Free CISI Investment, Risk & Taxation mock exam
Sit the whole Investment, Risk & Taxation paper: 80 questions weighted to the real element split, tax included, under a 120-minute clock. Free, no sign-up, with a weighted score and an explanation for every answer.
What is on the CISI Investment, Risk & Taxation mock exam?
One full Investment, Risk & Taxation practice paper: 80 questions in 120 minutes, weighted across the eight syllabus elements exactly as the real paper is. Score 56 out of 80 to meet the 70% practice threshold, then review every answer one at a time.
- Questions
- 80 original practice questions
- Time
- 120 minutes
- Practice threshold
- 70%, which is 56 of 80
- Access
- Free, with no account or card
How the paper is weighted
Investment, Risk & Taxation is a compulsory core unit of the Level 4 Investment Advice Diploma, sat alongside UK Regulation & Professional Integrity plus one technical unit. Its weighting rewards the candidates who take tax seriously.
| Element | Questions |
|---|---|
| 1. Asset Classes | 13 |
| 2. Fundamental Analysis | 6 |
| 3. Principles of Investment Risk & Return | 9 |
| 4. Taxation of Investors & Investments | 16 |
| 5. Investment Products | 13 |
| 6. Portfolio Construction & Planning | 5 |
| 7. The Process of Giving Investment Advice | 13 |
| 8. Portfolio Performance & Review | 5 |
| Total | 80 |
Taxation of Investors & Investments is the heaviest element at sixteen of the 80 marks, and Asset Classes, Investment Products and The Process of Giving Investment Advice are thirteen each. Those four elements are 55 of the 80 marks. Portfolio Construction & Planning and Portfolio Performance & Review are five apiece.
For the cleanest rehearsal, set aside the full 120 minutes, avoid notes and answer every question. There is no negative marking on the real paper, so a guess is always better than a blank. The mock hides feedback until submission and warns you before handing in a paper with blanks.
Full practice paper
80 questions. 120 minutes. No sign-up.
Sit the paper in one go if you can. Answers and explanations stay hidden until you submit, so the score is a more useful rehearsal than an instant-feedback quiz.
The timer starts when you press the button. Reloading or leaving the page ends this sitting.
Sample Investment, Risk & Taxation questions, with answers
8 questions at the standard of the paper above, weighted towards the elements that carry the most marks. Pick an answer to see whether you were right and why. None of these appear in the timed mock, so working through them first costs you nothing when you sit it.
A company brings two bond issues to the market in the same year. Tranche A is bought as a block by a syndicate of banks, led by one bank, which then resells the bonds on to investors. Tranche B is sold by the company itself to a small number of professional investors. Which of the following correctly identifies the tranche that leaves the banks holding the bonds if investors do NOT buy?
Not quite. The answer is A.
Tranche A was brought to market by an offer for sale, in which a syndicate led by one bank buys the whole issue from the borrower and resells it. The banks are effectively underwriting the issue, and any bonds investors decline are left on their books, which is what they charge fees for. Tranche B went directly from the company to a handful of professional investors, which makes it a private placing, so no syndicate stands behind it and the description of Tranche A as a private placing is misplaced. Tranche B was not sold by competitive auction, under which investors apply at the prices they are willing to pay, nor at a fixed price re-offering, where the lead manager and syndicate agree to sell the bonds at a common price for a period.
Which international body is responsible for enforcing the General Agreement on Tariffs and Trade (GATT) to promote freer trade between countries?
Not quite. The answer is B.
The World Trade Organization is recognised as the body that enforces the GATT and promotes freer international trade, alongside the OECD. The answer naming the Organisation for Economic Co-operation and Development is wrong because the OECD is a separate body that promotes trade and economic co-operation more broadly, not the enforcer of GATT specifically. The answer naming the International Monetary Fund is wrong because the IMF's core role is lending to countries with balance of payments problems, not enforcing trade rules. The answer naming the Bank for International Settlements is wrong because the BIS serves central banks and plays no role in enforcing GATT.
