ICWIM exam

Which type of investment is associated with providing finance to growing companies with the objective of exiting via a profitable stock market listing?A . Convertible bondsB . Preference sharesC . Private equityD . Structured productsView AnswerAnswer: C Explanation: Private Equity and Growing Companies: Private equity involves investing in privately-held companies...

If someone in a fiduciary position has personal or professional interests that compete with their duty to act in the client’s best interest, this is called:A . Discretionary managementB . A regulatory breachC . Full disclosureD . A conflict of interestView AnswerAnswer: D Explanation: Conflict of Interest Definition: A fiduciary...

How does standard deviation provide investors with a measure of historical volatility?A . By the analysis of historical share price movementsB . Through the measurement of the highs and lows of each assetC . By measuring the degree of fluctuation around the meanD . Through the measurement of share price...

Which of the following elements would be included in a recommendation report to a client?A . Previous arrangementsB . RestrictionsC . Cost of livingD . Rate of inflationView AnswerAnswer: A Explanation: A recommendation report for a client should contain comprehensive details of their existing financial arrangements. This ensures that advice...

An execution-only sale usually means a sale where there is an absence of:A . ChargesB . AdviceC . ProductD . GuaranteeView AnswerAnswer: B Explanation: Understanding Execution-Only Sales: Execution-only sales occur when the client makes a financial transaction without receiving any advice or recommendations from the intermediary. The client assumes full...

Why is the process of prioritising the protection needs of your client important?A . To establish the net worth of your clientB . It provides an opportunity to establish a benchmarkC . To protect your firm from riskD . It allows you and the client to agree on an affordable...

"An approach which applies a theoretical price to a company’s shares by discounting the company’s expected future cash flow into infinity." This statement is describing the: A. Net asset value B. Market value added C. Dividend valuation model D. Economic value addedView AnswerAnswer: C Explanation: Dividend Valuation Model (DVM) The...

It is a regulatory requirement for financial advisers to explain any potential additional obligations for clients making a transaction in:A . BondsB . CommoditiesC . DerivativesD . EquitiesView AnswerAnswer: C Explanation: Financial advisers are required to explain the additional obligations associated with derivatives, such as margin requirements, leverage risks, and...

Stablecoins are less prone to price fluctuations because:A . They do not use blockchain technologyB . Their price is in US DollarsC . Their value is pegged to underlying assetsD . They are highly illiquidView AnswerAnswer: C Explanation: Stablecoin Characteristics: Stablecoins reduce price volatility by pegging their value to stable...

Which index tracking method requires a swap agreement?A . Full replicationB . Stratified SamplingC . Synthetic ReplicationD . OptimisationView AnswerAnswer: C Explanation: Synthetic replication involves tracking an index using derivatives such as swaps. A swap agreement allows the fund to replicate the index performance without holding the actual underlying assets,...