CISI Securities Exam Questions With Correct
Answers
What |are |holders |of |'A' |ordinary |shares |usually |excluded |from?
Voting |at |meetings
What |securities |are |bearer? |(1)
Eurobonds |and |ADRs
What |is |the |count |for |coupons |for |eurobonds? |(1)
30/360
What |is |the |difference |between |cross |rate |and |direct |rate? |(2)
A |direct |rate |involves |one |domestic |currency, |while |a |cross |rate |involves |two |foreign |
currencies |that |are |calculated |through |a |third |currency |eg |(EUR/JPY, |GBP/AUD, |AUD/NZD, |and |
USD/CHF)
Who |is |the |legal |owner |of |a |share |on |which |an |ADR |has |been |created |and |issued? |(2)
The |depositary |bank
What |are |French |gov |bonds |called, |when |are |coupon |interest |payments |paid |and |when |is |
settlement? |(2)
OATs, |PAID |ANNUALLY |and |T+2
What |are |the |different |German |gov |bonds |called, |when |are |the |interest |payments |paid, |and |
when |is |settlement? |(2)
- |Bubills |< |1 |year
- |Schatz |< |2 |years
- |Bobl |5 |years
- |Bund |> |10 |years
PAID |ANNUALLY
T+2
,What |are |the |names |of |the |different |US |bonds, |their |maturities, |and |their |settlement? |(2)
- |T-bills, |less |than |a |year |and |T+0
- |T-notes, |2-10 |years |and |T+1
- |T-bonds, |> |10 |years |and |T+1
What |is |meant |by |ex-dividend?(2)
This |is |the |day |on |which |a |stock |begins |trading |without |the |dividend. |If |you |buy |the |stock |on |
or |after |this |day, |you |are |not |entitled |to |the |dividend |payment. |In |other |words, |the |stock |is |
trading |"ex" |or |"without" |the |dividend.
What |is |meant |by |cum-dividend?(2)
This |is |the |opposite |of |ex-dividend. |It |refers |to |a |stock |that |is |trading |with |the |dividend |
included. |If |you |buy |the |stock |before |the |ex-dividend |date, |you |are |entitled |to |receive |the |
dividend |payment, |and |the |stock |is |said |to |be |trading |"cum" |or |"with" |the |dividend.
What's |the |difference |between |floating |and |fixed |charge? |(2)
A |floating |charge |is |created |over |a |changing |pool |of |assets, |while |a |fixed |charge |is |created |
over |specific |assets |that |cannot |be |sold |or |used |without |the |lender's |consent |until |the |debt |is |
fully |repaid.
What |are |bonds |issued |with |a |fixed |charge |referred |to |as?(2)
Debenture
What |is |the |purpose |of |an |SPV?(2)
A |legal |entity |is |set |up |for |a |specific |purpose |or |project |to |limit |risk |exposure |and |protect |the |
interests |of |investors |or |lenders. |They |can |hold |assets, |enter |contracts, |and |raise |capital |
independently |of |the |sponsor.
What |are |covered |bonds?(2)
Debt |securities |backed |by |a |pool |of |high-quality |assets, |like |mortgages |or |public |sector |loans. |
They |are |issued |by |banks |and |other |financial |institutions |and |are |considered |lower-risk |
investments |because |they |are |backed |by |assets |that |generate |steady |cash |flows.
What |bonds |are |more |volatile |short |or |long |dated |bonds? |(2)
Long
Whats |meant |by |a |bond |spread? |(2)
The |difference |between |a |bonds |yield |and |the |yield |of |a |benchmark |gilt.
, What |are |the |different |types |of |trustees |in |structured |finance |transactions?(2)
- |Note |trustees: |Represent |the |interests |of |securities |holders.
- |Security |trustees: |Hold |securities |or |properties |for |the |benefit |of |secured |parties.
- |Share |trustees: |Hold |shares |in |an |issuing |SPV |to |ensure |off-balance-sheet |treatment.
- |Successor |trustees: |Replace |a |trustee |with |conflicts |of |interest |or |cannot |continue |due |to |
work |requirements.
