In the UK, which body must authorise institutions like banks and building societies to accept deposits?
The Prudential Regulation Authority (PRA).
Which category of taxpayer receives no personal savings allowance in the 2025/26 tax year?
Additional-rate taxpayers.
What type of bank account requires an investor to give a specific period of notice (e.g., 30, 60, or 90 days) before withdrawing money?
A notice account.
Which types of bank accounts generally offer higher rates of interest in exchange for less access to capital?
Notice accounts and term or fixed rate accounts.
What are the three common types of money market instruments issued in the UK?
Treasury bills, commercial paper, and certificates of deposit (CDs).
What is the corporate equivalent of a government Treasury bill?
Commercial paper.
Which money market instrument is issued by commercial banks and pays interest over its term of three months to five years?
A certificate of deposit (CD).
What is National Savings and Investments (NS&I)?
A UK savings organisation, backed by the government, that provides low-risk products to raise public funds.
In NS&I Premium Bonds, what do investors receive instead of earning interest?
Entry into a monthly prize draw where they could win tax-free cash prizes.
What is the key feature of NS&I Index-linked Savings Certificates?
They provide a guaranteed tax-free return linked to the inflation rate, as measured by the Retail Price Index (RPI).
What is the ‘nominal value’ of a bond?
The amount used to calculate the interest due and the amount that will be repaid at maturity.
How is the interest (coupon) from directly held gilts and qualifying corporate bonds treated for income tax?
It is taxable as savings income at the investor’s marginal rate, after any personal savings allowance is used.
How are capital gains from the disposal or maturity of UK gilts and qualifying corporate bonds treated for tax purposes?
They are exempt from Capital Gains Tax (CGT).
What is the defining feature of an index-linked gilt?
Its coupon payments and maturity value are uplifted to account for the effect of inflation (RPI).
Gilts with up to seven years remaining until redemption are classified as ____.
shorts
Gilts with a remaining term to maturity of between 7 and 15 years are classified as ____.
mediums
Gilts with more than 15 years remaining until redemption are classified as ____.
longs
In the UK, what term often refers to a corporate bond that is secured against specific company assets?
A debenture.
What term describes corporate bond stock that is not secured against any specific asset?
Loan stock.
What type of bond pays no interest and is instead issued at a discount to its par value?
A zero coupon bond (ZCB).
What is the main advantage of an NS&I savings product over a standard bank or building society account?
They carry a government guarantee, making them less risky than other deposit-taking institutions.
After a bond is issued, its value fluctuates in the stock market based on interest rate movements and what other key factor?
Demand and supply.
What type of NS&I product offers a monthly income, has no set term, and allows withdrawals without notice?
An income bond.
On liquidation of a company, which type of charge has priority: a fixed charge or a floating charge?
Fixed charges have priority over floating charges.
