missed questions from mocks

who takes eurobonds to market

the issuing syndicate

who settles eurobond transactions

euroclear and clearstream

on a balance sheet, a bonus issue does what to share capital and reducing reserves

increasing

a company reduces is free float but doesn’t cancel any shares. what is the effect on market cap

unchanged

who actually sells the shares in a placing

a broker appointed by the issuing company

how is a medium term note’s coupon rate and maturity set

according to market demand

are gilts bearer or registered

registered

what to do if there is a clash between the detailed rules and the principles of the Takeover Code

the principles prevail

when ADRs are released in pre release form, what form of collateral is then deposited with the issuing bank

US dollars

what do we call the two parts of a repo (the sale and the repurchase)

two ‘legs’

depositary receipts are they freely transferrable

yes

in which market is the most recently issued long term bond known as the ‘on the run’ bond

US treasuries

are UK gilt coupons paid gross or net

gross, but it is possible for taxpayers to elect for net payments

what does the term convexity describe

the actual shape of a price to yield curve being convex not linear

what kind of PE ratio and dividend yield would a growth company have

high PE

low dividend yield

how to buy shares in an ITC

via a stockbroker, since they are traded on an exchange

what does the origination team do

advise on structuring, marketing + pricing capital issues

coordinate preparation of the prospectus

create the best possible environment to bring the issuing company to the stock market

what is a bubill

german treasury discount paper with 6 or 12 month maturities

in a takeover, would the competitors of the predator be considered associates

no

who must submit a statement for listing documents saying that all regulations have been complied with

the sponsor

which system links the UK central bank’s Euro real time gross settlement system with other EU central banks

TARGET 2

who monitors pricing information through the TRAX system

the ICMA (international capital market association)

give 3 open ended funds

unit trust

OEIC

ETF (even tho it can be traded on an exchange)

give a closed ended fund

investment trust company

when are special cum deals done

ex dividend date to day before payment date

are T bonds registered or bearer (US)

registered

what letter needs to be sent as part of a rights issue

a provisional allotment letter

how do IDBs settle trades

as principal

which is more risky, debentures or convertible loan stock

convertible loan stock

what is the impact on profit and fixed assets of depreciation charge increases

both decrease

does a deep discounted rights issue need to be underwritten

no because the price is so low u can basically guarantee everyone will buy it

what is POTAM principle 6

an offeror must not be hindered by a bid for longer than is necessary

what type of orders can be used during the opening auction

limit and market orders ONLY

what does an electronic bridge allow

communication between depositaries

(eg. the bridge between euroclear and clearstream)

who always gets the right to vote on a company’s shares

legal owner

the process of an investor in a rights issue not suffering any dilution without investing new proceeds is called….

…swallowing the tail

the associated calculation is max subscription at nil cost

what is an open offer

like a rights issue, except that shareholders cannot sell on rights

what does ‘poor’ inflation mean

an increase in inflation

offer for subscription vs offer for sale

subscription = brand new shares

sale = shares that the founders or other existing shareholders already have

how often is interest paid on eurobonds

annually

what is deferred tax considered as on a balance sheet

it is a provision, therefore a non-current liability

who ranks higher in priority between guaranteed debt holders and fixed charge security holders

fixed charge security holders, then floating, THEN guaranteed, then subordinated

what is pricing off

the price or value of one thing being determined from the price or value of something else

what does a nomad do

advise the directors of an AIM company on their responsibilities

is underwriting required for a placing

no

what can you do with an introduction that is important to know

use it to create a new company from two previously listed companies that have merged

what does CFD as a hedge allow for

the investor to benefit from less initial outlay

why might a fund manager pay more broker commission

they are also receiving research + other services

who can a standing repo facility be used by

GEMMs and other DMO counterparties

what does a standing repo facility allow for

GEMMs and other DMO counterparties to enter into reverse repos with the DMO

what is an anomaly switch

a switch away from a high priced bond to a low priced bond

what is policy switching

a switch from a low duration bond to a high duration bond

what is inter-market spread switching

a switch from a government to a corporate bond

if a rights issue is not taken up, what will happen

the shares are sold and the resultant proceeds are passed to the investor

who does a regulatory information provider report to

a SIP

what is the most common method for issuing new shares

placing

when a lender loans a stock, what can they no longer do

sell the stock

when a custodian is experiencing financial difficulty, it must…

…maintain legal segregation at all times

for which type of investment is the calculated yield virtually guraranteed

conventional gilt, since gvts are default risk free

how is voting organised at company meetings

voting is proportional to the number of shares held by shareholders

what does rollover risk apply to

commercial paper

what is rollover risk

the risk that the issuer won’t be able to issue new CP, since new issues tend to fund the retirement of old issues (it’s a rolling form of debt)

another word for rollover risk

refinancing risk

give two examples of ‘dark pools’ of liquidity

ATS

MTS

(off exchange trading)

what is the key risk of high frequency trading immediately prior to a large price drop

systemic risk

who do listing rules apply to

official list stocks only

AIM rules are administered by the LSE

when would a broker dealer not receive the limit price or better on a limit order

in the opening auction call period, because no trades are executed then

who are shares offered to in ‘private placements’

‘sophisticated investors’

what is the most appropriate corporate action for a company who wants to dilute its share price while keeping it above nominal value

a stock split, since it both dilutes share price AND lowers nominal value

who offers the shares in a subscription IPO

the issuing company

how are the shares of ITCs priced

real time, because they are exchange traded

the price of a warrant is dependent on…

…the remaining life

why might a company issue shares using a rights issue rather than a placing

all shareholders are treated the same

the dilution of holdings is avoided

a eurobond issue by a single institution is known as…

…a bought deal

would a redeemable preference share be affected much by the profitability of a company

no because of fixed coupon

what is the touch price on an equity order book

the highest priced order to buy

the lowest priced order to sell

other names for the sponsor

the listing agent

what team is the sponsor part of

the origination team

does the UKLA suspend and cancel listings

yes

what investment strategy would a fund employing a passive bond strategy use

duration based immunisation

what is an immunised portfolio

one insulated from the effect of future interest rate changes