What |are |the |three |tiers |of |debt?(2)
- |Senior |debt: |This |is |the |highest-ranking |debt, |which |has |priority |over |all |other |debt |and |must
|be |repaid |first |in |the |event |of |default.
- |Subordinated |debt: |This |is |a |middle-ranking |debt |that |is |subordinated |to |senior |debt |but |has |
priority |over |equity.
- |Mezzanine |debt: |This |is |the |lowest-ranking |debt, |which |is |subordinated |to |senior |and |
subordinated |debt.
What |is |the |par |value?(2)
The |face |value |or |nominal |value |of |a |bond |or |stock. |It |represents |the |amount |that |the |issuer |
agrees |to |pay |back |to |the |bondholder |or |shareholder |upon |maturity |or |redemption |of |the |
security.
What |is |a |preference |share?(2)
Pay |a |fixed |dividend |and |generally |have |no |voting |rights, |but |get |paid |dividends |before |
ordinary |shareholders |and |are |paid |out |before |them |in |the |event |of |liquidation
What |are |the |different |types |of |preference |shares?(2)
- |Cumulative |preference |shares: |Accumulate |unpaid |dividends |and |pay |them |out |in |future |
years.
- |Participating |preference |shares: |Receive |a |fixed |dividend |and |also |share |in |the |company's |
profits |with |ordinary |shareholders.
- |Redeemable |preference |shares: |Enable |the |company |to |buy |back |the |shares |from |the |
shareholder |at |an |agreed |price |in |the |future.
- |Convertible |preference |shares: |Allow |the |shareholder |to |convert |the |preference |shares |into |a
|predetermined |number |of |ordinary |shares.
- |Zero |coupon |preference |shares: |Pay |no |dividend, |but |offer |an |upside |to |the |shareholder |in |
that |they |redeem |at |a |price |above |that |at |which |they |are |issued.
How |do |you |calculate |flat |yield?(2)
Flat |yield |= |(annual |coupon/price) |x |100
Answers
What |are |holders |of |'A' |ordinary |shares |usually |excluded |from?
Voting |at |meetings
What |securities |are |bearer? |(1)
Eurobonds |and |ADRs
What |is |the |count |for |coupons |for |eurobonds? |(1)
30/360
What |is |the |difference |between |cross |rate |and |direct |rate? |(2)
A |direct |rate |involves |one |domestic |currency, |while |a |cross |rate |involves |two |foreign |
currencies |that |are |calculated |through |a |third |currency |eg |(EUR/JPY, |GBP/AUD, |AUD/NZD, |and |
USD/CHF)
Who |is |the |legal |owner |of |a |share |on |which |an |ADR |has |been |created |and |issued? |(2)
The |depositary |bank
What |are |French |gov |bonds |called, |when |are |coupon |interest |payments |paid |and |when |is |
settlement? |(2)
OATs, |PAID |ANNUALLY |and |T+2
What |are |the |different |German |gov |bonds |called, |when |are |the |interest |payments |paid, |and |
when |is |settlement? |(2)
- |Bubills |< |1 |year
- |Schatz |< |2 |years
- |Bobl |5 |years
- |Bund |> |10 |years
PAID |ANNUALLY
T+2
,What |are |the |names |of |the |different |US |bonds, |their |maturities, |and |their |settlement? |(2)
- |T-bills, |less |than |a |year |and |T+0
- |T-notes, |2-10 |years |and |T+1
- |T-bonds, |> |10 |years |and |T+1
What |is |meant |by |ex-dividend?(2)
This |is |the |day |on |which |a |stock |begins |trading |without |the |dividend. |If |you |buy |the |stock |on |
or |after |this |day, |you |are |not |entitled |to |the |dividend |payment. |In |other |words, |the |stock |is |
trading |"ex" |or |"without" |the |dividend.
