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Chapter 3+4

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User has deleted their subject information Quiz on Chapter 3+4, created by Deleted user on 03/09/2021.
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Dale Doust
Created by Dale Doust over 2 years ago
Dale Doust
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Resource summary

Question 1

Question
Which of the following gives the right, but not the obligation, to sell individual equity at a specified date for a given price?
Answer
  • Future
  • Forward contract
  • Put option
  • Call option

Question 2

Question
Which of the following Fitch ratings denotes the LOWEST level of risk for a bond?
Answer
  • D
  • BBB
  • C
  • AAA

Question 3

Question
Which of the following statements is TRUE about preference shares?
Answer
  • The most common type is the deferred share
  • They offer a lower dividend rate than the comparative coupon rate on a debenture
  • Dividends are guaranteed each year
  • In most cases they do not carry voting rights International Certificate in Wealth & Investment Management

Question 4

Question
Global Depositary Receipts traded on the London Stock Exchange are settled in which currency?
Answer
  • Euros
  • US Dollars
  • Japanese Yen
  • UK Sterling

Question 5

Question
Which MAIN class of financial asset is normally considered to be the LEAST liquid?
Answer
  • Equities
  • Corporate bonds
  • Government bonds
  • Property

Question 6

Question
Which measurement in relation to a fixed interest investment is given by the following formula?
Answer
  • Grossed up redemption yield
  • Gross redemption yield
  • Net redemption yield
  • Running yield

Question 7

Question
The running yield of a corporate bond is determined by calculating the coupon as a percentage of the:
Answer
  • market price
  • issue price
  • gross dividend
  • nominal value

Question 8

Question
Where the mining costs of a particular metal increase to 105% of that metal's current price, this indicates that:
Answer
  • demand is significantly rising
  • supply has become unreliable
  • there is likely to be a shortage of raw materials
  • production activities are likely to stop

Question 9

Question
A call option is an option that generally confers
Answer
  • the right to buy
  • the right to sell
  • a contract to sell
  • a contract to buy

Question 10

Question
Exchange-traded funds normally operate by:
Answer
  • tracking indices
  • tracking an individual security
  • investing in fund of funds
  • investing in manager of managers funds

Question 11

Question
Units in a unit trust fund are sold by which of the following?
Answer
  • The trustee
  • The registrar
  • The manager
  • The depositary

Question 12

Question
What is a key feature of exchange-traded commodities?
Answer
  • They are an open-ended collective investment vehicle
  • They are available only to high net worth individuals
  • There is limited exposure to derivative contracts
  • No additional shares can be created by the fund

Question 13

Question
Where an investment fund established in the UK satisfies the UCITS directive and is sold in another EU country, what is the position regarding local taxes and local marketing laws?
Answer
  • It will not be subject to either
  • It will be subject to local taxes but not local marketing laws
  • It will be subject to local marketing laws but not local taxes
  • It will be subject to both local taxes and local marketing laws

Question 14

Question
The Undertakings for Collective Investment in Transferable Securities Directives (UCITS) cover investment funds established in which location(s)?
Answer
  • England and Wales only
  • UK only
  • UK and France only
  • All European Union countries

Question 15

Question
One of the fundamental aims of a traditional hedge fund is to minimise which type of investment-related risk?
Answer
  • Inflation risk
  • Issuer risk
  • Market risk
  • Liquidity risk

Question 16

Question
A private equity fund is MOST likely to use a structure similar to that of which of the following?
Answer
  • Investment Trust
  • Limited Partnership
  • OEIC
  • SICAV

Question 17

Question
If a collective investment scheme is unauthorised, this means that it is specifically banned from:
Answer
  • operating a bid/offer spread
  • holding some of the fund assets in cash
  • being marketed to the general public
  • paying out dividends
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