Mock 3 Flashcards by Seni Luca-Daniels

As defined under the Bribery Act 2010, all of the following statements are true of the criminal offence of bribery, EXCEPT?

a) There is no corporate offence of bribery, only individual offences.
b) The UK Bribery Act 2010 has multinational application.
c) The maximum jail sentence that can be handed down for bribery is 10 years imprisonment.
d) ‘Local custom and practices’ cannot be used as a defence to a charge of bribing foreign officials.

a) There is no corporate offence of bribery, only individual offences.

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Under the Retail Distribution Review (RDR), which of the following are requirements for accredited bodies such, as CFA Society of the UK?

i) Provide gap-fill training for qualifications
ii) Ensure advisors follow an appropriate code of ethics
iii) Perform sample checks of continuous professional development (CPD)

a) I and II only
b) II and III only
c) I and III only
d) I, II and III

b) II and III only

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A purchase of which of the following bonds would incur Stamp Duty Reserve Tax (SDRT)?

a) A UK Domestic Bond
b) A UK Government Bond
c) A plain vanilla Corporate Bond
d) A Convertible Bond

d) A Convertible Bond

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A company looking to launch its shares on the LSE’s official list, via an offer for sale, would need to comply with which of the following UKLA rules regarding the floatation?

i) Publish its prospectus
ii) Have the prospectus approved by the UKLA
iii) Advertise the prospectus in at least one national newspaper

a) I only
b) I and II only
c) II and III only
d) All of the above

d) All of the above

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Which of the following is the BEST description of the principal-to-principal guarantee structure of a clearing house?

a) The guarantee operates between the clearing member and the clearing house.
b) The guarantee operates between a broker and the clearing member.
c) The guarantee operates between the end client and the clearing member.
d) The guarantee extends from the end client to the clearing house.

a) The guarantee operates between the clearing member and the clearing house

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A higher rate taxpayer receives a dividend of £7,800, how much tax is the investor liable for on this dividend income?

a) £2,535.00
b) £3,120.00
c) £1,958.00
d) £2,463.75

d) £2,463.75

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A higher rate taxpayer has already received dividends of £4,500 in the current tax year. She then receives a further dividend of £1,750.

What is the investor’s income from this further dividend after the payment of all tax due?

a) £5,681.25
b) £2968.75
c) £2,000.00
d) £1,159.38

d) £1,159.38

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A client asks you as their adviser about investing in an emerging market.

Which one of the following would normally be viewed as an advantage of such a course of action?

a) Increased risk of contagion during market crisis
b) Strong correlations between local currencies and local equity markets
c) Concentration in markets such as commodities
d) Lower correlations with developed markets

d) Lower correlations with developed markets

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Eugene has total taxable income of £114,750.

In terms of taxation, how much is his personal allowance?

a) £0
b) £11,850
c) £5,195
d) £2,455

c) £5,195

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Which of the following would be seen as a benefit of the LSE CCP service?

a) Settlement netting
b) Flexible settlement timing
c) Counterparty disclosure
d) Negotiation on deliverable assets

a) Settlement netting

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Regarding fiduciary responsibilities, all of the following are included as Standards of Professional Conduct according to the CFA Institute, EXCEPT?

a) Keep client information confidential.
b) Undertake risk to the extent that it is reasonable given the client’s objectives.
c) Undertake additional risk only to achieve portfolio projected returns.
d) Meet client objectives within the constraints.

c) Undertake additional risk only to achieve portfolio projected returns.

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Elizabeth and Hamish visit their financial advisor. Elizabeth is a basic rate tax payer and Hamish is a higher rate taxpayer. Hamish invests in fixed income but mostly in equities, whereas Elizabeth prefers to invest predominantly in cash and high-quality bonds but still retains a few shares. They are looking to hopefully clear their mortgage in 15 years, seeking to use any growth in their current investments to do this, but remain realistic that this may not actually be achievable. Elizabeth and Hamish are under the belief that interest rates may rise over the next year. Their current holdings are split between their personal accounts and their Individual Savings Accounts (ISA). Their adviser obtained all the aforementioned information via a factfind.

