Investors Europe (Mauritius) Limited - Training Module I
Module I : Gauges the staff's basic comprehension of Financial Markets and of the firm's basic rules, regulations and obligations as a Mauritius FSC regulated entity.
Questions and Answers
- 1.
At Investors Europe Stock Brokers, an investor can trade with many different currencies on his online trading platform but must normally choose a base currency.
- A.
True
- B.
False
- C.
False
Correct Answer
A. TrueExplanation
At Investors Europe Stock Brokers, traders are provided with the option to trade with various currencies on their online trading platform. However, they are typically required to select a base currency. This means that all trades and profits or losses will be measured and calculated based on the chosen base currency. Therefore, the statement "An investor can trade with many different currencies on his online trading platform but must normally choose a base currency" is true.Rate this question:
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- 2.
Account Opening : The documents needed to open a corporate account are the same as the ones needed to open an Individual account or a personal account.
- A.
True
- B.
False
- C.
False
- D.
False
Correct Answer
B. FalseExplanation
The explanation for the correct answer (False) is that the question states that the documents needed to open a corporate account are the same as the ones needed to open an individual or personal account. This statement is incorrect because corporate accounts typically require additional documentation such as proof of business registration, company financial statements, and identification of authorized signatories, which are not needed for individual or personal accounts. Therefore, the answer is false.Rate this question:
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- 3.
Investors Europe Stock Brokers executes trades on behalf of clients as their agent or their intermediary.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Investors Europe Stock Brokers acts as an agent or intermediary for clients when executing trades. This means that they carry out trades on behalf of their clients, rather than trading on their own account. As an agent, they have a fiduciary duty to act in the best interests of their clients and to execute trades in accordance with their instructions. As an intermediary, they facilitate the trading process by connecting buyers and sellers in the market. Therefore, the statement is true.Rate this question:
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- 4.
Investors Europe informs and assists the client in choosing which platform to use, but it is always the client's choice
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Investors Europe provides information and guidance to clients regarding platform selection but ultimately leaves the decision up to the client. This suggests that the client has the autonomy and freedom to choose the platform that best suits their needs and preferences. Thus, the statement "Investors Europe informs and assists the client in choosing which platform to use, but it is always the client's choice" is true.Rate this question:
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- 5.
It is usually possible to add tradeable and liquid securities from global stock markets onto the Rock Trader platform
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement suggests that the Rock Trader platform allows users to add tradeable and liquid securities from global stock markets. This implies that users can access a wide range of securities and trade them easily on the platform. Therefore, the answer is true.Rate this question:
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- 6.
MT4 is a platform which clients are able to use to trade on the foreign exchange market or Spot Forex Market
- A.
True
- B.
False
- C.
False
Correct Answer
A. TrueExplanation
MT4 is a widely used platform that allows clients to trade on the foreign exchange market or Spot Forex Market. This platform provides various tools and features that enable users to analyze market trends, execute trades, and manage their trading accounts. Therefore, the statement "MT4 is a platform which clients are able to use to trade on the foreign exchange market or Spot Forex Market" is true.Rate this question:
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- 7.
If a client sends his account opening application, you should give it to the Administrative Department
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Compliance DepartmentRate this question:
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- 8.
There are no currency controls with regard to international transfers into and from Mauritius.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
This statement suggests that there are no restrictions or regulations in place for transferring money into and out of Mauritius. This implies that individuals and businesses can freely send and receive international transfers without any currency controls or limitations. Therefore, the correct answer is True.Rate this question:
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- 9.
Clients can place orders over company's recorded phone (recorded Skype) and they will not be charged extra
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Clients can place orders over the company's recorded phone (recorded Skype) without being charged extra. This means that the company allows its clients to make orders through recorded phone calls or Skype calls, and there are no additional charges for using these methods.Rate this question:
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- 10.
