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CISI Introduction to Securities and Investment Exam Questions and Answers
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CISI Introduction to Securities and Investment Exam Questions and Answers
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CISI Introduction to Securities andInvestment Exam Questions and
Answers
What 2 documents are required to form a company? - Answer -Articles of Association +
Memorandum of Association
Top 5 Global Financial Centres - Answer -NY LDN HKD SGP SF
FX Market - Answer -Average daily turnover in excess of US$6 trillion
Insurance Markets - Answer -Globally, the US, China, Japan and the UK are the largest
insurance markets
building societies - Answer -Savings institutions that are mutually owned. UK example is
National Savings & Investment (NS&I)
peer to peer lending - Answer -P2P lending cuts out the banks, so borrowers often get
slightly lower rates, while savers get far improved headline rates, with the P2P firms
themselves profiting via a fee.
crowdfunding - Answer -Is the practice of funding a project or venture by raising small
amounts of money from a large number of people. In the form of a donation, debt or
equity crowdfunding
platforms - Answer -Online services used by intermediaries, such as independent
financial advisers (IFAs), to view and administer their clients' investment portfolios.
wraps - Answer -Often offer greater access to other products too, such as ISAs, pension
plans and insurance bonds
fund supermarkets - Answer -offer wide ranges of unit trusts and OEICs
Third-party administrators - Answer -enables a firm to focus on the core areas of its
business (f and fix its costs, and leaves a specialist firm to carry out the administrative
functions
Restricted advice - Answer -Giving advice on a firm's own products
,ESG - Answer -Sustainability and climate change; social concerns include consumer
protection and diversity while governance concerns include employee relations and
management structures. MSCI is one such organisation that determines the ESG rating
Stages of economic cycle - Answer -Peak, contraction, trough, expansion
Public sector borrowing requirement - Answer -The amount the government will need to
borrow if public expenditure exceeds total revenue
higher interest rates - Answer -Consumers would be encouraged to save with higher
interest rates. • Mortgage payments would rise, leaving less disposable income for
homeowners. • The higher cost of credit would deter borrowing and hence spending. •
The level of corporate investments would decline due to higher borrowing costs. • The
corporate sector may lose confidence in the economy and become pessimistic about
future prospects.
central banks - Answer -Acting as banker to the banking system by accepting deposits
from, and lending to, commercial banks. • Acting as banker to the government. •
Managing the national debt. • Regulating the domestic banking system. • Acting as
lender of last resort in financial crises to prevent the systemic collapse of the banking
system. • Setting the official short-term rate of interest. • Controlling the money supply.
Monetary Policy Committee - Answer -The body within the Bank of England responsible
for the conduct of monetary policy- 9 members. MPC's primary focus is to ensure that
inflation is kept within a Government-set range monthly meetings
QE - Answer -QE involves the central bank creating money, which it then used to buy
assets such as government bonds and high-quality debt from private companies,
resulting in more money in the wider economy
Financial Policy Committee (FPC) - Answer -A part of the Bank of England that monitors
and responds to risk posed to the entire financial services market. Its focus on the
whole market makes it a macro-prudential authority.
Prudential Regulation Authority - Answer -the part of the Bank of England responsible
for the microprudential regulation and supervision of banks, building societies, credit
unions, insurers and major investment firms
Financial Conduct Authority (FCA) - Answer -The organisation that regulates financial
firms providing services to consumers, and maintains the integrity of the UK's financial
markets.
Federal Reserve - Answer -The central bank of the United States- comprises 12
regional Federal Reserve Banks
, European Central Bank (ECB) - Answer -Located in Frankfurt, the ECB is principally
responsible for setting monetary policy for the entire Eurozone, with the objective of
maintaining internal price stability
Inflation - Answer -• Businesses have to continually update prices to keep pace with
inflation. • Employees find the real value of their salaries eroded. • Those on fixed levels
of income, such as pensioners, will suffer as the price increases are not matched by
increases in income. • Exports may become less competitive. Rising house prices can
contribute to a 'feel-good' factor (although this might contribute to further inflation as
house-owners become more eager to borrow and spend). • Borrowers benefit, because
the value of borrowers' debt falls in real terms - ie, after adjusting for the effect of
inflation. • Inflation also erodes the real value of a country's national debt and can
benefit an economy in difficult times.
deflation - Answer -unemployment --> recession --> depression
CPI - Answer -ONS calculates inflation is to collect price data on a typical 'shopping
basket' of some 700 items from month to month. To calculate changes in price, the ONS
sets a base year for the total cost of the 'shopping basket' which is then converted into
an index of 100; for CPI and CPIH the base year is 2015.
Long-run economic growth - Answer -the process by which rising productivity increases
the average standard of living. In a mature economy, the labour force typically grows at
about 1% pa,
Balance of payments - Answer -the difference between the flow of money into and out
of a country
Visible trade balance - Answer -A record of the export and import of physical goods.
Invisible trade balance - Answer -A record of the trade in services, such as
transportation and financial services.
Current account - Answer -The current account is used to calculate the total value of
goods and services that flow into and out of a country. The current account comprises
the trade balance figures for the visibles and invisibles
Capital Account - Answer -The capital account records international capital transactions
related to investment in business, real estate, bonds and stocks. eg fdi
National Debt - Answer -£2 trillion
Government Debt - Answer -essentially this is what the Government owes. The most
widely quoted is public sector net debt.
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