CISI-Examination Final Mocks

Which of the following best describes the primary function of a platform in investment management?

• A) To provide advisory services exclusively to high-net-worth individuals.

• B) To act as a fund supermarket allowing intermediaries to administer clients’ portfolios.

• C) To exclusively sell proprietary investment products.

• D) To conduct market research for financial institutions.

Answer explanation

Platforms facilitate the management of investment portfolios for intermediaries, providing access to a wide range of products and services.

What is a key characteristic of private banks compared to retail banks?

• A) Private banks primarily serve mass-market customers.

• B) Private banks offer services only for tax avoidance.

• C) Private banks provide personalized wealth management services for high-net-worth individuals.

• D) Private banks do not engage in lending activities.

Answer explanation

Private banks specialize in wealth management and related services for clients with significant assets, distinguishing them from retail banks.

Sovereign Wealth Funds (SWFs) are established primarily from which of the following sources?

• A) Local tax revenues from citizens.

• B) Trade deficits and borrowing.

• C) Balance of payments surpluses and fiscal surpluses.

• D) Donations from international organizations.

Answer explanation

SWFs are funded by surpluses accumulated from various sources, including trade surpluses and other government revenues.

What is the primary role of industry trade and professional bodies in the financial services sector?

• A) To regulate the financial markets directly.

• B) To provide consumer education on financial products.

• C) To represent the interests of firms and ensure cooperation across the industry.

• D) To offer direct financial services to clients.

Answer explanation

Trade bodies advocate for their members' interests and facilitate collaboration to improve market efficiency.

Third-party administrators (TPAs) primarily help firms by:

• A) Providing exclusive financial advice to clients.

• B) Undertaking investment administration on behalf of other firms.

• C) Offering financial products directly to consumers.

• D) Managing investment portfolios independently.

Answer explanation

TPAs focus on administrative functions, allowing firms to concentrate on their core competencies like investment management.

Financial planning is fundamentally about:

• A) Maximizing returns on investments only.

• B) Organizing financial affairs to achieve specific goals and objectives.

• C) Providing tax evasion strategies.

• D) Focusing solely on retirement planning.

Answer explanation

Financial planning aims to help individuals and businesses meet their financial and lifestyle objectives through careful organization and analysis.

Which of the following statements accurately describes independent advice in investment services?

• A) It is biased towards the firm's own products.

• B) It is based on a limited analysis of available products.

• C) It involves comprehensive analysis of all products in the market.

• D) It is only available to high-net-worth clients.

Answer explanation

Independent advice must be unbiased and based on thorough analysis, ensuring that clients receive comprehensive recommendations.

In execution-only transactions, which party bears the responsibility for assessing the suitability of an investment product?

• A) The financial firm providing the service.

• B) The regulatory body overseeing the transaction.

• C) The client making the investment decision.

• D) The third-party administrator involved.

Answer explanation

In execution-only transactions, the client is responsible for determining whether the investment is suitable for their needs.

Robo-advice is characterized by which of the following features?

• A) It requires a personal financial advisor to implement.

• B) It relies on algorithms to provide investment strategies without human intervention.

• C) It only offers high-risk investment options.

• D) It is exclusively available to institutional investors.

Answer explanation

Robo-advisors utilize technology to automate investment advice and strategy formulation based on user data.

Which of the following describes the significance of ESG investing?

• A) It focuses solely on financial returns without considering ethical implications.

• B) It prioritizes long-term sustainability and ethical considerations in investment choices.

• C) It is a new concept with no historical significance.

• D) It restricts investment opportunities to domestic markets only.

Answer explanation

ESG investing incorporates environmental, social, and governance factors to align investments with broader ethical values and sustainability goals.