CISI International Certificate in Wealth & Investment Management

QUESTION NO: 1
When a hedge fund puts together an equity arbitrage position, it will seek to balance respective:

A. Deltas B. Gammas C. Alphas D. Betas

Correct Answer: D

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 2
When analysing rates of return, why is a short-dated government bond considered to be the risk-free rate?

A. Governments are considered unlikely to default B. Investors can buy short-dated government bonds without risk C. Government bonds are free from all types of risk D. There is no tracking error when measuring the performance of government bonds

Correct Answer: A

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 3
A defined benefit DB pension scheme:

A. Can be transferred from employer to employer B. Provides employees with the knowledge of their retirement income C. Provides a fund that employees can use to purchase benefits at retirement D. Is linked to the performance of the assets within the fund

Correct Answer: B

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 4
When investors wish to sell units in mutual funds, there is a risk of the fund being gated. Why might this happen?

A. To allow fund managers to raise enough funds to pay out to those wishing to sell their units B. To ensure any tax deferral benefits are not lost C. To ensure that the commission as a proportion of the fund remains small D. Because the investor has not held the units past the 'lock-in' period

Correct Answer: A

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 5
The demand for a product is said to be highly elastic if:

A. An increase in price leads to a halt in production B. A 1% change in price results in a change in demand of less than 1% C. A slight change in price leads to little change in the quantity supplied D. A slight change in price leads to a sharp change in the quantity demanded

Correct Answer: D

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 6
The return on a whole-of-life unit-linked policy is:

A. Related to the Consumer Price Index (CPI) B. Dependent on prevailing interest rates C. Linked to the rate of inflation D. Directly related to the performance of the insurance company's fund

Correct Answer: D

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 7
How does the inclusion of risk in the Capital Asset Pricing Model formula potentially limit its usefulness?

A. It artificially inflates the required return B. It makes it harder to choose a suitable benchmark C. It relies on the accuracy of the stock's beta D. It distorts the inherent value of the stock

Correct Answer: C

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 8
Which of the following will be a major constraint on a client's ability to invest and protect against all risks?

A. Tax implications B. Age C. Affordability D. Risk aversion

Correct Answer: C

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 9
An investment manager is undertaking some transactions for a client. A fact find for the client has not been undertaken. This is allowed because:

A. It is a discretionary management account B. It is an execution only account C. The client is trading in funds, not equities D. It is an advisory management account

Correct Answer: B

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 10
Which type of individual is most likely to be subject to enhanced due diligence (EDD) checks?

A. A high-net-worth individual B. A corporate client C. A government official D. A company director

Correct Answer: C

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

CISI International Certificate in Wealth & Investment Management - ICWIM Exam Questions