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CISI Unit 2 Securities Exam with correct Answers
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CISI Unit 2 Securities Exam with correct Answers
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CISI Unit 2 Securities Exam with correctAnswers
Bloomberg, reuters, third party administrators, IT consultants, Lawyers - Answer -3rd
party vendors
banks and brokers are part of the - Answer -sell side
asset managers are part of the - Answer -buy side
Professional sector business - Answer -Markets, corporate insurance, fund
management, investment banks - trading, banking, market making, research corporate
finance, investment management, custodian banks
Retail sector - Answer -retail banking, pensions, insurance, investment services,
custodians, financial planning and wealth management
What is equity? - Answer -A company can issue shares in order to raise capital
Other names for shareholders - Answer -shareholders, voting rights, owners
Authorised share capital - Answer -Authorised share capital is the maximum amount of
capital that can be raised through share issue
issued share capital - Answer -number of shares the company has allotted o
shareholders
nominal value - Answer -fixed legal value of a share, accounting term
Market capitalisation - Answer -number of shares multiplied by the market price
free float - Answer -Number of shares in the hands of the public
- owners holding 5% or more of all shares
- restricted stocks
- insider holdings
What kind of dividends do ordinary shares have? - Answer -Variable
What kind of dividends do preferred shares have? - Answer -fixed
, Do ordinary shares have voting rights - Answer -yes
A/B shares, redeemable, partly paid - Answer -Ordinary shares
Cumulative, participating, convertible, redeemable - Answer -Preferred shares
Priority order upon liquidation - Answer -Preferred, ordinary
What are redeemable shares - Answer -offered by a company to shareholders that may
be bought back by the company at its election. Companies are permitted to issue
ordinary shares that can be redeemed, as long as conventional non-redeemable
ordinary shares are also in issue
Partly paid - Answer -each ordinary share has a nominal value, which represents the
minimum amount that the company must receive from subscribers on the issue of the
shares. Occasionally the company may not demand all the nominal value at issue, with
the shares then referred to as being partly paid
cumulative - Answer -right to receive the dividend is rolled over into the next period
participating - Answer -opportunity for further dividend
convertible - Answer -right to convert into ordinary shares
American depository receipts (ADR) - Answer -A used by non-US companies in order to
encourage US Dollar investments to buy an equity stake
Features of an ADR - Answer -US Dollar denominated and US dividend. Bearer
document. Rights issue: ADR holders receive cash. Bonus issues: alters number of
shares
What is the settlement time of ADR - Answer -T+2
What happpens at the pre-release of an ADR ? - Answer -An ADR is secured by cash
collateral rather than the deposited securities and can be issued in a pre-release format
for upto 3 months
What are the risks associated with ADR? - Answer -Market and company sepcific risk
and FX risk
What is a warrant - Answer -Right to subscribe for NEW shares from a company at a
fixed price on a future date
not part of ordinary share capital
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