ICWIM Exam Dumps : International Certificate in Wealth & Investment Management

Private Equity and Growing Companies:

Private equity involves investing in privately-held companies with the goal of increasing their value and exiting through a stock market listing (IPO) or sale.

This investment type targets growth-stage businesses requiring significant capital.

Elimination of Other Options:

A: Convertible bonds are debt instruments, not equity investments.

B: Preference shares provide fixed dividends and are not growth-oriented investments.

D: Structured products are financial instruments tied to underlying assets and not specific to growth financing.

References:

ICWIM Module 3: Coverage of private equity investments and their objectives.

What is an Uncovered Dividend?

An uncovered dividend payment occurs when a company pays a dividenddespite having insufficient earningsto support the payout.

The dividend is effectively "uncovered" by profits, meaning the company might be using reserves, taking on debt, or liquidating assets to fund the dividend.

Why Companies Pay Uncovered Dividends

To maintain investor confidence and avoid negative signals to the market.

Investors may interpret a dividend cut as a sign of financial trouble, so companies sometimes prioritize dividends even at a financial strain.

Other Options Explained

A. Ex-dividend payment: Refers to the status of a stock when a dividend has already been declared, and new buyers are not entitled to the dividend.

B. Proxy dividend payment: No such widely recognized term in this context.

C. Scrip dividend payment: A dividend paid in the form of additional shares rather than cash.

Example

A company reports $500,000 in profits but declares a $1,000,000 dividend, funding the shortfall through borrowing. This is an uncovered dividend.

ICWIM Textbook, Chapter on Corporate Actions: Discusses uncovered dividends and their implications.

Corporate Finance Standards: Defines uncovered dividends and contrasts them with scrip and ex-dividends.

References

What is an Accumulation and Maintenance Trust?

This is a trust designed primarily for minors or young beneficiaries.

Trustees have discretion over income and capital distributionsuntil a specified event or age, after which the discretion typically ceases.

When Does Discretion Cease?

Generally, trustees' discretion ends at theend of a prescribed periodor when the beneficiary reaches a predetermined age, often 18 or 25.

This ensures the trust complies with legal requirements, such as therule against perpetuitiesin some jurisdictions.

ICWIM Study Guide, Chapter on Trusts: Details the rules around accumulation and maintenance trusts.

Trust Law Principles: Highlights limitations of trustee discretion.

References