Which of these disclosures would be considered as hard facts?

i) Elizabeth and Hamish are under the belief that interest rates may rise over the next year.
ii) They are looking to hopefully clear their mortgage in 15 years, seeking to use any growth in their current investments to do this.
iii) Their current holdings are split between their personal accounts and their Individual Savings Accounts (ISA).
iv) Hamish invests in fixed income but mostly in equities, whereas Elizabeth prefers to the lower risk choice of cash and high-quality bonds.

1) I & II
2) II & III
3) III & IV
4) I, II, III & IV

3) III & IV

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Elizabeth and Hamish visit their financial advisor. Elizabeth is a basic rate tax payer and Hamish is a higher rate taxpayer. Hamish invests in fixed income but mostly in equities, whereas Elizabeth prefers to invest predominantly in cash and high-quality bonds but still retains a few shares. They are looking to hopefully clear their mortgage in 15 years, seeking to use any growth in their current investments to do this, but remain realistic that this may not actually be achievable. Elizabeth and Hamish are under the belief that interest rates may rise over the next year. Their current holdings are split between their personal investment accounts and their Individual Savings Accounts (ISA).

What would be the most tax-efficient course of action?

a) Hamish transfers all his fixed income investments from his ISA to his personal investment account.
b) Hamish transfers his bonds from his personal investment account to Elizabeth’s ISA.
c) Elizabeth transfers her bonds from her ISA to her personal investment account.
d) Hamish transfers his bonds from his investment account to Elizabeth’s investment account.

b) Hamish transfers his bonds from his personal investment account to Elizabeth’s ISA.

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Elizabeth and Hamish visit their financial advisor. Elizabeth is a basic rate tax payer and Hamish is a higher rate taxpayer. Hamish invests in fixed income but mostly in equities, whereas Elizabeth prefers to invest predominantly in cash and high-quality bonds but still retains a few shares. They are looking to hopefully clear their mortgage in 15years, seeking to use any growth in their current investments to do this, but remain realistic that this may not actually be achievable. Elizabeth and Hamish are under the belief that interest rates may rise over the next year. Their current holdings are split between their personal accounts and their Individual Savings Accounts (ISA).

Which of the following is the most likely conclusion as to the risk appetite of Elizabeth and Hamish?

a) Elizabeth is more willing to take risks than Hamish.
b) Hamish and Elizabeth have the same willingness to bear risk.
c) Hamish is more willing to take risks than Elizabeth.
d) Given the available information this cannot be determined.

c) Hamish is more willing to take risks than Elizabeth

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With reference to the fact that they are looking to hopefully clear their mortgage in 15 years, however remain realistic that this may not actually be achievable, which type of risk is highlighted?

a) Target risk
b) Idiosyncratic risk
c) Portfolio risk
d) Shortfall risk

d) Shortfall risk

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What rate of income tax would Hamish be liable for on dividends received from shares held in his ISA?

a) 20%
b) 40%
c) 32.5%
d) 0%

d) 0%

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Indirect taxation would occur within which of the following scenarios?

a) Anthony purchases a new laptop for £2,000.
b) Maureen earns £120,000 as the marketing director for a charity.
c) Carl sells his investment property and makes a capital gain of £88,000.
d) Harriet inherits £782,000 from her grandmother.

a) Anthony purchases a new laptop for £2,000.

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Anthony invested £200,000 in an investment bond five years ago and withdrew £5,000 in year one, £7,000 in year two and £9,000 in year three.

What sum could Anthony withdraw in year four without triggering a chargeable event for income tax?

a) £10,000
b) £12,000
c) £17,000
d) £19,000

d) £19,000

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Firms are required to apply a ‘fit and proper’ assessment to those staff who are considered to pose a risk of significant harm to the firm or its customers.

