Skills questionnaire Bank Account, Foreign Exchange (topic 1 of 5)1. What do we mean by Bank Account? Index funds, passively managed and traded on the stock exchange. Banking product that allows you to take advantage of services such as securities deposits and payment services. Debt securities issued by companies to finance themselves. 2. What do we mean by "Foreign Exchanges"? Index funds, passively managed and traded on the stock exchange. Debt securities issued by companies to finance themselves. The exchange ratio between currencies of different countries. 3. What do we mean by IBAN Code? A bank code made up of letters and numbers that uniquely identify the account also internationally. A code to use the credit card. A security code to use internet banking. 4. What do we mean by "current account credit"? The reputational risk of the client as a good creditor. The sum (Credit) that the bank can make available to the customer beyond the available balance. Entrust the payment of bills to the bank management. 5. What are the main costs of a bank account? None. Bank accounts are offered free of charge by banks. Fixed management costs, such as annual fees, payment card fees and fees for use of home banking. Fixed costs of managing the bank account and / or securities deposit, such as annual fees, payment card fees and fees for use of home banking and variable costs such as commissions, interest and settlement costs. 6. What is the difference between credit cards and debit cards? The credit card allows access to a credit line, while the availability of the debit card is limited to the amount deposited in the current account. The credit card has a maximum daily withdrawal limit, while there is no such limit for the debit card. The credit card allows you to access several accounts simultaneously, while the debit card is linked to a single current account. 7. What do we mean by spot FX? Prices for transactions in which the exchange of currencies takes place at the standard settlement of two days. Prices for transactions in which the exchange takes place on a specific date. Tools that allow you to hedge currency risk more effectively. 8. What does forward FX entail? Execution of currency exchange on a deferred date but at pre-agreed prices. Hedging exchange rate risk with more flexible instruments. The appreciation of your currency (or other currency) against a third currency. 9. What is a Currency SWAP contract? The exchange of the appreciation or depreciation of one currency against the value of another currency. The ability to exchange currencies in an unregulated market (OTC). The exchange of future cash flows calculated on equivalent amounts on agreed dates in a different currency. 10. What are the components of a Currency SWAP contract? Spot Transaction and Forward Transaction. Exchange rate derivatives and transaction price on the OTC market. Others. Continue with the next topic Insurance (topic 2 of 5)11. What do we mean by Insurance? A share of the capital of a listed company. Contract by which a person pays a premium to transfer the risk of a possible negative event to another person, who covers and reimburses him or her within the agreed limits. Debt securities issued by companies to finance their operations. 12. In life insurance policies, what is the beneficiary's role? The natural or legal person who receives the economic benefit of the insurance upon the death or survival of the insured. The natural or legal person who receives a periodic sum for the duration of the contract. The natural or legal person who signs the policy and pays the contract premiums. 13. What do we mean by "compulsory social security"? The pay-as-you-go system whereby contributions paid by active workers finance the pensions of retired workers. The contribution system whereby the contributions paid by the worker are multiplied by a coefficient and paid monthly in their pension. The retribution method whereby the average of the wages received in the last years of work is multiplied by the years of contribution and by a certain factor. 14. What do we mean by "complementary social security"? The compulsory contribution system for those who have completed at least two or more jobs. The contribution system which provides for free and voluntary payments to funds or legal entities, which is added to the public pension. The contribution system granted to retired workers who have held public offices. 15. What are Individual Pension Plans (IPPs)? Part of close-end pension funds exempt from collective management choices. Special civil liability policies. Life insurance policies, offered by insurance companies, accessible only for single membership. Continue with the next topic Bonds (topic 3 of 5)16. What do we mean by bonds? A share of the capital of a listed company. A securitized derivative financial instrument. A debt security issued by an issuer to finance its operations. 17. What is the coupon of a bond? The maturity of a bond. The periodic interest that the issuer pays to its bondholders. A fixed rate that determines the amount to be paid on each payment date. 18. Why are senior bonds considered safer? In the event of the issuer's insolvency, the repayment of the senior bonds comes from the liquidation of the issuer's assets. The issuing institution is too large to file for bankruptcy and not repay the bondholders (too big to fail). Senior bonds are not aligned with market trends. 