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CISI ICWIM Exam Syllabus Topics:

SectionWeightObjectives
Risk and Return20%- Portfolio theory
  • 1. Asset allocation principles
  • 2. Modern portfolio theory
  • 3. Risk-return profiling
- Risk concepts
  • 1. Risk measurement
  • 2. Types of investment risk
  • 3. Risk diversification
Client Advisory25%- Client needs analysis
  • 1. Risk profiling and suitability
  • 2. Investment objectives
  • 3. Time horizons
- Portfolio construction
  • 1. Performance measurement
  • 2. Portfolio review and rebalancing
  • 3. Asset allocation strategies
Market Environment20%- 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
Financial Products20%- Bonds and fixed income
  • 1. Credit risk
  • 2. Yield and price relationships
  • 3. Bond types and characteristics
- Collective investments
  • 1. ETFs and index trackers
  • 2. Fund selection criteria
  • 3. Funds and structured products
- Equities and shares
  • 1. Types of equity
  • 2. Dividends and total return
  • 3. Valuation methods
Regulation and Ethics15%- Regulatory framework
  • 1. Financial regulation principles
  • 2. Investor protection
  • 3. Compliance requirements
- Ethical conduct
  • 1. Conflict of interest
  • 2. Professional responsibilities
  • 3. CISI Code of Ethics

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CISI International Certificate in Wealth & Investment Management Sample Questions (Q32-Q37):

NEW QUESTION # 32
If two sets of data have a correlation coefficient of 1.0, they possess:

Answer: C

Explanation:
* Correlation Coefficient of 1.0:
* A correlation coefficient measures the strength and direction of the relationship between two datasets.
* A value of1.0indicates a perfect positive correlation, meaning the two sets of data move in the same direction proportionally.
* Elimination of Other Options:
* A: A value of 0 indicates no correlation.
* B: Weak correlation would be closer to 0.
* C: Perfect negative correlation has a value of -1.
References:
* ICWIM Module 3: Concepts of statistical measures, including correlation.


NEW QUESTION # 33
The use of a central counterparty CCP during settlement helps to lower risk because the CCP:

Answer: B

Explanation:
A central counterparty reduces counterparty credit risk by becoming the buyer to every seller and the seller to every buyer. This process, often described as novation, means each trading participant faces the CCP rather than facing the original counterparty directly. By interposing itself between counterparties, the CCP centralises and manages default risk through mechanisms such as margining, default funds, netting of exposures, and robust risk controls. This structure lowers the risk that the failure of one market participant will cascade through the system, because the CCP's risk management framework is designed to absorb shocks and ensure trades can still be settled. Delivery versus payment is an important settlement risk control, but it is not the defining CCP feature in this question because DvP can exist without a CCP. Electronic book entry and dematerialisation relate to how securities are recorded and transferred, not to the core credit risk reduction mechanism of central clearing. The key risk reduction feature is that the CCP stands in the middle of the trade, replacing bilateral exposures with a centrally managed exposure.


NEW QUESTION # 34
A stockbroking firm receives both buy and sell orders for the same security but from different clients. How can they best avoid a conflict of interest?

Answer: C

Explanation:
* Avoiding Conflicts of Interest:
* By placing orders in the order they are received, the firm ensures fairness and transparency.
* This approach avoids any preferential treatment and complies with regulatory obligations.
* Elimination of Other Options:
* A: Withdrawing services would not address the conflict and is impractical.
* C: Disclosing orders breaches confidentiality agreements.
* D: Prioritizing sell orders introduces bias and conflict.
References:
* ICWIM Module 5: Discussion on ethics and conflict of interest mitigation in trading.


NEW QUESTION # 35
Which type of investment is associated with providing finance to growing companies with the objective of exiting via a profitable stock market listing?

Answer: C

Explanation:
* 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.


NEW QUESTION # 36
In normal market circumstances, the yield curve slopes upward. Why is this?

Answer: A

Explanation:
The yield curve typically slopes upward because long-term bonds have higher yields than short-term bonds.
* Why is Option C Correct?
* Investors require a higher return (yield) for longer-maturity bonds due to:
* Greater risk exposure (inflation, interest rate changes).
* Opportunity cost (capital is locked up for a longer period).
* This creates an upward-sloping yield curve.
* Why Not Other Options?
* A (Interest rate sensitivity) # While true, it does not explain why the curve slopes upwards.
* B (Resale value risk) # Not a key factor in yield curve structure.
* D (Bond-equity risk comparison) # Bonds react to interest rate expectations, but this does not cause the yield curve slope.
# Reference: CFA Institute (Fixed Income Markets), CISI Wealth & Investment Management.


NEW QUESTION # 37
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