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| Section | Objectives |
|---|---|
| Topic 1: Investment and Financial Markets | - Market participants and their roles - Asset classes and investment products - Structure of financial markets |
| Topic 2: Investment Products and Suitability | - Suitability and client profiling - Equities, bonds, and collective investments - Taxation and charges overview |
| Topic 3: Regulation and Ethics | - Ethical standards in investment advice - Conduct of business and compliance principles - Regulatory environment in financial services |
| Topic 4: Wealth Management Principles | - Portfolio construction basics - Risk and return concepts - Client investment needs and objectives |
1. An economy with two consecutive quarters of negative growth is considered to be in what phase of an economic cycle?
A) Recession
B) Depression
C) Slump
D) Inflationary
2. Where the fact find process identifies that a client has three competing financial planning needs, what action should the financial adviser normally take?
A) Help the client to determine their priorities
B) Seek a second opinion from another adviser
C) Recommend the cheapest product
D) Conduct a fresh fact find to narrow down options
3. What is the purpose of measuring a company's dividend yield?
A) It provides an indication of the expected return on a share and then can then be compared to other shares
B) It provides a clear indication of how much profit is being used by the company for expansion and growth
C) It is useful for investors not wanting to exceed the annual dividend tax allowance
D) It provides an indication of future dividend growth for a successful company
4. Which one of the following would cause a shift to the right in aggregate demand?
A) An increase in expected inflation
B) A decrease in consumer confidence
C) A decrease in expected inflation
D) Depreciation of the pound against other currencies
5. Assuming an upward-sloping yield curve that does not change, how can a fund manager profit from buying a longer-dated bond?
A) As time passes, the yield and price of the purchased bond will rise
B) The yield will rise as the bond gets closer to maturity, so the bond can be sold for a profit
C) The gross redemption yield will rise on the purchased bond as maturity nears
D) The yield will fall as the bond gets closer to maturity, so the bond can be sold for a profit
Solutions:
| Question # 1 Answer: A | Question # 2 Answer: A | Question # 3 Answer: A | Question # 4 Answer: D | Question # 5 Answer: D |
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