How often must they fulfill this requirement?

a) Monthly
b) Quarterly
c) Semi-annually
d) Annually

d) Annually

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Kimberly Blanc asks you as her IFA, a CFA charter holder, about a highly complex tax planning strategy involving offshore investments to gauge your opinion. As you are initially suspicious, you decide to take legal advice which reveals that the strategy is only just on the right side of the law. You decide to do nothing further. Ten days later, you receive a call from the UK Financial Intelligence Unit (UKFIU) who inform you that Kimberly is under investigation for suspected involvement of an illegal investment scheme. Six months later Ms. Blanc is convicted of the offence and imprisoned. Whilst not actually being involved in the legal proceedings, you are naturally concerned about the reputational risk and implications of this connection.

Based solely on the above information, is it likely that you could be perceived as breaching any Standards with regards to the illegal investment scheme?

a) Yes, you should have immediately reported your suspicions.
b) No, because the actual illicit nature of the strategy would not be evident to a reasonably informed professional.
c) Yes, because ignorance of the law or Code and Standards does not excuse illegal or unethical acts.
d) No, because of the difficulty in proving connection between parties.

b) No, because the actual illicit nature of the strategy would not be evident to a reasonably informed professional.

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Which of the following gains would be liable to CGT?

i) Gains on an Exchange Traded Fund (ETF)
ii) Gains on a contract for difference (CFD)
iii) Gains on Permanent Interest-Bearing Shares (PIBS)
iv) Gains on a buy-to let residential property

a) I & II
b) III & IV
c) I, II & IV
d) II, III & IV

c) I, II & IV

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Clients categorisation is required for the purpose of?

i) Allowing large firms to market to the public directly.
ii) Improving segregation procedures for MiFID business.
iii) Providing a higher level of protection to those with less experience and knowledge.
iv) Reducing the cost of trading for retail clients.

iii) Providing a higher level of protection to those with less experience and knowledge.

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he three pillars of supervision used by the Financial Conduct Authority include all of the following EXCEPT?

a) Event-drive work
b) Firm systematic framework
c) Issues and products
d) Governance and Culture

d) Governance and Culture

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A higher rate taxpayer has contributed £30,000 to their pension this year but the pension provider also receives a 20% contribution in the form of a tax rebate from HMRC.

The total value contributed to the pension for the year including the tax rebate at source would therefore be?

a) £30,000
b) £37,500
c) £36,000
d) £34,500

b) £37,500

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Which of the following is NOT covered by the insider dealing legislation? a) Depository receipts b) Warrants c) Futures d) Currency derivatives

d) Currency derivatives

MiFID II attempts to increase consumer protection through which of the following methods? i) Enhanced product governance ii) Enhanced product disclosures iii) The remuneration of intermediaries a) I only b) II only c) II and III only d) I, II and III

d) I, II and III

Premium listings on the London Stock Exchange are subject to stricter requirements than standard listings. Which of the following is a requirement to gain a standard listing? a) 25% free float b) Three-year trading record c) Twelve-month working capital d) Sponsor

a) 25% free float

Which of the following is not considered as a ‘real’ asset? a) Copper b) Land c) Oil d) Equity

d) Equity

Which of the following types of settlement does Euroclear UK & Ireland’s CREST system typically provide? a) Novation b) Free of Payment (FOP) c) Delivery Versus Payment (DVP) d) Arbitrage settlement

c) Delivery Versus Payment (DVP)

