New ICWIM Learning Materials | ICWIM New Question
New ICWIM Learning Materials | ICWIM New Question
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CISI International Certificate in Wealth & Investment Management Sample Questions (Q107-Q112):
NEW QUESTION # 107
Standard deviation is used when analysing portfolios because it:
- A. Allows for a comparison of volatility
- B. Identifies underperforming assets
- C. Identifies profitable trades
- D. Makes it easier to track the performance against a benchmark
Answer: A
Explanation:
Standard deviation measures the volatility of returns, helping investors compare the risk levels of different portfolios or assets. A higher standard deviation indicates greater uncertainty in returns, which can signify higher risk.
NEW QUESTION # 108
An investor with $900,000 of investable assets would normally be categorised as:
- A. Mass affluent
- B. Ultra-high-net-worth
- C. Very-high-net-worth
- D. High-net-worth
Answer: D
Explanation:
* Investor Categories Based on Investable Assets
* Mass Affluent: $100,000-$1,000,000
* High-Net-Worth Individuals (HNWI): $1,000,000-$5,000,000
* Very-High-Net-Worth Individuals (VHNWI): $5,000,000-$30,000,000
* Ultra-High-Net-Worth Individuals (UHNWI): Over $30,000,000
* Why $900,000 Falls into HNWI?
* Although $900,000 is close to the HNWI threshold, the term is often used flexibly for individuals who are near the $1M mark.
* Banks and wealth managers generally consider $900,000 within this category because they have similar service needs.
* ICWIM Textbook, Chapter on Investor Profiling: Defines HNWI thresholds and explains their investment behavior.
* Wealth Management Industry Standards: High-net-worth classification begins near $1M.
ReferencesThus, the investor would normally be categorized asB. High-net-worth.
NEW QUESTION # 109
Setting standards for national anti-money laundering (AML) and counter-terrorist financing (CTF) programs and evaluating how effectively member countries have implemented the standards is the role of which of the following?
- A. National Crime Agency
- B. Interpol
- C. Financial Action Task Force (FATF)
- D. International Monetary Fund (IMF)
Answer: C
Explanation:
The Financial Action Task Force (FATF) is an intergovernmental organization that sets global AML
/CTF standards and assesses compliance.
* Why is Option C Correct?
* FATF develops recommendations that countries must implement to combat money laundering and terrorist financing.
* It conducts peer reviews and blacklists non-compliant nations.
* Why Not Other Options?
* A (IMF) # The IMF monitors economic stability, not AML enforcement.
* B (Interpol) # Handles criminal investigations, not financial regulations.
* D (National Crime Agency) # The NCA is UK-specific, while FATF is global.
# Reference: FATF Guidelines, CISI Wealth & Investment Management.
NEW QUESTION # 110
What term describes the process that enables savings institutions to transform into banks?
- A. Swap
- B. Demutualisation
- C. Refinancing
- D. Peer-to-peer
Answer: B
Explanation:
Demutualisation refers to the process by which a mutual savings institution, such as a building society, converts into a publicly traded company or bank. This transformation allows the institution to raise capital through equity issuance and expand its services beyond mutual members.
Example:
* The Abbey National Building Society in the UK demutualised in the 1980s to become a bank.
NEW QUESTION # 111
Having prepared recommendations via a report, why would an adviser suggest a face-to-face meeting with their client?
- A. To afford the opportunity to clear up any misunderstandings
- B. In order to collect fees prior to implementation of the recommendations
- C. So that the client can review the adviser's qualifications
- D. To establish the client's tax position
Answer: A
Explanation:
A face-to-face meeting ensures that clients fully understand recommendations and can ask questions to clarify any doubts.
* Why is Option D Correct?
* Complex financial products require explanations in simple terms.
* Clients may have concerns about risk, fees, or investment strategy.
* Regulatory bodies (e.g., FCA) emphasize client understanding in financial advice.
* Why Not Other Options?
* A (Collect fees) # Fees must be disclosed before services are provided.
* B (Establish tax position) # This should be determined before making recommendations.
* C (Review adviser qualifications) # While qualifications matter, the main purpose is clarity.
# Reference: FCA Handbook (Suitability & Client Communications), CISI Wealth & Investment Management.
NEW QUESTION # 112
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