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CISI ICWIM Exam Syllabus Topics:

Section	Weight	Objectives
Regulation and Ethics	15%	- Ethical conduct 1. Professional responsibilities 2. Conflict of interest 3. CISI Code of Ethics - Regulatory framework 1. Financial regulation principles 2. Investor protection 3. Compliance requirements
Market Environment	20%	- Economic environment 1. Interest rates and inflation 2. Macroeconomic factors affecting investments 3. Business cycles - Role and function of financial markets 1. Market participants and intermediaries 2. Types of financial markets and their roles 3. Market indices and benchmarks
Risk and Return	20%	- Risk concepts 1. Risk diversification 2. Risk measurement 3. Types of investment risk - Portfolio theory 1. Modern portfolio theory 2. Risk-return profiling 3. Asset allocation principles
Client Advisory	25%	- Portfolio construction 1. Performance measurement 2. Portfolio review and rebalancing 3. Asset allocation strategies - Client needs analysis 1. Risk profiling and suitability 2. Time horizons 3. Investment objectives
Financial Products	20%	- Equities and shares 1. Types of equity 2. Valuation methods 3. Dividends and total return - Collective investments 1. Funds and structured products 2. ETFs and index trackers 3. Fund selection criteria - Bonds and fixed income 1. Bond types and characteristics 2. Yield and price relationships 3. Credit risk

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CISI International Certificate in Wealth & Investment Management Sample Questions (Q27-Q32):

NEW QUESTION # 27
Why do investors demand a risk premium?

A. So that they can outperform the benchmark
B. To cover the expenses of the fund manager
C. To cover the tax payments on profitable trades
D. To compensate them for accepting additional risk

Answer: D

Explanation:
A risk premium is the additional return investors require for taking on higher risk.
* Formula: Risk Premium=Expected Return#Risk-Free Rate\text{Risk Premium} = \text{Expected Return} - \text{Risk-Free Rate}Risk Premium=Expected Return#Risk-Free Rate
* Why It Exists:
* Riskier investments (e.g., stocks, high-yield bonds) must offer higher returns to attract investors.
* Lower-risk assets (e.g., government bonds) have lower expected returns.
* Example:
* If a government bond yields 2%, but an equity portfolio yields 8%, the equity risk premium is
6%.
# Reference: CFA Institute (Risk and Return), CISI Wealth & Investment Management.

NEW QUESTION # 28
Which index tracking method requires a swap agreement?

A. Full replication
B. Synthetic Replication
C. Optimisation
D. Stratified Sampling

Answer: B

Explanation:
Synthetic replication involves tracking an index using derivatives such as swaps. A swap agreement allows the fund to replicate the index performance without holding the actual underlying assets, reducing transaction costs and increasing efficiency.

NEW QUESTION # 29
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 an advisory management account
B. It is a discretionary management account
C. The client is trading in funds, not equities
D. It is an execution only account

Answer: D

Explanation:
A fact find is a key part of giving advice or managing investments on a discretionary basis because the firm must assess suitability. In an advisory relationship, the adviser recommends actions and must understand the client's objectives, financial situation, risk tolerance, and capacity for loss. In discretionary management, the manager makes investment decisions on the client's behalf, so suitability and ongoing alignment to the mandate are central, and a fact find and clear investment objectives are normally essential. By contrast, in an execution only service, the firm is not providing advice or making decisions for the client; it is simply executing the client's instructions. Because there is no personal recommendation, a full fact find for suitability is not required in the same way. The key exam distinction is service type: execution only means responsibility for the investment decision remains with the client, while advisory or discretionary services require client information to support suitability. Trading in funds rather than equities does not remove the suitability requirement if advice is being given, so that option is a trap.

NEW QUESTION # 30
Your client estimates that they will require £50,000 of income annually to live off when they retire. Personal plus state pension will provide £40,000. They wish to retire in 25 years' time. It is estimated that they can earn 5% per annum, and inflation has been forecast at 2%. Interest rates are currently 1.5%. Allowing for inflation, what lump sum would they need to accrue to supplement their pension?

A. £546,869
B. £328,120
C. £468,745
D. £252,401

Answer: B

Explanation:
To calculate the required lump sum, we need to determine the present value (PV) of future withdrawals, adjusted for inflation and investment growth.
A screenshot of a paper AI-generated content may be incorrect.

Reference: CISI Wealth & Investment Management (Retirement Planning), FCA Pensions Guidance.

NEW QUESTION # 31
If a company's Economic Value Added (EVA) is negative, this means that:

A. The rate of growth in the company's value is below that of the sector average
B. The rate of growth in the company's value is slowing down
C. The company's value is nil
D. The company's value is being destroyed

Answer: D

Explanation:
Economic Value Added (EVA) measures a company's true economic profit by assessing whether it generates returns above its cost of capital.
EVA=Net Operating Profit After Tax (NOPAT)#(Capital Employed×Cost of Capital)EVA = \text{Net Operating Profit After Tax (NOPAT)} - (\text{Capital Employed} \times \text{Cost of Capital}) EVA=Net Operating Profit After Tax (NOPAT)#(Capital Employed×Cost of Capital) Why is Option B Correct?
A negative EVA means the firm's returns are lower than its cost of capital, leading to value destruction.
Why Not Other Options?
A (Slowing growth rate) # EVA measures profitability, not growth rate.
C (Below sector average) # EVA is firm-specific, not a comparative measure.
D (Value is nil) # A company may still be profitable, but inefficient.
# Reference: CFA Institute (EVA Analysis), CISI Wealth & Investment Management.

NEW QUESTION # 32
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