International Certificate in Wealth & Investment Management (ICWIM) Free Practice Test

Question 1

Shareholder value models seek to establish whether a company has the ability to add value for its ordinary shareholders. They do this by:

A. Measuring the change in net asset value NAV

B. Comparing returns on assets to the cost of asset financing

C. Assuming dividends will grow at a constant rate

D. Comparing current dividends to expected future dividends

Correct Answer: B

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

Question 2

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 that the commission as a proportion of the fund remains small

C. Because the investor has not held the units past the 'lock-in' period

D. To ensure any tax deferral benefits are not lost

Correct Answer: A

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

Question 3

An adviser is reviewing a client's portfolio, which has a time horizon of 15 years and is made up primarily of bonds and cash but with some exposure to equities and other higher-risk investments. It is reasonable to believe that the client's risk appetite is:

A. Mid Risk

B. Low-Mid Risk

C. Low Risk

D. Mid-High Risk

Correct Answer: B

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

Question 4

When analysing rates of return, why is a short-dated government bond considered to be the risk-free rate?

A. There is no tracking error when measuring the performance of government bonds

B. Government bonds are free from all types of risk

C. Governments are considered unlikely to default

D. Investors can buy short-dated government bonds without risk

Correct Answer: C

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

Question 5

Which two accounts are used to measure the country's balance of payments?

A. Current, Financial and Capital

B. Investment in and out, Actual

C. Domestic, Non-domestic

D. Services, Physical

Correct Answer: A

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

Question 6

Which index tracking method requires a swap agreement?

A. Stratified Sampling

B. Synthetic Replication

C. Full replication

D. Optimisation

Correct Answer: B

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

Question 7

According to Modern Portfolio Theory (MPT), portfolios below the efficient frontier are not efficient because:

A. They attract additional charges

B. A greater return could be achieved for the same risk

C. The investor assumes proportionately higher risk for lower incremental returns

D. Risk-free assets are not profitable

Correct Answer: B

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

Question 8

What causes the price of a closed-ended investment company to trade at a premium or discount to net asset value (NAV)?

A. The level of charges within the fund

B. Supply and demand

C. The tax status of the fund

D. Current level of interest rates

Correct Answer: B

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

Welcome to TestSimulate

CISI International Certificate in Wealth & Investment Management (ICWIM) Free Practice Test