Investors Europe an execution-only broker which means it never takes positions in the markets
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Investors Europe is an execution-only broker, meaning that it solely executes trades on behalf of its clients and does not engage in any trading for its own account. This means that the broker does not take positions in the markets, as stated in the given statement. Therefore, the correct answer is true.Rate this question:
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- 11.
There are clearly potential conflicts of interest when a stock broker or bank manages its own assets alongside client assets
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
When a stock broker or bank manages its own assets alongside client assets, there is a possibility of conflicts of interest. This means that the broker or bank may prioritize their own interests over the interests of their clients. For example, they may be tempted to make decisions that benefit their own investments at the expense of their clients' investments. This can lead to unfair treatment and disadvantageous outcomes for the clients. Therefore, it is true that potential conflicts of interest exist in such situations.Rate this question:
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- 12.
Investors Europe can manage client asset executions if so instructed and given discretion by a client?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Investors Europe has the capability to handle client asset executions if they are provided with instructions and given the authority by the client. This suggests that Investors Europe has the necessary expertise and systems in place to execute transactions on behalf of their clients.Rate this question:
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- 13.
MiFiD stands for “Market Investment For Investors Direct” in the EU
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Markets in Financial Instruments Directive (MiFID)Rate this question:
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- 14.
FATCA is an acronym for an American Law attempting to identify US tax payers throughout the world?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The Foreign Account Tax Compliance Act (FATCA) is designed to combat tax evasion by U.S. persons holding investments overseas. Certain U.S. taxpayers holding specified financial assets outside the United States must report those assets to the IRS via the jurisdiction in which they are held. Minimum to be reported USD 50.001Rate this question:
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- 15.
MiFID gives protection primarily to Intermediaries like Investors Europe & banks
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Protects investors, especially retail investors.Rate this question:
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- 16.
Investors Europe was originally set up in 2001 in Gibraltar as an Execution-only stock broker?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Investors Europe was indeed originally established in 2001 in Gibraltar as an Execution-only stock broker. This means that the company's primary function is to execute trades on behalf of clients without providing any investment advice or recommendations.Rate this question:
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- 17.
Spot Forex a regulated activity in Gibraltar?
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Spot Forex is not a regulated activity in Gibraltar.Rate this question:
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- 18.
The company cannot reveal the names of its clients to any third parties unless they specifically approve this as it would be a serious breach of client privacy and the Company could be sued under Mauritius and EU privacy laws.?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because the company is legally bound to protect the privacy of its clients. Revealing their names to third parties without their explicit approval would violate privacy laws in Mauritius and the European Union. Such a breach could result in legal consequences, including potential lawsuits against the company.Rate this question:
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- 19.
MT4 is a well known Motorway North of London, by the M3?
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The given statement is incorrect. MT4 is not a well-known motorway north of London.Rate this question:
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- 20.
Banking secrecy still exists in Mauritius? A third party like the police has to get a Court Order for authorisation to look at a Mauritius bank account?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Banking secrecy still exists in Mauritius, meaning that the information regarding bank accounts in the country is kept confidential. In order for a third party, such as the police, to access and examine a Mauritius bank account, they would need to obtain a Court Order for authorization. This ensures that the privacy and confidentiality of individuals' financial information is protected, and prevents unauthorized access to bank accounts without proper legal procedures.Rate this question:
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- 21.
Capital Gains Taxes are levied on clients' trading profits when they trade via Investors Europe, if they are not resident in Mauritius.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Capital Gains Taxes are not levied on clients' trading profits when they trade via Investors Europe, even if they are not resident in Mauritius.Rate this question:
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- 22.
London is an offshore jurisdiction in some circumstances
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
London can be considered an offshore jurisdiction in certain situations because it offers certain advantages to individuals and businesses looking to minimize their tax liabilities or protect their assets. Offshore jurisdictions are typically known for their favorable tax laws, confidentiality, and asset protection measures. London, being a global financial hub, attracts many foreign investors and businesses who may choose to establish offshore entities or utilize offshore banking services to take advantage of these benefits. However, it is important to note that not all aspects of London can be classified as offshore, as it also operates within the regulatory framework of the United Kingdom.Rate this question:
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- 23.
