Gilts - aaaargh!

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi - I'm currently mid Technician studies and have the Cash devolved assessment in three weeks - and...DOES ANYONE UNDERSTAND GILTS!!! I work in the NHS - in fact most of our course are public sector, and all this investment stuff is pretty foreign but Gilts just don't make sense!

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Gilts - aaaargh!

    I know what you mean. I have my devolved next week and we have only studied this subject for 3 weeks!!! We did gilts last week and I have just read up on it, got the basic idea but not the detail.<BR><BR>Sorry havent been that much help but just wanted you to know that I am in the same boat!!!<BR>Annette
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Gilts - aaaargh!

    hiya<BR>i sat this exam at the beginnin of the year<BR>as long as u no the current base rate and that guilts are issued by the gov't and what would happen if the interest rates went up or down ul be fine on guilts.<BR>hope this helps<BR>good luck
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Gilts - aaaargh!

    Just to add to Steph's comment. Gilt edged securities. The interest rate on a stock is usually fixed and as a result the market value of the stock can be affected by changes in base rates which can make the stock either more attactive or less so. Also relevent to public sector because a cash balance should where possible be invested, but public sector is not allowed to buy private stocks, but gilts can be used along with Local authority and other public sector stocks. Local authority stocks might give a better return, but these are not considered quite as safe as government gilts (stocks). Governments issues gilts to cover budget deficits and originally the stock certificates where issued with gold leaf on the edge hence the name. Government Gilts are consider low risk because no government would refuse to pay up on maturity. <BR><BR>Some definitions from a BPP book:<BR>Shorts - lives up to 5 years<BR>Mediums - lives 5 to 15 years<BR>Longs - lives more the 15 years<BR>Undated stocks - Irredeemable or one-way option stocks ig War Loan<BR>Index linked stocks - Interest and redemption value linked to inflation.<BR><BR>From Pear Cyclopaedia:<BR>'Prices of stocks fluctuate so that their yield keeps in line with interest rate generally. This presents the possibility of a capital gain or loss. However, it is generally true that as the stock approaches redemption, the closer the price will be to par, and the smaller the capital gain. The futher way from redemption the greater the capital gain will be if the stock is held to redemption. Government securities are a very marketable investment and can be sold quickly if need be'.<BR><BR>I found on my skills based assessment calculations were not needed which was just as well!, more important was a good understanding of what gilts are.<BR>Clive
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Gilts - aaaargh!

    I did my devolved a week earlier than planned and can confirm that it wasn't as bad as we were dreading!! The gilts question was just a basic understanding, exactly what Clive has said in the first part of his reply.<BR><BR>Good luck LizzieW but I think you will be fine.<BR><BR>Annette

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