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Sample-Paper FC V14a
Sample-Paper FC V14a
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INTRODUCTION TO SECURITIES & INVESTMENT PE
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Syllabus version 14a
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These 50 questions should be answered in an hour in the real exam, so make sure you time
yourself accurately.
Record your answer for each question by circling your selected answer.
When you have finished the test, you may check your answers against the Answer Sheet
at the back of this paper.
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For those questions you answered incorrectly, the answer sheet will show you the
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corresponding syllabus element, sub element and learning objective against which the
questions were written, so you can identify any syllabus areas where you may need to
revise further.
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Introduction to Securities & Investment
1 A capitalisation issue would have which ONE of the following effects on an investor`s
shareholding?
2 The XETRA DAX index relates to stock market performance in which ONE of the
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following countries?
A Italy
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B Germany
C France
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D Spain
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A going long
B going short
4 Which ONE of the following is responsible for pricing units in a unit trust?
A Depository
B Manager
C Trustee
D Director
5 A firm of advisers has received a written complaint from a customer. Within what
MAXIMUM period after the date of the original complaint must the firm issue a final
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response?
A 5 working days
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B 10 working days
C 6 weeks
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D 8 weeks
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Introduction to Securities & Investment
A Exchange rate
C Balance of Payments
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A warrant
B call option PE
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C put option
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D future
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Introduction to Securities & Investment
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A Dividend
B Rights issue PE
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C Takeover
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D Scrip Dividend
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Introduction to Securities & Investment
10 What is the MAXIMUM compensation award that the Financial Ombudsman can make
a firm pay?
A 25,000
B 50,000
C 150,000
D 250,000
11 What protection product solution would be MOST suitable for a company that employs
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a consulting engineer because of his detailed knowledge of a particular project?
A Partnership insurance
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B Business insurance protection
C Shareholder insurance
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D Directors` insurance
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Introduction to Securities & Investment
12 A client holds an 8% bond which matures in 2014. It is currently trading at 124. What
is the flat yield?
A 1.80%
B 5.16%
C 6.45%
D 25.81%
13 Which ONE of the following financial activities is MOST likely to be carried out in the
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retail sector?
A Trading of options
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B Corporate finance
C Financial planning
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D Reinsurance
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14 The difference between a lender`s quoted interest rate and its effective annual rate,
NORMALLY relates to what key factor?
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A short term debt issued at a discount to par and repaid at par on maturity
B long term debt issued at a discount to par and repaid at par on maturity
C short term debt issued at par and repaid at a predetermined level on maturity
D long term debt issued at par and repaid at a predetermined level on maturity
16 The shares of an investment trust are said to be trading at a premium when the share
price is:
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A higher than the net asset value
17 What is the main exchange for trading financial derivatives in the UK?
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A LME
B virt-x
C Liffe
D AIM
Introduction to Securities & Investment
A Compliance Officer
C Internal auditor
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A Equities
B Bonds
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C Gilts
D Swaps
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A Long
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B Medium
C Short
D Repo
Introduction to Securities & Investment
21 All firms who wish to conduct financial services business in the UK have to undergo an
authorisation process. The main reason for this is to ensure that the firm in question:
22 Fund A is an authorised fund and Fund B is an unauthorised fund. This means that:
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A only Fund A can be marketed to the general public
23 The use of which type of investment wrapper means that the payments made by the
investor will attract tax relief at outset?
B Pensions
C Investment bonds
D Cash ISAs
24 Where tax is deducted at source from the gross interest, the actual amount payable is
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normally described as:
A nominal interest
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B yield interest
C real interest
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D net interest
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25 Which ONE of the following indices contains only the largest companies, by
capitalisation, listed on the London Stock Exchange?
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A FTSE 100
B FTSE 250
D FTSE Techmark
Introduction to Securities & Investment
27 What is the PRIME responsibility of the Bank of England`s Monetary Policy Committee
(MPC)?
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A Determining interest rates in accordance with inflation targets
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Intervening in the market to influence exchange rates
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C Organising the amount of notes and coins in circulation
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29 What fundamental factor usually dictates the price of goods and services within a
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market economy?
D Government policy
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Introduction to Securities & Investment
30 When a shareholder delegates the right to vote at an AGM to another person, which of
the following statements is TRUE?
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A A stockbroker purchasing via a market maker
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A stockbroker purchasing via the Stock Exchange Electronic Trading System
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C A private investor purchasing direct from the manager
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B Long-term deposit
34 What does an investor have the right to do when she buys a traded call option?
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A The right to sell a share at a predetermined price by a given date
B
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The right to buy a share at a predetermined price by a given date
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C The right to sell a share at a price to be determined by a given date
36 What would be the economic impact of having higher inflation rates than other major
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industrialised countries?
C at a date to be agreed
38 Within an OEIC who is responsible for the safekeeping of the scheme property?
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A The Investment Management Association
C Bonds
A Custodian
B Market maker
C Broker
D Investor
41 Which ONE of the following investments is covered by the insider dealing legislation?
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A Bank deposits
B Commercial property
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C Equities
D Gold
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42 Which of the following normally have voting rights attributed to them at the time of
issue?
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A Preference shares
B Warrants
C Ordinary shares
D Eurobonds
Introduction to Securities & Investment
A Dealing when they did not expect the trade to result in a profit
B Dealing when they believed, on reasonable grounds, that the information had
been sufficiently widely disclosed
D Dealing using information that was not available to the market, to make a profit
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44 Which market would you use if you wished to trade in aluminium alloy?
A ICE Futures PE
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B LME
C Lloyds of London
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D Euronext.liffe
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C A company set up with the sole intention of investing in the shares of other
companies
D A company which exchanges commitments with another to gain from the profit of
the new commitment
Introduction to Securities & Investment
B Company name registered with the exchange on which the shares trade
D The name of the underlying investor using a nominee company to hold shares
47 Compared to direct property investment, Real Estate Investment Trusts normally offer
a reduced level of:
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A liquidity risk
B institutional risk PE
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C legal risk
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D systemic risk
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A Sibling
B Children
C Parents
D Spouse
Introduction to Securities & Investment
50 What MAXIMUM proportion of the amount paid into an investment bond can be
withdrawn in the first year, whilst ensuring that an immediate tax liability is avoided?
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A 2.5%
B 5.0% PE
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C 7.5%
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D 10.0%
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ANSWER SHEET
Introduction to Securities & Investment
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13 C 1 1 2
14 B 10 1 2
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A
A
C
3 2 2
7 5 3
6 5 1
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18 B 8 2 3
19 C 5 1 1
20 C 5 1 1
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21 C 8 1 3
22 A 7 1 3
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23 B 9 3 1
24 D 3 1 2
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25 A 4 1 10
26 B 10 3 2
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27 A 2 1 3
28 B 7 1 2
29 C 2 1 1
30 D 4 1 6
31 C 7 4 2
32 C 9 2 2
33 D 9 1 1
34 B 6 3 2
35 A 7 6 1
36 C 2 1 5
37 A 3 4 1
38 C 7 3 2
39 D 4 1 8
40 A 1 1 1
41 C 8 3 1
42 C 4 1 2
ANSWER SHEET
Introduction to Securities & Investment
43 D 8 3 1
44 B 6 5 1
45 A 7 2 1
46 C 4 1 13
47 A 7 5 1
48 D 9 1 3
49 A 3 2 2
50 B 9 4 1
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