Which of the following are classified as specified investments under FSMA 2000? i) UK equities ii) Commodities iii) Stock market index bets a) I only b) I and II c) I and III d) II only

c) I and III

Which of the following is a characteristic of a fund that would be able to passport under the Undertakings for Collective Investments in Transferable Securities (UCITS) Directive? a) One that is classified as an alternative investment fund b) One that is unregulated in its home state c) One that is an open-ended fund d) One that invests in commodity derivatives

c) One that is an open-ended fund

Which legislation regulates work-based pension schemes? a) The Financial Services and Markets Act 2000 b) The Companies Act 2006 c) The Pensions Act 2004 d) The Trustee Act 2000

c) The Pensions Act 2004

A higher rate tax payer sells their second home for £350,000. If they bought it for £225,000, what is their capital gains tax liability? a) £11,330 b) £20,394 c) £29,280 d) £45,320

c) £29,280

Which of the following is true of the voting procedures at shareholder meetings? a) On both a show of hands and a vote by poll, due regard is given to the actual size of shareholding. b) On both a show of hands and a vote by poll, each member present at the meeting who is entitled to vote has one vote. c) On a show of hands, each member present at the meeting who is entitled to vote has one vote, regardless of size of holding. However, with a vote by poll, due regard is given to the actual size of shareholding. d) On a show of hands, due regard is given to the actual size of shareholding. However, with a vote by poll, each member present at the meeting who is entitled to vote has one vote, regardless of size of holding.

c) On a show of hands, each member present at the meeting who is entitled to vote has one vote, regardless of size of holding. However, with a vote by poll, due regard is given to the actual size of shareholding.

All of the following trade on the London Stock Exchange's SETS with the exception of? a) All FTSE Small Cap shares b) All FTSE 100 shares c) All AIM shares d) Some Exchange-traded funds

c) All AIM shares

Which ONE of the FCA’s Principles for Businesses specifically requires firms to ensure the suitability of their advice? a) Communications with clients b) Market conduct c) Skill, care and diligence d) Customers: relationships of trust

d) Customers: relationships of trust

The risk of not being able to buy or sell a product quickly is known as? a) Reinvestment risk b) Counterparty risk c) Liquidity risk d) Market risk

c) Liquidity risk

You are advising a client who is considering an investment in either commercial or residential property. Which of the following statements is/are correct about these types of property investments? i) Offices typically have the higher yields than shops. ii) Commercial property is typically let on 99 year leases. iii) The landlord is responsible for repairs with a commercial property. iv) The landlord is responsible for repairs with a residential property. a) I & III b) I & II c) II & IV d) I & IV

d) I & IV

Carly Brookes, CFA has had an ambition to set up a small private fund for a long time. In readiness she has been testing her abilities by trading using an online practice account for the last 3 years. She also recently won a competition in which she was given a theoretical $5,000,000 to invest and her efforts proved highly profitable. She is in the initial stages of finally setting up an actual fund and is currently marketing it to potential clients. In her marketing literature she provides charts showing her success with the practice account and in the competition. She reiterates that this performance was on a theoretical basis and that this is her first real fund. According to CFA guidelines: a) Carly’s lack of actual experience means she should in no way be marketing this fund to others. b) Carly has provided a clear explanation of the basis of her fund and her previous experience. c) Carly’s involvement with the investment decisions of fund means she would be too close to be truly objective about its performance. d) Carly should not provide theoretical performance figures as they may be very different to actual figures.

b) Carly has provided a clear explanation of the basis of her fund and her previous experience.

On behalf of consumers, which of the following would have the final say on whether a takeover or merger can proceed? a) Competition and Market Authority b) Financial Conduct Authority c) Prudential Regulation Authority d) UK Listing Authority

a) Competition and Market Authority

Where do corporate bonds mostly trade? a) They are exchange traded b) They trade OTC c) They trade via Crest d) They trade via dark pools

b) They trade OTC

Principles of Businesses, Principle 6 is stated as ‘Customers' Interests’. Who is protected by this principle? a) All clients b) Retail clients only c) Retail clients and professional clients only d) Retail clients and professional clients for their MiFiD business

c) Retail clients and professional clients only

Which of the following investors would be committing an offence under the insider dealing legislation in the Criminal Justice Act 1993? a) Colin buys CFDs on a company’s shares based on inside information passed on by an old friend, a research analyst. Unfortunately, he makes a loss from the transaction. b) SteamPunk Designs Ltd deals in a rival's shares based on inside information received from one of their employees, gaining a profit. c) Claude deals on inside information regarding cocoa futures that he received from his brother, an investment manager, making a profit from the transaction. d) Lissof Plc sells a large holding of an oil company's shares based on inside information they received from an inside source, preventing a large loss.

