Free CISI practice questions

Not quite. The answer is A.

Asset servicing is the income collection, corporate action processing and tax reclaim work performed on assets already held in custody. Fund accounting is the closest runner-up, but it is the valuation and unit pricing of a fund and is an administrator's job rather than a custodian's. Trade execution is the broker's role of buying and selling in the market, and prime brokerage bundles financing, stock lending and clearing for hedge funds.

Not quite. The answer is C.

Section 19 is the general prohibition and bites on a person who is neither authorised nor exempt; section 26 then makes the resulting agreements unenforceable against the client, who may recover money paid. Section 20 applies where an authorised firm steps outside its own permission, and it expressly does not make the transaction void or unenforceable. Saying the agreements bind the client as normal ignores that statutory remedy.

Not quite. The answer is D.

Gilts are auctioned by the Debt Management Office, an executive agency of HM Treasury, so primary issuance sits outside the central bank. Issuing banknotes for England and Wales is a Bank responsibility, and Bank Rate is decided by the Monetary Policy Committee, which sits inside the Bank. Acting as lender of last resort to solvent but illiquid banks is also its own function.

Not quite. The answer is B.

Geographic arbitrage exploits a price difference for the same asset in two locations, so it is only worth doing while the gap is wider than the freight, insurance and handling cost of shipping between them, and that transport cost is what closes the opportunity. The closest alternative is cash and carry, which is also bounded by a cost, but the cost there is funding and storage over time in a single market rather than movement between two. Intertemporal arbitrage trades two dates and value chain arbitrage trades an input against its outputs.

Not quite. The answer is B.

Self-certification is open to someone who has been a director of a company with an annual turnover of at least £1 million in the past two years. Simply holding shares in such a company is the closest miss, because the route turns on having held the office of director rather than on owning a stake. Net assets of £250,000 and income of £100,000 belong to the certified high net worth tests instead, and there the main home is left out of the net assets figure and the income counted is the individual's own rather than a partner's.

Not quite. The answer is A.

When money may be called on at short notice, access governs the choice: a fixed-rate or term account commits the deposit for an agreed period, with interest usually credited at the end and a penalty charged for withdrawing early, while a notice account requires a set period of notice before funds are released. The answer pointing to the headline interest rate is wrong because the best-paying accounts are normally the ones that lock the money up, which is precisely what Rachel cannot accept. The answer about monthly crediting confuses compounding, which is what the annual equivalent rate exists to express, with the terms on which capital can be withdrawn. The answer pointing to the type of provider is wrong because banks, building societies and credit unions are all principal deposit takers, and all of them offer instant-access accounts.

Not quite. The answer is D.

The planner owns the client relationship and the recommendation, so responsibility cannot be passed down with the drafting work. The paraplanner carries out research and analysis but does not face the client or sign off the advice. The compliance officer monitors and oversees the firm's systems rather than approving individual recommendations, and the provider is responsible only for its own product.

Not quite. The answer is D.

Credit, market and liquidity risks sit at the heart of the sector because they underpin core transactions such as mortgage lending and corporate bond issuance. Strategic and reputational risk arise as internal and external drivers rather than from the transactions themselves. Enterprise risk is a reporting overlay that brings the other risk types together, and fintech and cyber risk are emerging considerations rather than the core transactional group.

Not quite. The answer is B.

A principles-based approach acts as guidance on how firms and individuals are expected to act, with compliance judged on outcomes rather than a precise rulebook. A rules-based approach requires strict adherence to detailed rules, while thematic and relationship-based are supervisory techniques rather than drafting approaches.

Not quite. The answer is D.

Government sets the tone and the high-level direction; HM Treasury implements it and holds oversight of the regulatory framework. The FCA is the strongest runner-up, since it writes and enforces the conduct rules candidates meet most often, but it operates inside the framework rather than owning it. The Bank's role here runs to monetary policy and financial stability.

Not quite. The answer is A.

FSMA's third limb is handling the proceeds of crime, and it bites whenever a firm deals with property representing the benefit of someone else's criminal conduct. Fraud or dishonesty is the near neighbour, but that limb looks at the offence by which value was obtained in the first place, not at what is subsequently done with the proceeds. Dealing with a designated person's funds is a sanctions breach, which sits outside the FSMA definition altogether, and misuse of market information is the market abuse limb.

Not quite. The answer is D.

The real rate of return is the nominal rate adjusted for inflation, so once inflation climbs above the rate paid the real return turns negative and the balance buys less than it did before. The tempting answer is that the return merely falls while staying positive because the capital comes back in full, but repayment of capital says nothing about what that money will then purchase. Deposit rates are set by the institution and do not track the price level automatically.

Not quite. The answer is C.

A forward is a legally binding agreement to make or take delivery of a specified quantity of a specific asset at a certain future time, for a price that is agreed today. The spot price on the delivery day is the very uncertainty the forward removes, so it has no bearing on what the buyer actually pays.

Not quite. The answer is A.

The Bank for International Settlements defines a financial conglomerate as a group of companies under common control whose predominant activities involve significant services in at least two different financial sectors. A challenger bank is the opposite case, a smaller institution specialising in a narrow area underserved by the large banks. Larger retail banks commonly become conglomerates by adding investments, pensions and insurance.