19. What do we mean by subordinated bonds? Bonds whose interest payments and repayment of principal, in the event of liquidation or bankruptcy of the issuer, takes place after the repayment of the senior bonds. Bonds that always give a lower return than senior bonds. Bonds that involve less risk than senior bonds. 20. What is the main risk of bonds? The risk that the issuer is insolvent and will not be able to partially or totally repay the bonds. The risk that the increase in interest rates will cause the value of the bond to drop. The risk that rating agencies downgrade the issuer's specific rating. 21. What does the rating of the bonds indicate? The amount of bonds issued by a single issuer. The assessment on the issuer's ability to meet its obligations. The security level of the bond market. Continue with the next topic Shares (topic 4 of 5)22. What do we mean by shares? A share of capital of a listed company. Securitized derivative financial instruments. Debt securities issued by companies to finance their operations. 23. What do we mean by stock dividend? The ratio of the share divided between the contracting partners. A partition of the profits, agreed by the Shareholders' Meeting, to remunerate the share capital. A portion of the company's share capital. 24. In addition to receiving dividends, what are shareholders' rights? Voting in shareholders’ meetings, examining company books, challenging invalid shareholders' resolutions. Assign the most important positions within the company, use the company's profits to finance one’s own business. Decide on employee payroll and other company expenses. 25. What is the goal of a company that issues shares? Increase commercial visibility. Share the risks between shareholders. Finance investments and corporate activities. 26. What are the risks of the company's economic activity that can affect shareholders? The risk of depreciation of the share value and capital losses. Concentration and counterparty risk. Reputational risk. Continue with the next topic Funds, ETFs, Variable Capital Investment Companies (Sicav), Certificates (topic 5 of 5)27. What do we mean by Exchange Traded Fund (ETF)? Index funds, passively managed and traded on the Italian and foreign stock exchanges. Securitized derivative financial instruments. Joint-stock company with the purpose of collective investment of the assets, in the form of shares to the public. 28. What do we mean by Certificates? Index funds, passively managed and traded on the Italian and foreign stock exchanges. Joint-stock company with the purpose of collective investment of the assets, in the form of shares to the public. Securitized derivative financial instruments. 29. What are the differences between synthetic and physical replication ETFs? Synthetic replication ETFs use a total return swap contract instead of a physical holding of the benchmark components as in physical replication ETFs. UCITS ETFs (Collective Investment Schemes) offer higher returns. Synthetic replication ETFs are not exposed to any counterparty risk, while physical replication ETFs are more exposed. 30. Why have ETFs met the favor of institutional and private investors? Because they include all the main asset classes. Because they combine the advantages of diversified investment funds and the negotiability of shares. Because they allow you to invest in foreign stock markets without exchanging the currency. 31. What do we mean by Asset Management Companies (AMCs)? Companies to which the underwriters rely for the management of the fund, which act through a "delegation" mechanism. Companies that manage the general savings of a subscriber. National companies that monitor the management of savings by citizens. 32. What do mutual funds, ETFs and SICAVs (Variable Capital Investment Companies) have in common? They consist of capital paid in by various investors and savers, holders of a proportional number of units. They are securitized derivative financial instruments. They are debt securities issued by various issuers to finance their operations. 33. Why aren’t the assets of mutual funds, ETFs and SICAVs subject to the credit risk of the management company? Because the assets are separated from the fund and deposited with the custodian bank. Because the capital structure is so transparent and flexible that the company in crisis would be financed by other funds. Because they are guaranteed by the State. 34. If the SICAV is assimilated to a mutual fund, what does this mean for investors? The investor does not buy shares but takes on the role of shareholder with the right to vote and the share capital becomes the managed assets. The members of the SICAV lose the right to vote. The fund's investors have to pay more fees to maintain their units. 35. Which underlying assets does the specialized intermediary that issues the Certificates allow access to? Shares, stock indices, currency, commodities, interest rates. Bonds, exchange rates, insurance policies. Mutual funds, SICAVs, ETFs. 36. What markets do Certificates allow you to invest in? Only in the domestic market. Only in the foreign market. Any market. 37. What are the main risks of Certificates? Issuer risk, liquidity risk, risks related to subscription fees and unbalanced gains and losses. Country risk, counterparty and reputational risk. Operational risk, migration risk, downgrading and legal risk. 38. What are the strengths of Certificates? Undistrainability and unseizability. Diversification, negotiability and retail investment denominations (much less than € 50,000). They can be sold as bonds. By continuing, you consent to the processing of data as indicated by privacy policy of the web-site.