a) Colin buys CFDs on a company’s shares based on inside information passed on by an old friend, a research analyst. Unfortunately, he makes a loss from the transaction.

Which of the following is a requirement placed on AIM Companies? a) They must publish audited accounts for last three years. b) They must disclose interim and full-year results. c) They must issue at least £200,000 of debt securities. d) In terms of issued shares, they must have a 25% free float.

b) They must disclose interim and full-year results.

The role of counterparty to the buyer of an exchange-traded futures contract is ultimately taken over from the seller by: a) The exchange itself b) The clearing member through which the contract was sold c) A consortium of all member firms of an exchange d) A clearing house

d) A clearing house

Consider the following: Lena, Max and Monica are all higher rate taxpayers. Lena invested in a non-qualifying life policy and encashed her investment several years later after making a healthy gain. Max invested in a qualifying policy and encashed his investment, years later, after also making a gain. Monica invested in a unit trust and realised a gain upon encashment. In relation to these three investors, which of the following is/are correct, ignoring any CGT allowances? i) Lena will have no further tax to pay. ii) Max will have no CGT to pay but will have extra income tax to pay. iii) Monica will have an extra 20% CGT to pay. a) I only b) II only c) III only d) All of the above

c) III only

The rules on market abuse would be applicable to which of the following? a) Approved persons only b) Approved persons and Authorised persons only c) Members of the public only d) Approved persons and members of the public

d) Approved persons and members of the public

Kelly is a research analyst with a major investment bank and she knowingly passes inside information to her brother and encourages him to deal. Noor is an asset manager who decides to deal on investment research that was specifically produced for the firm's clients and before they have had time to react to it. Raymond owns a fast food restaurant and has been looking after the proceeds of criminal activity until it appears to be legitimate. Which of the following statements is true? a) Only Noor is guilty of Insider Dealing as defined under the Criminal Justice Act 1993. b) Only Kelly could be served with an unlimited fine. c) Only Kelly and Noor can be charged with financial crime. d) Only Raymond could serve a 14-year prison sentence.

d) Only Raymond could serve a 14-year prison sentence.

Once the novation of a futures contract has occurred within the clearing house, which of the following best describes the relationship between the counterparties involved? a) The buyer remains contractually bound to the seller and vice versa. b) The buyer remains contractually bound to the seller and vice versa, but the clearing house guarantees that each will meet their obligations. c) The buyer and the seller are now contractually bound to the clearing house. d) The contact is effectively closed out and the buyer and the seller are now contractually bound to the clearing house.

c) The buyer and the seller are now contractually bound to the clearing house.

All of the following are true of a standard listing on the LSE, EXCEPT? a) They can be used for the creation of depositary receipts. b) The shares meet EU standards. c) The shares may be included in the FTSE Indices. d) A standard listing can be used shares and ADRs.

c) The shares may be included in the FTSE Indices.

Which of the following is/are true regarding capital gains tax? i) An allowance is made for the effects of inflation. ii) An allowance is made with regard to time period of ownership. iii) Annual exemption £3,000. iv) Losses once declared may be carried forward indefinitely. 1) I and II 2) II and III 3) III only 4) III and IV

4) III and IV

Which of the following is not required in a suitability report? a) A statement explaining which regulatory authority the firm is under. b) An explanation of the firm's recommendation to the client. c) An explanation of any possible disadvantages for the client of the recommendations. d) A specification of the client's objectives.

a) A statement explaining which regulatory authority the firm is under.

