Chapter 3+4

Question 1 of 17

1

Which of the following gives the right, but not the obligation, to sell individual equity at a
specified date for a given price?

Select one of the following:

  • Future

  • Forward contract

  • Put option

  • Call option

Explanation

Question 2 of 17

1

Which of the following Fitch ratings denotes the LOWEST level of risk for a bond?

Select one of the following:

  • D

  • BBB

  • C

  • AAA

Explanation

Question 3 of 17

1

Which of the following statements is TRUE about preference shares?

Select one of the following:

  • 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

Explanation

Question 4 of 17

1

Global Depositary Receipts traded on the London Stock Exchange are settled in which
currency?

Select one of the following:

  • Euros

  • US Dollars

  • Japanese Yen

  • UK Sterling

Explanation

Question 5 of 17

1

Which MAIN class of financial asset is normally considered to be the LEAST liquid?

Select one of the following:

  • Equities

  • Corporate bonds

  • Government bonds

  • Property

Explanation

Question 6 of 17

1

Which measurement in relation to a fixed interest investment is given by the following
formula?

Select one of the following:

  • Grossed up redemption yield

  • Gross redemption yield

  • Net redemption yield

  • Running yield

Explanation

Question 7 of 17

1

The running yield of a corporate bond is determined by calculating the coupon as a percentage
of the:

Select one of the following:

  • market price

  • issue price

  • gross dividend

  • nominal value

Explanation

Question 8 of 17

1

Where the mining costs of a particular metal increase to 105% of that metal's current price,
this indicates that:

Select one of the following:

  • demand is significantly rising

  • supply has become unreliable

  • there is likely to be a shortage of raw materials

  • production activities are likely to stop

Explanation

Question 9 of 17

1

A call option is an option that generally confers

Select one of the following:

  • the right to buy

  • the right to sell

  • a contract to sell

  • a contract to buy

Explanation

Question 10 of 17

1

Exchange-traded funds normally operate by:

Select one of the following:

  • tracking indices

  • tracking an individual security

  • investing in fund of funds

  • investing in manager of managers funds

Explanation

Question 11 of 17

1

Units in a unit trust fund are sold by which of the following?

Select one of the following:

  • The trustee

  • The registrar

  • The manager

  • The depositary

Explanation

Question 12 of 17

1

What is a key feature of exchange-traded commodities?

Select one of the following:

  • 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

Explanation

Question 13 of 17

1

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?

Select one of the following:

  • 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

Explanation

Question 14 of 17

1

The Undertakings for Collective Investment in Transferable Securities Directives (UCITS) cover
investment funds established in which location(s)?

Select one of the following:

  • England and Wales only

  • UK only

  • UK and France only

  • All European Union countries

Explanation

Question 15 of 17

1

One of the fundamental aims of a traditional hedge fund is to minimise which type of
investment-related risk?

Select one of the following:

  • Inflation risk

  • Issuer risk

  • Market risk

  • Liquidity risk

Explanation

Question 16 of 17

1

A private equity fund is MOST likely to use a structure similar to that of which of the following?

Select one of the following:

  • Investment Trust

  • Limited Partnership

  • OEIC

  • SICAV

Explanation

Question 17 of 17

1

If a collective investment scheme is unauthorised, this means that it is specifically banned
from:

Select one of the following:

  • operating a bid/offer spread

  • holding some of the fund assets in cash

  • being marketed to the general public

  • paying out dividends

Explanation

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