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| Section | Weight | Objectives |
|---|---|---|
| The Financial Services Sector | 16% | - Regulatory objectives and frameworks - Ethical standards and professional conduct - Market functions and products - Structure and participants |
| Economics and Investment Analysis | 10% | - Economic indicators and cycles - Macroeconomics and markets - Investment mathematics and statistics - Valuation methods |
| Asset Classes | 10% | - Equities - Derivatives - Fixed income securities - Real estate and alternative assets - Cash and money market instruments |
| Investment Management | 15% | - Risk and return concepts - Portfolio construction theories - Investment strategies - Performance measurement and evaluation |
| Investment Advice | 21% | - Advisory process - Taxation principles - Portfolio recommendations and review - Communication and documentation |
| Lifetime Financial Provision | 18% | - Trusts and foundations - Protection and insurance planning - Estate and succession planning - Retirement planning |
| Fiduciary Relationships | 16% | - Risk profiling and suitability - Conflicts of interest - Client needs assessment - Duties and responsibilities |
| Industry Regulation | 10% | - Regulatory authorities and rules - Financial crime prevention - Client categorization and protection - Compliance and governance |
1. The return on a whole-of-life unit-linked policy is:
A) Dependent on prevailing interest rates
B) Directly related to the performance of the insurance company's fund
C) Linked to the rate of inflation
D) Related to the Consumer Price Index (CPI)
2. Which index could be used to measure inflation from the perspective of the seller?
A) Retail Price Index (RPI)
B) Inflation Price Index
C) Consumer Price Index (CPI)
D) Producer Price Index (PPI)
3. What is the role of a central counterparty (CCP)?
A) To act as a market maker between counterparties
B) To provide funding to counterparties as and when required
C) The CCP guarantees that the counterparties will not default
D) It interposes itself between the counterparties to a trade, becoming the buyer to every seller and the seller to every buyer
4. Which type of investment is associated with providing finance to growing companies with the objective of exiting via a profitable stock market listing?
A) Preference shares
B) Private equity
C) Structured products
D) Convertible bonds
5. Your client estimates that they will require £40,000 of income annually to live off when they retire. Personal plus state pension will provide £35,000. They wish to retire in 20 years' time. It is estimated that they can earn
3% per annum and inflation has been forecast at 2% over the next 20 years. Interest rates are currently 1.5%.
Allowing for inflation, what lump sum would they need to accrue to supplement their pension?
A) £165,105
B) £247,658
C) £495,316
D) £331,631
Solutions:
| Question # 1 Answer: B | Question # 2 Answer: D | Question # 3 Answer: D | Question # 4 Answer: B | Question # 5 Answer: D |
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