Under the Public Interests Disclosure Act (PIDA) a so called 'whistle-blower' is offered defences for making a ‘protected disclosure’. Which of the following BEST describes those protections? a) They protect persons from retaliation when they inform the press of any concerns that might come to their attention at their place of work. b) They outline the obligations on relevant persons to disclose suspicions regarding money laundering activities. c) They protect persons from retaliation where they inform the regulatory authorities of any concerns that might come to their attention at their place of work. d) They outline the obligations on relevant persons to disclose information that is of public interest.

c) They protect persons from retaliation where they inform the regulatory authorities of any concerns that might come to their attention at their place of work.

Who sets the trading rules for members of the London Stock Exchange? a) The UK Listing Authority (UKLA) b) The Financial Conduct Authority (FCA) c) The Prudential Regulatory Authority (PRA) d) The London Stock Exchange (LSE)

d) The London Stock Exchange (LSE)

What is a potential benefit of trading a product OTC? a) Increased flexibility b) Increased liquidity c) Reduced risk d) Higher regulatory protection

a) Increased flexibility

A self-employed person needs to voluntarily top up their National Insurance contributions. Which class of NI contributions would you recommend that they top up to maximise their benefits? a) Class 1 b) Class 2 c) Class 3 d) Class 4

b) Class 2

With regard to the civil offence of market abuse, which one of the following statements is true: a) The offender’s intention must be proved. b) The effect caused by the action is most important. c) Intention and effect are both equally relevant. d) The effect caused by the action is not really a consideration.

b) The effect caused by the action is most important.

To gain approved person status, which of the following conditions must be met? i) Attain a degree in a finance related subject ii) Pass an appropriate regulatory examination iii) Obtain membership of a professional body iv) Pass an internal assessment conducted by their firm 1) I and II 2) II and III 3) II and IV 4) III and IV

3) II and IV

A client asks you as their adviser to explain the importance of corporate governance to them. Which of the following BEST describes corporate governance? a) It is a mechanism to ensure the company is run in the best short term interests of the shareholders. b) It is a mechanism to ensure the company is run in the best short term interests of the directors. c) It is a mechanism to ensure the company is run in the best long term interests of the directors. d) It is a mechanism to ensure the company is run in the best long term interests of the shareholders.

d) It is a mechanism to ensure the company is run in the best long term interests of the shareholders.

To get the full basic State Pension, you need a total of how many qualifying years of National Insurance contributions or credits? a) 10 b) 35 c) 15 d) 25

b) 35

Having already used up their allowance for the year, an investor makes a further gain from an ICVC. Which of the following is true? a) There are no CGT liabilities on gains from an ICVC. b) The ICVC has already paid the CGT on behalf of the investor. c) The investor would suffer CGT on the full gain. d) There is a reduced CGT rate of 5% on ICVCs.

c) The investor would suffer CGT on the full gain.

When a firm provides designated investment business to a retail client, the training and competency requirements do not apply for which of the following processes? a) When managing b) When advising and dealing c) When arranging d) During daily oversight of regulatory procedures

c) When arranging

You have a customer with net, investable assets of £250,000 and who trades, on average, 20 times a year. In terms of Client Categorisation, how should you classify this customer? a) As an eligible counterparty b) As a professional client c) As a retail client d) As a private client

c) As a retail client

With regard to mergers, alongside the Competition and Markets Authority, who else could be involved in the decision as to whether or not a merger should go ahead? a) The Panel on Takeovers and Mergers (PoTAM) b) The UKLA c) The FCA d) The Secretary of State

d) The Secretary of State

Without incurring any IHT on their estate, a person can pass on how much per year? a) £1,000 b) £3,000 c) £11,700 d) £11,850

b) £3,000

Under the Pensions Act 2004, the Scheme Specific Funding Requirement relates to which of the following pension schemes? a) Certain occupational defined contribution schemes b) Certain occupational defined benefit schemes c) SIPPs d) Private pension schemes

b) Certain occupational defined benefit schemes

If an individual wishes to find out what data held about him by a credit reference agency. What is the MAXIMUM amount the agency is permitted to charge for this access? a) A maximum of £2. b) A maximum of £10. c) There is no maximum. d) They are not permitted to charge.

a) A maximum of £2.

