ensure off balance sheet treatment |
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How is EPS calculated |
Earnings over ordinary shares |
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Which is the depositary for Eurobonds |
ClearStream. Eurobonds are bearer instruments are are immobilized in depositaries operated by euroclear or Clearstream |
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Calculating the forward interest rate |
Spot rate * (1+Rv) / (1+Rf) |
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In a rising market what sort of bonds are best ? |
High duration bonds will appreciate in price more. So likely to replace low duration with high duration |
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Automatic execution suspension on SETS (a reason?) |
Price moves more then the tolerance level away from the previous trade price |
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Worked Principal notification submitted? |
Submitted by the exchange Member within three minutes of entering into the WPA with a client. The exchange will delay the publication, to enable to exchange member to offset their position |
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During an auction call on SETS what orders can and cannot be placed |
CAN: Limit, Iceberg Market orders
CANNOT: At best |
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MTN (shelf registration) |
A one off arrangement with the REGULATORS for a number of bond issues to be undertaken over a period of up to two years |
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Preference shares are normally |
CUMulative IRRedeemable NON-participating NON-convertible |
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Purpose of Thomson report (omego) |
System for reporting international equities |
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'At best' order |
Picks up all it can on the order book and the rest is eliminated |