The US is probably the world's largest offshore jurisdiction
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement suggests that the US is likely the largest offshore jurisdiction globally. This means that the US is a popular destination for individuals and businesses to establish offshore accounts or entities to take advantage of tax benefits, financial privacy, or other advantages. This could be due to the country's robust financial system, strong legal framework, and favorable regulations.Rate this question:
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- 24.
In the stock markets, company dividends are normally paid Net of Withholding Tax (i.e. Tax taken at source before being transferred to the investor)
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
In stock markets, company dividends are typically paid net of withholding tax, which means that the tax is deducted at the source before the dividend is transferred to the investor. This is a common practice to ensure that the appropriate taxes are paid on the dividend income. Therefore, the statement "True" is correct.Rate this question:
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- 25.
Is a Chinese Wall an articial information exchange barrier created within a company to avoid conflicts of interest
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
A Chinese Wall is indeed an artificial information exchange barrier created within a company to avoid conflicts of interest. It is typically implemented in financial institutions to separate departments that may have access to sensitive information, such as investment banking and research departments. This barrier ensures that confidential information is not shared inappropriately, preventing any potential conflicts of interest that may arise.Rate this question:
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- 26.
Investors Europe Stock Brokers has a Euro 1.2 million Professional Indemnity Insurance with AIG of Belgium
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The given statement is true. Investors Europe Stock Brokers has a Euro 1.2 million Professional Indemnity Insurance with AIG of Belgium. This insurance provides coverage for any potential errors, omissions, or negligence that may occur during the brokerage services provided by Investors Europe Stock Brokers. Having this insurance is important as it protects both the company and its clients from financial losses that may arise from any mistakes made during the course of business operations.Rate this question:
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- 27.
TIEA stands for Tax Information Exchange Agreement, an agreement between two states to share tax information
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The explanation for the given correct answer is that TIEA stands for Tax Information Exchange Agreement, which is indeed an agreement between two states to share tax information. This agreement is aimed at preventing tax evasion and promoting transparency in the global tax system. Through TIEAs, countries can exchange relevant tax information to ensure that individuals and entities are fulfilling their tax obligations. Therefore, the statement "True" is correct.Rate this question:
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- 28.
Investors Europe pays corporate tax in Mauritius?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Investors Europe pays corporate tax in Mauritius because it is a financial services company based in Mauritius. As per the tax laws and regulations in Mauritius, all companies operating in the country are required to pay corporate tax. Therefore, it can be inferred that Investors Europe, being a company based in Mauritius, is also subject to paying corporate tax in the country.Rate this question:
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- 29.
A HNWI is a High Net Worth Investor
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because HNWI stands for High Net Worth Investor, which refers to individuals who have a high net worth, typically exceeding a certain financial threshold. These individuals are considered to be wealthy and have the financial capacity to invest significant amounts of money. Therefore, the correct answer is true.Rate this question:
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- 30.
By Law, Investors Europe Stock Brokers has to have two resident directors in Mauritius
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
According to the given information, Investors Europe Stock Brokers is required by law to have two resident directors in Mauritius. This suggests that it is mandatory for the company to appoint two directors who are residents of Mauritius in order to comply with legal regulations. Therefore, the answer is true.Rate this question:
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- 31.
A margin call is a formal notification to a client to reduce his cash balance or increase his exposure to the markets
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The given statement is false. A margin call is not a formal notification to a client to reduce his cash balance or increase his exposure to the markets. Rather, a margin call is a demand from a broker to a client to deposit additional funds into their margin account in order to meet the required margin level. This is usually done when the value of the client's investments has decreased and the margin account falls below a certain threshold.Rate this question:
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- 32.