A financial adviser is comparing the benefits of investing in a qualifying endowment life assurance bond over investing directly in a unit trust. If advising clients on these benefits, which of the following statements would be correct? i) They pay a guaranteed minimum sum on death. ii) There are no commission costs. iii) The proceeds are tax free. iv) They can always be sold at the current realisable price. a) I and II b) I and III c) I and IV d) II and III

b) I and III

All of the following are true with regard to the powers granted to a FCA enforcement officers under FSMA 2000, EXCEPT? a) They may enter the premises of an authorised firm without notice. b) They may remove any original document that pertains to the investigation. c) They may demand and take printouts of electronic data. d) They may interview any employee.

b) They may remove any original document that pertains to the investigation.

Occupational Pension fund trustees are required to invest in accordance with which of the following? a) The Trustee Act 2000 b) The instructions of the sponsoring company following a consultation c) The instruction of the beneficiaries d) The Statement of Investment Principles

d) The Statement of Investment Principles

Flash Inc. are looking to reduce their current overheads due to a downturn in profits and have sold their office building for £2.5m. They have decided to lease their next office and are purchasing a lease on a premise for £145,000. The rate of stamp duty land tax payable on this move would be? a) 0% b) 1% c) 2% d) 3%

a) 0%

All of the following are true with regard to the money laundering regulations, EXCEPT? a) A Money Laundering Reporting Officer is only required for firms most likely to be connected to such offences. b) Records of identification must be kept for 5 years after the termination of the relationship. c) The simple failure to report suspicions is an offence under the regulations. d) Inadequate education of staff is an offence even if no money laundering transactions take place.

a) A Money Laundering Reporting Officer is only required for firms most likely to be connected to such offences.

If the FOS (Financial Ombudsman Service) makes an award it can be for: i) For any distress or inconvenience caused ii) For any pain and suffering caused iii) For any damage to reputation caused iv) For any financial loss incurred a) IV only b) IV and III only c) IV, III and II only d) IV, III, II and I

d) IV, III, II and I

In regard to the rules governing the disclosure of directors' interests in shares, which of the following are true? i) All dealings must be disclosed to the company within three business days. ii) All dealings must be disclosed to a Regulatory Information Service. iii) All shareholdings over 1% must be disclosed. iv) All dealings must be disclosed to the company within four business days. a) I and III only b) II and IV only c) I, II and III only d) III and IV only

b) II and IV only

Marsha works in fixed income sales and is about to call a relatively new client. According to FCA rules regarding communications what should Marsha consider? i) Not seek to make future appointments unless the client requests it. ii) That she should terminate the call if requested to do so by the client. iii) That she should call at an appropriate time. a) II and III only b) I and II only c) I, II and III d) II only

a) II and III only

Whilst conducting a fact find you ascertain the following information about a client: They are 61 years old, married and have two young children aged 8 and 10. They have an investment portfolio consisting of the following assets with their various weightings: 35% in Fixed income securities 15% in Property 10% in Cash or near cash instruments 40% in Equity (almost entirely in AIM shares) Which of the following would best suit the investor and their current holdings? a) An increase in inflation b) A decrease in inflation c) An increase in interest rates d) A decrease in interest rates

c) An increase in interest rates

Whilst conducting a fact find you ascertain the following information about a client: They are 61 years old, married and have two young children aged 8 and 10. They have an investment portfolio consisting of the following assets with their various weightings: 35% in Fixed income securities 15% in Property 10% in Cash or near cash instruments 40% in Equity (almost entirely in AIM shares) How would you MOST LIKELY assess the portfolio, based purely on the information given? a) The client would be wise to invest more in Fixed income for steady returns. b) The client would be wise to invest more in AIM shares for their growth. c) The client would be wise to invest more in cash or near cash for instant access. d) The client has the balance about right for his situation.

a) The client would be wise to invest more in Fixed income for steady returns.

