CISI Introduction to Securities and Investment Exam

CISI Introduction to Securities and Investment Exam 2023 -2024 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 woul d 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, com mercial 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 officia l 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 infla tion. • 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 eff ect 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