Free CISI International Intro to Securities practice questions

Not quite. The answer is C.

Challenger banks are the smaller newcomers that go after business the big traditional banks underserve, and what marks them out is modern financial technology in place of a branch network. A private bank is the tempting alternative because it is also outside the mass retail model, but it is defined by the wealth of the clients it serves rather than by the technology it uses. A custodian does not take retail deposits at all; it safeguards securities for institutions.

Not quite. The answer is B.

A state-controlled economy is one where the government decides what is produced and how it is distributed, and it is also described as a planned or command economy because allocation is planned in advance. A mixed economy is the tempting alternative because governments there also intervene, but that intervention sits alongside market forces rather than replacing them. The Soviet Union was the best-known example of the planned model.

Not quite. The answer is C.

The Articles of Association govern the relationship between a UK company and its shareholders, and are lodged with the Registrar of Companies. The Memorandum of Association is tempting but it only confirms the intention to form the company rather than setting out that relationship.

Not quite. The answer is C.

The coupon is the annual interest expressed as a percentage of the face value, so the amount paid is found by multiplying the nominal holding by the coupon rate. Market price is the tempting alternative, but the price a holder paid affects the flat yield rather than the interest the issuer pays.

Not quite. The answer is A.

Instant access accounts pay the least of the deposit accounts on offer because the saver keeps the right to withdraw at any moment. A fixed account paying more is the natural comparison, since the extra return is the reward for tying the money up.

Not quite. The answer is B.

A derivative takes its value from a separate reference asset, called the underlying, which may be a share, a bond, a commodity, a currency or an index. Margin is simply a proportion of contract value posted with an exchange as security, so it is a consequence of the trade rather than the source of the derivative's price.

Not quite. The answer is C.

Because dealing costs are spread across the whole pool, each investor bears only a tiny share of them, which is one of the standing benefits of collective investment. A fixed capital base belongs to closed-ended funds and is a feature of one structure rather than a benefit of pooling itself.

Not quite. The answer is B.

An exchange that provides a market and also sets and enforces standards of behaviour for its members is regulating itself, which is what self-regulation describes. Statutory regulation is the tempting alternative, but that term is reserved for rules laid down in law and enforced by an independent body outside the market.

Not quite. The answer is B.

Contributions are generally tax efficient because they cut the amount of income on which tax is charged, which is why governments allow the relief. The pension itself is normally taxable as income when it is received, so the relief defers tax rather than removing it.

Not quite. The answer is A.

Producing a budget across a year comes first, because it shows where the money goes and where costs can be cut. A yearly statement of assets and liabilities gives a useful picture of net worth, but it does not show the flow of income and spending that this first step is meant to capture. Building an emergency reserve, and later paying into a pension, are natural next steps once savings goals have been set, so they follow the budget rather than replacing it.