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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

Normal gilt maturity

5 years- considered short

What is the fairest way to raise funds for shareholders

Rights issue - as will protect against dilution

Pips

0.00xx

Eurobonds pay coupon how frequently?

Annual

How is an OEIC priced


Who manages it

Single price


Managed by ACD

Where do ADRs trade?

On the IOB which is not part of SETS

Which orders can remain on the order book

Limit orders

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

If gilt is below par

At maturity it will be making a gain. Therefor GRY>FY

An introduction to the LSE

Involved introducing the shares for trading.


Does not raise funds for company as shares already owned

What is a competitor to the LCH

SISxclear

Lowest NMS on the LSE

100 shares

Can gilts be traded special ex

No. but they can be special cum


Up to 7 days

Take over panel applies to who?

All public companies

Who managed a unit trust

A fund managed ( not an ACD)

For FX where does the money go to

BoE received payment to and from CIS bank

At expiry what does the warrant loose

Time value

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

How is an investment trust price set

By supply and demand (market)

Who decides ex div date

Stock exchange

Is an ADR a bearer instrument

Yes

What happens when a gilt is stripped ?

Each payment (coupon and redemption) are treated as separate securities, zero coupon bonds, and freely traded

Zero coupon pref shares may have...

Voting rights to compensate for no divs.

Number of days and accrued interest till next coupon

Amount bought x coupon x freq x (no of days left/total in period)

Purpose of a syndicate

Mainly to ensure all rights are taken up.


Also to insure the rights issue

What is the tick multiple on SETS if price below £5

0.25p increments

Section 798 gives a company the right to what?

Find out who has held interest in the company for the last 3 years

Can UK corporate bonds be traded special cum?

Yes, from ex date but not including payment date.

How is GRY calculated

Based on before tax cash flows and ignored income tax on annual coupons

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

In a takeover bid who must disclose and how much

Both shareholders of bid and acquiree must disclose any shareholdings over 1%

NCA - NCL =

EQUITY - CA + CL

A director earning £50000 will prefer what sort of investment

As it is a higher tax payer, prefer low coupon bonds.

At what levels is effective control and legal control?

Effective - 30%


Legal - 50% + 1 share

Order of risk


Blue chip shares, local authorities bonds, convertibles, warrants

Least risk:


Local authority bonds


Convertible


Blue chip


Warrants

Define ROCE

Profit before interest payable and tax / capital employed


As a %

What will a rights issue and loan stock do for a firm

Raise funds

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

What type of market it SETS

Order driven and therefor does not have set market makers

What powers does the takeover panel have if you don't stick to the rules?

Can only 'cold shoulder' you

What happens to limit orders during uncrossing

Cannot be settled, but will


Be AFTER algo is done

Broker dealers cannot use what to trade gilts?

Inter broker dealers

How to work out the tax credit amount

Div amount/0.9 x 0.1


For a normal tax rate payer

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.

What is it called where currencies are not quoted against each other.

Cross rate

Max trade size on LSE

200000

GEMMs have what informal unwritten obligation?

To buy any unsold bonds during auction.

Japanese government bond has normal life of?

10 years

If a clash of principle and rules for take over code

Principles may overide rules

Conversion premium

Effective price through rights



EP - P / P

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

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

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

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

Best way to diversify

Choose shares that are uncorrelated

Who can use the DMO standing repo facility

Any DMO counterparty

How many principles underpin the U.K. takeover code

Six

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

Requirement to join AIM

Changes of major shareholders should be reported (important announcements)

What is used to determine if a bond can be traded electronically?

Liquidity

What effect would an increase in the equity risk premium have on the share price?

Share price would fall.

What key feature of an investment trust automatically increases the potential volatility of th returns?

Gearing

Stabilization benefits investors as it prevents...

Substatial losses from occurring

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

Why would a company choose the share trustee route when appointing a trustee a debenture stock issue

To ensure off balance sheet treatment

How is EPS calculated

Earnings over ordinary shares

Which is the depositary for Eurobonds

ClearStream.


Eurobonds are bearer instruments are are immobilized in depositaries operated by euroclear or Clearstream

Calculating the forward interest rate

Spot rate * (1+Rv) / (1+Rf)

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

Automatic execution suspension on SETS (a reason?)

Price moves more then the tolerance level away from the previous trade price

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

During an auction call on SETS what orders can and cannot be placed

CAN:


Limit,


Iceberg


Market orders



CANNOT:


At best

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

Preference shares are normally

CUMulative


IRRedeemable


NON-participating


NON-convertible

Purpose of Thomson report (omego)

System for reporting international equities

'At best' order

Picks up all it can on the order book and the rest is eliminated