CISI Chartered Wealth Manager Programme Financial Markets Day

CISI Chartered Wealth Manager Programme Financial Markets – Day 6 Cris Glascow Accredited Training Partner

Objectives By the end of the workshop you will have: q Practised exam type questions q Identified areas you need to read about more thoroughly q Devised an action plan. Accredited Training Partner

Agenda q Exam question practice and technique q Review. Accredited Training Partner

Section A Questions - Chapter 1 1. Describe what the monetary measures narrow money and broad money include. (5 marks) 2. How would each of the following gain or lose from unanticipated inflation? • Lenders • Borrowers • Taxpayers • The government • Pensioners. (5 marks) Accredited Training Partner

Section A Questions – Chapter 2 3. In terms of basic accounting principles, explain the following terms: • • Going concern concept Accruals concept Matching principle Consistency and comparability. (5 marks) Accredited Training Partner

Section A Questions - Chapter 3 4. PQR PLC has provided the following financial information from its most recent report and accounts: Operating profit before interest and tax £ 150 m Net interest paid £ 10 m Profit on ordinary activities after taxation £ 97 m Ordinary dividends £ 15 m Fixed charge debenture £ 51 m Unsecured loan stock £ 109 m Called up share capital (160 million 10 p ordinary shares) £ 16 m Shareholders reserves £ 350 m Current share price 450 p From the information provided, calculate: a) Capital gearing b) Interest cover c) Dividend cover d) Price-earnings ratio (5 marks) Accredited Training Partner

Section A Questions - Chapter 4 5. a) Define and explain the meaning of the term “AER” b) Peter is considering two investments. Investment A pays 2% every half year Investment B pays 13% after three years Calculate which investment offers the highest return? (5 marks) Accredited Training Partner

Section A Questions – Chapters 5 and 6 6. A £ 1, 000 bond pays a 9% coupon per annum over 15 years. If the market rate of interest is 7%, calculate the current value of the bond. (5 marks) 6. A bond’s 8% coupon is paid semi-annually on 1 January and 1 July. An investor buys £ 100, 000 nominal on 15 March at a clean price of £ 96. 24. What is its dirty price? (Assume 181 days in interest period) (5 marks) Accredited Training Partner

Section A Questions – Chapters 5 and 6 8. Describe the key features of the following money market instruments: a. Deposits b. Treasury bills c. Bills of exchange d. Certificates of deposit. (4 marks) Accredited Training Partner

Section A Questions – Chapters 7 and 8 9. Describe the key features of ordinary and preference shares in terms of both their similarities and differences. (5 marks) 10. Explain the following terms: i. a scrip dividend, ii. a scrip issue and iii. a stock split. (5 marks) Accredited Training Partner

Section A Questions – Chapters 7 and 8 11. A client has 10 traded call option contracts in company ABC plc. Current share price is 550 p. The exercise price of the options is 485 p. The expiry date is July. The current price of the options is 145 p. Calculate: a. The intrinsic value of the option b. The time value of the option. 12. A hostile takeover bid for ABC plc has been announced at 605 p per share. Advise the client of the merit of the choices available to holders of the call option contract. (5 marks) Accredited Training Partner

Section A Questions – Chapters 7 and 8 13. Briefly explain a fixed to floating interest rate swap. Describe what happens if both parties to the swap agree to terminate it early. (5 marks) Accredited Training Partner

Day 6 Review q Review slides and exercises against syllabus q Check areas of understanding - questions for next session q Assess past exam reports for questions on syllabus areas covered. Accredited Training Partner