Active Management - answer-Investment approach employed to generate returns in excess of the market
Additional Rate (of Income Tax) - answer-Tax on top of band of income (currently at 45%)
Alternative Investment Market (AIM) - answer-Established by LSE (London Stock Exchange) - Junior market ...
CISI EXAM DEFINITIONS
Active Management - answer-Investment approach employed to generate returns in
excess of the market
Additional Rate (of Income Tax) - answer-Tax on top of band of income (currently at
45%)
Alternative Investment Market (AIM) - answer-Established by LSE (London Stock
Exchange) - Junior market for smaller company shares
Annual General Meeting (AGM) - answer-Yearly meeting of shareholders - vote
dividends, appoint directors and approve financial statements
Approved Persons - answer-Employees in controlled functions, who must be
approved by regulator
Articles of Association - answer-Legal document that sets out internal constitution of
company - shareholder voter rights and company borrowing powers
Auction - answer-Sales system used by the debt management agency (DMO) when
it issues guilts
Authorisation - answer-Required status under FSMA for firms that wish to provide
financial services
Authorised Corporate Director (ACD) - answer-Fund manager from an OEIC
Authorised Unit Trust (AUT) - answer-Unit trust which is freely marketable.
Authorised by FCA
BoP - answer-Summary of all transactions between a country and rest of the world
(X-M)
Bank of England (BoE) - answer-UK central bank , implements economic policy
decided by treasury and determines interest rates
Basic Rate (of Income Tax) - answer-Rate of tax charged on income that is below
high rate tax threshold (currently 20%)
Bearer Securities - answer-Ownership is evidenced by mere possession of a
certificate - ownership can therefore pass hand to hand with no formalities
Beneficiaries - answer-Beneficial owners of trust property or those who inherit under
a will
, Bid Price - answer-Price at which dealers buy stock. Also price quoted by unit trusts
that are dual priced for sales of units
Bonds - answer-Interest bearing securities which entitle holders to annual interest
and repayment at maturity - issued by government and companies
Bonus Issue - answer-A free issue of shares to existing shareholders. No money is
paid. The share price falls pro rata. Also known as a capitalisation or scrip issue.
The CAC 40 Index - answer-Index of prices of 40 major French company shares
Call Option - answer-Option giving its buyer the right to buy an asset at an agreed
price
Capital Gains Tax - answer-Tax payable by individuals on profit made on the
disposal of certain assets
Central Bank - answer-Responsible for:
- setting nations short term interest rate
- controlling money supply
- acting as banker and lender of last resort to banking system
- managing net debt
Certificates of Deposit (CDs) - answer-Certificates issued by a bank as evidence that
interest-bearing funds have been deposited with it. CDs are traded within the
money market.
Clean Price - answer-Quoted for price of guilt - excludes any interest that has
accrued from the last interest payment date. Accrued interest added on afterwards
and price then known as "dirty price"
Closed-ended - answer-Organisations which are a fixed size as determined by their
share capital. Commonly used to distinguish investment trusts (close-ended) from
unit trusts (OEICs) (open-ended)
Closing - answer-Reversing an original future position by (for example) selling what
you have previously bought
Commercial Paper (CP) - answer-short-term unsecured debt (money market
instrument) issued by large corporations
Commission - answer-Charged for acting as agent or broker
Commodity - answer-Items including sugar, wheat, oil and copper. Derivatives of
commodities are traded on exchanges (oil futures and ICE futures)
Contract - answer-Standard unit of trading in derivatives
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