ICWIM exam

When creating a portfolio for a risk-averse client, why would you select stocks with a beta of less than one?A . So that the portfolio is easier to understandB . So that the portfolio moves in line with the marketC . In order to produce a low-volatility portfolioD . To...

Once an offshore foundation is established, who will normally be responsible for making ongoing decisions regarding the operational use of the foundation's assets? A. The board of directors B. The trustees C. The council D. The beneficiariesView AnswerAnswer: C Explanation: Offshore Foundations These legal entities are typically used for wealth...

Standard deviation is used when analysing portfolios because it:A . Allows for a comparison of volatilityB . Identifies profitable tradesC . Makes it easier to track the performance against a benchmarkD . Identifies underperforming assetsView AnswerAnswer: A Explanation: Standard deviation measures the volatility of returns, helping investors compare the risk...

A business may need key person protection because:A . The business relies on the input of an individualB . It is a very small businessC . It is to cover a very significant customerD . Its profits are very seasonalView AnswerAnswer: A Explanation: Key Person Protection: This insurance protects a...

What term describes the process that enables savings institutions to transform into banks?A . DemutualisationB . Peer-to-peerC . RefinancingD . SwapView AnswerAnswer: A Explanation: Demutualisation refers to the process by which a mutual savings institution, such as a building society, converts into a publicly traded company or bank. This transformation...

Personal accident policies will pay out:A . Once the insured has been seen by a doctorB . On the day of the accidentC . Following a waiting periodD . Once the insurance company has received the medical documentationView AnswerAnswer: C Explanation: Personal Accident Policies: These policies often include a waiting...

Why would a composite benchmark be needed to measure portfolio performance?A . It makes it easier for the fund managerB . Because the portfolio spans several asset classesC . Because the portfolio forms part of the investment universeD . To lower the tracking errorView AnswerAnswer: B Explanation: Need for a...

A company recently increased its earnings per share figure by 10%. This means that the company’s:A . Share base has widenedB . Ability to pay dividends has improvedC . Market share has risenD . P/E ratio has increasedView AnswerAnswer: B Explanation: An increase in earnings per share (EPS) indicates improved...

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 expansionB . Accelerate its output expansionC . Increase its unit priceD . Decrease its unit priceView AnswerAnswer: D Explanation: Minimum Efficient Scale: This is...

The Arbitrage Pricing Theory (APT) seeks to determine what factors influence security price movements using:A . Mean variance analysisB . Beta testingC . Technical analysisD . Regression analysisView AnswerAnswer: D Explanation: Understanding APT: The Arbitrage Pricing Theory (APT) uses statistical models to identify the factors influencing security prices. Regression analysis...