The potential loss of selling a naked option is normally very limited indeed
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The potential loss of selling a naked option is not normally very limited, but rather can be unlimited. When an investor sells a naked option, they are obligated to fulfill the terms of the contract if the option is exercised. This means that if the market moves against them, they may have to buy or sell the underlying asset at a loss. Since there is no limit to how much the price of an asset can move, the potential loss from selling a naked option is not limited. Therefore, the correct answer is False.Rate this question:
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- 33.
A strike price of an option contract is the price one will pay to buy/sell the option contract
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because the strike price of an option contract is the predetermined price at which the underlying asset can be bought or sold when exercising the option. It is not the price one will pay to buy or sell the option contract itself. The option contract itself has a premium that is paid to the seller of the option, separate from the strike price.Rate this question:
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- 34.
GTC as in a 'GTC Order' stands for Global Trustee Corporation, probably the world's biggest Custodian.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The given explanation is incorrect. GTC in a 'GTC Order' does not stand for Global Trustee Corporation. GTC actually stands for Good 'Til Cancelled, which is a type of order in the stock market that remains active until it is executed or cancelled by the investor.Rate this question:
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- 35.
HFT stands for High Frequency Trading, sometimes using a whole football pitch of computers all linked together, to trade faster than other investors in a 'dark pool'.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
HFT stands for High Frequency Trading, which involves using a large number of computers connected together to trade at a faster pace than other investors. This technique is often employed in a 'dark pool' where trades are executed privately. Therefore, the statement is true.Rate this question:
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- 36.
Clients must formally make a complaint to company, if they are not satisfied, before making a complaint to the Regulator
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Clients must formally make a complaint to the company before making a complaint to the Regulator if they are not satisfied. This implies that the company should be given an opportunity to address the complaint and resolve the issue internally before involving the Regulator. By doing so, the company can have a chance to rectify the problem and potentially avoid any regulatory intervention. It also promotes a more efficient and effective resolution process, as the company can directly address the client's concerns without the need for external involvement.Rate this question:
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- 37.
Futures market : originally used by farmers to reduce their exposure to risk inherent in the quality/price of their harvest
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The explanation for the given correct answer is that the futures market was indeed originally used by farmers to mitigate the risk associated with the quality and price of their harvest. By entering into futures contracts, farmers could lock in a predetermined price for their produce, thereby protecting themselves from potential price fluctuations in the market. This allowed them to plan their finances more effectively and reduce their exposure to risk.Rate this question:
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- 38.
Settlement (Cash Products - stocks) & Clearing (Futures) is the exchange of cash for financial instruments after transaction is executed
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because settlement refers to the process of exchanging cash for financial instruments, such as stocks, after a transaction has been executed. Clearing, on the other hand, is the process of finalizing the transaction and ensuring that all obligations are met. In the context of futures, clearing involves the exchange of cash and the transfer of the futures contract to the buyer. Therefore, both settlement and clearing involve the exchange of cash for financial instruments after a transaction has taken place.Rate this question:
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- 39.
At Investors Europe Stock Brokers, Clients buying CFDs pay interest on the exposure based on the leverage created by the position(s) they have opened
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
At Investors Europe Stock Brokers, clients who purchase Contracts for Difference (CFDs) are required to pay interest on the exposure they have taken on through the leverage provided by their open positions. Leverage allows clients to control a larger position with a smaller amount of capital, but it also increases the risk and potential losses. Therefore, clients are charged interest on the borrowed funds used for leverage. This statement is true as it accurately reflects the practice followed by Investors Europe Stock Brokers.Rate this question:
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- 40.
CFDs are always available for penny stocks and other companies with low capitalization and high volatility
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
CFDs (Contracts for Difference) are derivative products that allow traders to speculate on the price movements of various financial instruments, including stocks. While CFDs are commonly available for stocks, including penny stocks and companies with low capitalization, it is not accurate to say that they are always available for these types of stocks. The availability of CFDs depends on various factors, including the brokerage firm and the specific stock being traded. Additionally, the statement implies that all penny stocks and low-cap companies have high volatility, which is not always the case. Therefore, the correct answer is False.Rate this question:
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- 41.