A salesperson within a large investment bank covers a client that has started to request that a large number of their deals involve Australian dollars. There is nothing in the 'Know Your Customer' information that would suggest why this should be the case. Which of the following is the best description of the action that the salesperson should take? a) Speak further with the client for clarification. b) Report the client directly to the National Crime Agency. c) Report the client to their Money Laundering Reporting Officer. d) Report the client directly to the Financial Conduct Authority.

c) Report the client to their Money Laundering Reporting Officer.

A new customer has approached you with the intention of taking out a life policy on her husband. What should be your main priority when recommending a policy? a) The level of commission that you would receive b) The risk appetite of the partner c) The affordability for the investor d) The current lifestyle and health of the partner

c) The affordability for the investor

A per se professional client asks an authorised firm to be re-categorised as a retail client for extra protection on a particular product. Which one of the following statements is TRUE? a) The firm must do it, but only once the client has signed a risk warning. b) The firm can refuse to re-categorise. c) The firm can re-categorise without telling the client. d) The firm would enter into a written agreement regarding re-categorisation.

d) The firm would enter into a written agreement regarding re-categorisation.

Which of the following is a responsibility of the product manufacturer, under the product governance rules? a) The need to ensure the distribution strategy is consistent with the identified target market. b) The need to comply with the MiFID rules on suitability. c) The need to ensure products are compatible with the objectives of a client. d) The need to specify the types of client a product is compatible with.

d) The need to specify the types of client a product is compatible with.

Sereen's bank places trading restrictions on all employees with regard to any equity purchases of Russian securities. Sereen thinks this is too restrictive and totally unfair restriction and proceeds to invest in companies via her broker. She assuages her guilt by wholeheartedly believing that she is breaching the rules, not for profit but to make an ethical stand. Has Sereen violated her duty in any way towards her employer? a) No, because the company is not justified in restricting an employee's right to trade. b) Yes, because whilst in her belief she is taking an ethical stand, she could still make a profit. c) Yes, because she has no right to unilaterally disapply a trading restriction just because she feels it unjust. d) No, because the purchase was justified on ethical grounds.

c) Yes, because she has no right to unilaterally disapply a trading restriction just because she feels it unjust.

According to the UKLA, a group acting in concert to buy shares in a target company will have to disclose their total holding when it reaches and exceeds: a) 3% b) 5% c) 10% d) 30%

a) 3%

Malinda, 58, wishes to leave a substantial amount of income generating assets on trust for the maintenance of her partner, 59, after her death. She also wishes to ensure that her son from a previous marriage receives the assets upon the death of her partner. Which of the following trusts would be most suitable? 1) Unit trust 2) Interest in possession trust 3) Bare trust 4) Discretionary trust

2) Interest in possession trust

A client seeks advice from their financial advisor and provides the following aspirations; they wish to retire at 50 years of age, repay their mortgage as quickly as possible and to provide protection to his family in the event of death. If the advisor believes, given the clients present situation, meeting all of these objectives is not currently possible, which of the following is true? a) The FCA state that life insurance objectives must be met before pension requirements. b) Regulations do not dictate which objectives should take priority, it is down to investor choice. c) In exercising the client's best interests rules, the advisor should recommend that the pension takes priority over other investment. d) Regulations state that the advisor needs to persuade the client to be more realistic.

b) Regulations do not dictate which objectives should take priority, it is down to investor choice.

Mock 3 Flashcards

(85 cards)