CISI ICWIM International Certificate in Wealth & Investment Management Online Training

Question #1

The concept of the Sharpe ratio is to measure the:

A . Amount of performance attributable to a benchmark
B . Return above a risk-free rate
C . Effect the annual charge has on fund performance
D . Ability of the fund manager in different scenarios

Question #2

Once a company reaches the point known as the minimum efficient scale, the "theory of the firm" suggests that the company should:

A . Halt its output expansion
B . Accelerate its output expansion
C . Increase its unit price
D . Decrease its unit price

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Question #3

A business may need key person protection because:

A . The business relies on the input of an individual
B . It is a very small business
C . It is to cover a very significant customer
D . Its profits are very seasonal

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Question #4

How would an active fund manager seek to avoid underperforming their peer group when deciding on asset allocation?

A . Through the use of asset allocation by consensus
B . By assessing the prospects for each main asset class
C . By hedging currency and market risk
D . Through the use of quantitative models

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Question #5

A rise in living standards will tend to:

A . Reduce the demand for commodities
B . Have no effect on commodities
C . Increase government participation in the commodities markets
D . Create an increased demand for commodities

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Correct Answer: D
D

Explanation:

Understanding the Question Context: The question examines the relationship between rising living standards and commodity demand. Commodities refer to basic goods used in commerce that are interchangeable with others of the same type, such as agricultural products (wheat, coffee), energy products (oil, gas), and metals (gold, copper).

Impact of Rising Living Standards:

Economic Theory: As living standards improve, disposable incomes generally increase, allowing individuals to purchase more goods and services.

Consumption Patterns: Higher living standards drive demand for:

Energy commodities: Increased vehicle ownership and industrial activity raise the demand for oil, gas, and electricity.

Agricultural commodities: Rising incomes lead to greater consumption of diverse and higher-quality food, including meat and grains (used for feed).

Industrial and precious metals: Construction, technology, and luxury markets grow with increased disposable income, driving demand for metals like steel, copper, and gold.

Explanation of the Correct Option (D):

Increased Demand: A direct relationship exists between rising living standards and commodity demand, as seen in both developed and developing economies.

Historical Context: Economic growth in emerging markets (e.g., China, India) has shown a clear correlation between rising GDP per capita and increased commodity consumption.

Rejection of Incorrect Options:

A (Reduce the demand for commodities): This contradicts economic principles; higher living standards typically boost demand for goods and services, including commodities.

B (Have no effect on commodities): Evidence shows a significant impact on commodities, making this incorrect.

C (Increase government participation in the commodities markets): While governments may engage in commodity markets for regulatory or strategic purposes, this is not a direct consequence of rising living standards.

Reference: from the International Certificate in Wealth & Investment Management:

Module 1: Macroeconomic Environment: Emphasizes the correlation between economic growth and demand for natural resources and commodities.

Module 3: Investment Assets and Markets: Discusses the role of commodities as essential assets whose demand rises with economic development and improved living standards.

Module 6: Trends in Emerging Markets: Demonstrates the increase in commodity demand with economic progression in developing economies.

Question #6

It is a regulatory requirement for financial advisers to explain any potential additional obligations for clients making a transaction in:

A . Bonds
B . Commodities
C . Derivatives
D . Equities

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Question #7

The management of investment portfolios of collective investment schemes, pension funds, insurance funds, hedge funds, and private equity would normally be considered to fall into the scope of:

A . The retail financial sector
B . The wholesale financial sector
C . Family offices
D . Private banking

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Question #8

If two sets of data have a correlation coefficient of 1.0, they possess:

A . No correlation
B . Weak correlation
C . Perfect negative correlation
D . Perfect positive correlation

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Question #9

Which of the following underlies the pillars of risk tolerance?

A . Psychological traits
B . Sociological traits
C . Education
D . Experience

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Question #10

An investor deposits £1,000 into an account that pays interest at the rate of 3% per year.

If the interest is credited to the account at the end of the year and the investor leaves the money in the account for 5 years, how much money will be in the account at the end of the fifth year?

A . £1,150.00
B . £1,157.63
C . £1,159.27
D . £1,276.28

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CISI ICWIM International Certificate in Wealth & Investment Management Online Training

CISI ICWIM International Certificate in Wealth & Investment Management Online Training

CISI ICWIM Online Training

The questions for ICWIM were last updated at Apr 04,2025.

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