The spread of a stock/currency or any security in the markets is the difference between the Bid and the Ask (“offer”)rates
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The spread of a stock, currency, or any security refers to the difference between the bid and ask rates in the market. The bid rate represents the highest price a buyer is willing to pay for the security, while the ask rate represents the lowest price a seller is willing to accept. The spread is important because it represents the cost of trading and can vary depending on market conditions and liquidity. Therefore, the statement is true.Rate this question:
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- 42.
The bid rate is the rate at which an individual investor would be able to buy a security
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The bid rate is the rate at which an individual investor would be able to sell a security, not buy. When an investor wants to sell a security, they would receive the bid rate, which is the highest price that a buyer is willing to pay for that security. Therefore, the statement is false.Rate this question:
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- 43.
Technical Analysts use Technical Analysis for the intrinsic bottom up value of a security to forecast the direction of its price
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Technical analysts use technical analysis to analyze historical price and volume data of a security in order to identify patterns and trends. They do not rely on intrinsic value or fundamental analysis to forecast the direction of a security's price. Instead, they focus on the study of charts, indicators, and other technical tools to make predictions about future price movements. Therefore, the statement that technical analysts use technical analysis for the intrinsic bottom-up value of a security to forecast its price direction is false.Rate this question:
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- 44.
Stock markets indices are watched closely by traders as they can give the overall future direction of the market/economy
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Stock market indices are a reflection of the performance of a group of stocks that represent a particular market or sector. Traders closely monitor these indices because they provide valuable insights into the overall market or economy. By analyzing the movement and trends of these indices, traders can make informed decisions about buying or selling stocks. Therefore, the statement that stock market indices are watched closely by traders as they can give the overall future direction of the market/economy is true.Rate this question:
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- 45.
Mauritius Due Diligence : Investors Europe Stock Brokers MiFID designated clients can open an account by sending an uncertified passport?
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because MiFID (Markets in Financial Instruments Directive) regulations require investors to provide certified identification documents, such as a certified passport, when opening an account with Investors Europe Stock Brokers. Sending an uncertified passport would not meet the due diligence requirements set by MiFID.Rate this question:
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- 46.
Mauritius Due diligence : Subject to it being certified as a true copy of the original or the actual original being sent to the Company with a signed hard copy of the account opening documents, can clients use a bank statement as a proof of residence?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Clients can use a bank statement as a proof of residence, provided that it is certified as a true copy of the original or the actual original is sent to the Company with a signed hard copy of the account opening documents.Rate this question:
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- 47.
Mauritius Due diligence : New clients can use a utility bill (water,electricity, telephone but not mobile) as proof of residence?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
New clients in Mauritius can use a utility bill (such as water, electricity, or telephone bill) as proof of residence. However, mobile phone bills are not accepted as proof of residence.Rate this question:
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- 48.
The Company's Benchmark Mifid classifies clients as either Retail or Professional
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because the company's benchmark Mifid does not classify clients as either Retail or Professional.Rate this question:
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- 49.
Client can be classified 'Professional' using Investors Europe Stock Broker's MiFID benchmark, by having worked in the financial sector for 1 year
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because the classification of a client as "Professional" using the MiFID benchmark requires more than just having worked in the financial sector for 1 year. The MiFID benchmark sets specific criteria and requirements that a client must meet in order to be classified as "Professional," such as having a certain level of experience, knowledge, and expertise in the financial markets. Simply having worked in the financial sector for 1 year is not sufficient to meet these criteria.Rate this question:
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- 50.
A small but regular transfer of monies in or out of a trading account be an initial indicator of money laundering activity
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
A small but regular transfer of money in or out of a trading account can be an initial indicator of money laundering activity. Money launderers often try to move small amounts of money frequently to avoid detection and suspicion. By doing so, they can disguise the illegal origin of the funds and make it appear as legitimate trading activity. Therefore, this statement is true as it highlights the potential connection between small and regular transfers and money laundering.Rate this question:
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