CISI test questions with correct answers
What is the minimum age that the benefits may be taken from a pension scheme? -
Answer -55
What are the key feature of unit trusts and OEICs? - Answer -Their valuation is directly
linked to the value of the assets
What two documents are needed to form a company? - Answer -Articles of Association,
Memorandum of Association
How is the share price of an investment trust determined? - Answer -A combination of
the value of the underlying assets and supply and demand
How do you calculate flat yield? - Answer -Annual coupon/bond price X 100
A bonus issue made to shareholders is an example of which type of corporate action? -
Answer -Mandatory
How does a private investor purchase investment trust shares in the secondary market?
- Answer -Through a stockbroker or financial intermediary
Private equity firms are usually set up as what type of company? - Answer -Limited
partnerships
What are short-term securities issued by commercial banks in exchange or fixed-term
deposits called? - Answer -Certificates of deposit
What is the principal role of a unit trust manager? - Answer -Deciding where the money
is to be invested
When can a claim be made from the Financial Services Compensation Scheme (FSCS)
- Answer -Once the firm is in default
What is effective annual rate o interest? - Answer -The rate of interest you actually pay
on the loan, regardless of its duration
If Company A pays Company B to recompense it if one of its investments falls in value,
what is this known as? - Answer -Credit default swap
, What is the advantage of with-profits whole-of-life policy over a unit-linked whole-of-life
policy - Answer -Profits are locked in each year
If a company makes a bonus issue on a 4:5 basis, what will existing shareholders
receive? - Answer -4 shares for every 5 that they own
What are the two documents required to form a company? - Answer -Articles of
Association and Memorandum of Association
Give three groups which custodian banks look after securities on behalf of - Answer -1.
Fund managers
2. Pension funds
3. Insurance companies
How are unit trust purchased? - Answer -Directly from the manager
What type of corporate action is a bonus issue? - Answer -Mandatory
Which type of whole-of-life insurance policy pays only the insured sum on death? -
Answer -Non-profit (fixed sum chosen at outset)
What type of trust gives the beneficiary/ies a right to income of a trust during their lives
and capital possess on to others in their deaths - Answer -Interests in possession trusts
What is the main advantage of a repayment mortgage over other types of mortgages for
the borrower? - Answer -The mortgage is guaranteed to be paid off at the end of the
term (providing they meet all the payments)
What is the role of market makers? - Answer -Quoting firm two-way prices
How do you calculate the effective annual interest rate? - Answer -Divide the annual
rate by the frequency within a year it is charged. Then multiply it by its self the number
of times interest is charged in a year. e.g. 16%/2 = 0.08. 1.08x1.08 = 1.1664 = 16.64%.
or
50%/12 = 4.167% a month. 1.0467 x1.0467 (12 times) = 63.2%
What is PSNCR? - Answer -Public Sector Net Cash Requirement - the shortfall when
the government spends more than it receives from tax and other revenue
At what age can young people access the proceeds of their Junior ISA - Answer -18
How do portfolio managers use futures contracts and put options to hedge against the
value of their portfolios falling? - Answer -Selling a sufficient number of futures contracts
or buying put options
What is the minimum age that the benefits may be taken from a pension scheme? -
Answer -55
What are the key feature of unit trusts and OEICs? - Answer -Their valuation is directly
linked to the value of the assets
What two documents are needed to form a company? - Answer -Articles of Association,
Memorandum of Association
How is the share price of an investment trust determined? - Answer -A combination of
the value of the underlying assets and supply and demand
How do you calculate flat yield? - Answer -Annual coupon/bond price X 100
A bonus issue made to shareholders is an example of which type of corporate action? -
Answer -Mandatory
How does a private investor purchase investment trust shares in the secondary market?
- Answer -Through a stockbroker or financial intermediary
Private equity firms are usually set up as what type of company? - Answer -Limited
partnerships
What are short-term securities issued by commercial banks in exchange or fixed-term
deposits called? - Answer -Certificates of deposit
What is the principal role of a unit trust manager? - Answer -Deciding where the money
is to be invested
When can a claim be made from the Financial Services Compensation Scheme (FSCS)
- Answer -Once the firm is in default
What is effective annual rate o interest? - Answer -The rate of interest you actually pay
on the loan, regardless of its duration
If Company A pays Company B to recompense it if one of its investments falls in value,
what is this known as? - Answer -Credit default swap
, What is the advantage of with-profits whole-of-life policy over a unit-linked whole-of-life
policy - Answer -Profits are locked in each year
If a company makes a bonus issue on a 4:5 basis, what will existing shareholders
receive? - Answer -4 shares for every 5 that they own
What are the two documents required to form a company? - Answer -Articles of
Association and Memorandum of Association
Give three groups which custodian banks look after securities on behalf of - Answer -1.
Fund managers
2. Pension funds
3. Insurance companies
How are unit trust purchased? - Answer -Directly from the manager
What type of corporate action is a bonus issue? - Answer -Mandatory
Which type of whole-of-life insurance policy pays only the insured sum on death? -
Answer -Non-profit (fixed sum chosen at outset)
What type of trust gives the beneficiary/ies a right to income of a trust during their lives
and capital possess on to others in their deaths - Answer -Interests in possession trusts
What is the main advantage of a repayment mortgage over other types of mortgages for
the borrower? - Answer -The mortgage is guaranteed to be paid off at the end of the
term (providing they meet all the payments)
What is the role of market makers? - Answer -Quoting firm two-way prices
How do you calculate the effective annual interest rate? - Answer -Divide the annual
rate by the frequency within a year it is charged. Then multiply it by its self the number
of times interest is charged in a year. e.g. 16%/2 = 0.08. 1.08x1.08 = 1.1664 = 16.64%.
or
50%/12 = 4.167% a month. 1.0467 x1.0467 (12 times) = 63.2%
What is PSNCR? - Answer -Public Sector Net Cash Requirement - the shortfall when
the government spends more than it receives from tax and other revenue
At what age can young people access the proceeds of their Junior ISA - Answer -18
How do portfolio managers use futures contracts and put options to hedge against the
value of their portfolios falling? - Answer -Selling a sufficient number of futures contracts
or buying put options