What |is |meant |by |cum-dividend?(2)
This |is |the |opposite |of |ex-dividend. |It |refers |to |a |stock |that |is |trading |with |the |dividend |
included. |If |you |buy |the |stock |before |the |ex-dividend |date, |you |are |entitled |to |receive |the |
dividend |payment, |and |the |stock |is |said |to |be |trading |"cum" |or |"with" |the |dividend.
What's |the |difference |between |floating |and |fixed |charge? |(2)
A |floating |charge |is |created |over |a |changing |pool |of |assets, |while |a |fixed |charge |is |created |
over |specific |assets |that |cannot |be |sold |or |used |without |the |lender's |consent |until |the |debt |is |
fully |repaid.
What |are |bonds |issued |with |a |fixed |charge |referred |to |as?(2)
Debenture
What |is |the |purpose |of |an |SPV?(2)
A |legal |entity |is |set |up |for |a |specific |purpose |or |project |to |limit |risk |exposure |and |protect |the |
interests |of |investors |or |lenders. |They |can |hold |assets, |enter |contracts, |and |raise |capital |
independently |of |the |sponsor.
What |are |covered |bonds?(2)
Debt |securities |backed |by |a |pool |of |high-quality |assets, |like |mortgages |or |public |sector |loans. |
They |are |issued |by |banks |and |other |financial |institutions |and |are |considered |lower-risk |
investments |because |they |are |backed |by |assets |that |generate |steady |cash |flows.
What |bonds |are |more |volatile |short |or |long |dated |bonds? |(2)
Long
Whats |meant |by |a |bond |spread? |(2)
The |difference |between |a |bonds |yield |and |the |yield |of |a |benchmark |gilt.
, What |are |the |different |types |of |trustees |in |structured |finance |transactions?(2)
- |Note |trustees: |Represent |the |interests |of |securities |holders.
- |Security |trustees: |Hold |securities |or |properties |for |the |benefit |of |secured |parties.
- |Share |trustees: |Hold |shares |in |an |issuing |SPV |to |ensure |off-balance-sheet |treatment.
- |Successor |trustees: |Replace |a |trustee |with |conflicts |of |interest |or |cannot |continue |due |to |
work |requirements.
What |are |the |three |tiers |of |debt?(2)
- |Senior |debt: |This |is |the |highest-ranking |debt, |which |has |priority |over |all |other |debt |and |must
|be |repaid |first |in |the |event |of |default.
- |Subordinated |debt: |This |is |a |middle-ranking |debt |that |is |subordinated |to |senior |debt |but |has |
priority |over |equity.
- |Mezzanine |debt: |This |is |the |lowest-ranking |debt, |which |is |subordinated |to |senior |and |
subordinated |debt.
What |is |the |par |value?(2)
The |face |value |or |nominal |value |of |a |bond |or |stock. |It |represents |the |amount |that |the |issuer |
agrees |to |pay |back |to |the |bondholder |or |shareholder |upon |maturity |or |redemption |of |the |
security.
What |is |a |preference |share?(2)
Pay |a |fixed |dividend |and |generally |have |no |voting |rights, |but |get |paid |dividends |before |
ordinary |shareholders |and |are |paid |out |before |them |in |the |event |of |liquidation
What |are |the |different |types |of |preference |shares?(2)
- |Cumulative |preference |shares: |Accumulate |unpaid |dividends |and |pay |them |out |in |future |
years.
- |Participating |preference |shares: |Receive |a |fixed |dividend |and |also |share |in |the |company's |
profits |with |ordinary |shareholders.
- |Redeemable |preference |shares: |Enable |the |company |to |buy |back |the |shares |from |the |
shareholder |at |an |agreed |price |in |the |future.
- |Convertible |preference |shares: |Allow |the |shareholder |to |convert |the |preference |shares |into |a
|predetermined |number |of |ordinary |shares.
- |Zero |coupon |preference |shares: |Pay |no |dividend, |but |offer |an |upside |to |the |shareholder |in |
that |they |redeem |at |a |price |above |that |at |which |they |are |issued.
How |do |you |calculate |flat |yield?(2)
Flat |yield |= |(annual |coupon/price) |x |100