Which of the following separates a cognitive bias from an emotional bias in behavioural finance?
Not quite. The answer is C.
Cognitive biases are the product of mental short-cuts, or heuristics (confirmation, hindsight, anchoring, availability and herding all sit here), whereas loss aversion, regret aversion, overconfidence and status quo bias are classed as emotional. Splitting prospect theory from regret theory between the two groups is the neatest-looking trap, but both theories are used to describe this behaviour generally rather than being assigned one category each.
For 2025-26, the Class 4 National Insurance charged on a self-employed person's profits above the upper profits limit of £50,270 is:
Not quite. The answer is D.
Class 4 National Insurance is charged at the main rate on profits between the lower and upper profits limits and falls to 2% on the profits above the £50,270 upper profits limit. The 2% rate applies only to the excess, so the option charging 2% on the whole of the profits is wrong. 6% is the main Class 4 rate charged between the two limits and is not the rate above the upper limit, and it likewise applies to a band of profits rather than to the whole of them.
A client with £75,000 wants a single structured product that pays a regular income during its term and also gives full participation in growth of the linked index. What is the most appropriate explanation for the adviser to give about that combination?
Not quite. The answer is C.
A structured product offers income or growth (not both), alongside defined returns, defined risks and a defined term, so the combination sought is not typically achievable in a single product. The distribution channel - buying direct from the bank rather than through an intermediary - makes no difference to this basic design feature. Nor does the choice between a buffer-zone and a principal-protected structure, since both are risk categories within the retail range, not methods of combining income with growth. A defined term fixes the product's length, not whether it can pay both elements together.
Rosalind's adviser projects her fund forward to retirement using a single fixed growth rate. Nathaniel's adviser, working with a client who intends to take regular withdrawals, runs several thousand simulations using random variables drawn from historical fluctuations. The two projections have in common that:
Not quite. The answer is C.
Stochastic modelling runs many simulations from randomly varying inputs, while deterministic modelling applies one fixed rate and contains no randomness, but neither is a substitute for ongoing planning and advice, so that need survives in both cases. The claim that both projections rely on randomly generated variables ignores the single fixed growth assumption applied to Rosalind's fund. The statement that both reflect the timing of market falls as well as their size fails for the same reason, since a constant growth rate contains no falls at all, and path dependence is precisely what the simulated approach is used to examine for Nathaniel. Saying that neither projection can produce a range of outcomes overlooks the purpose of running thousands of trials, which is to chart the frequency of outcomes and the likely range of returns.
Amara expects to need her capital in three years, Bethan in eight years and Callum in fifteen years. On the conventional minimum period for holding equities, which of the investors could be advised to invest in them?
Not quite. The answer is C.
Equities are generally regarded as suitable only where the money can be left invested for a minimum of five years, so that the investor can ride out periods of market volatility. Bethan's eight-year horizon and Callum's fifteen-year horizon both clear that minimum, which is why they are the two who could be advised to hold equities. Amara needs her capital in three years, a short-term horizon for which cash and short-dated bonds are the conventional answer, so any pairing that includes her is wrong, whether she is put beside Bethan or beside Callum. Listing all three investors makes the same mistake of treating a three-year horizon as long enough to bear equity risk.
Which pair of indices are both constructed on a price-weighted basis?
Not quite. The answer is A.
The Dow Jones Industrial Average and the Nikkei 225 are both price-weighted, with the Nikkei using a DJIA-style method. The FTSE 100, FTSE All-Share, S&P 500 and MSCI World are all market-capitalisation-weighted.
Where the marks go on this paper
Taxation is the element that separates results, and it is the one that goes stale fastest. Income tax bands, dividend and savings allowances, capital gains, inheritance tax and the treatment of ISAs and pensions all carry current figures, and a candidate revising from an out-of-date workbook will confidently pick a number that was right two tax years ago.
Principles of Investment Risk & Return is nine marks of genuine quantitative work: standard deviation, correlation, beta, the efficient frontier and risk-adjusted return measures. It is the part of the paper least like the day job of most advisers, and the part where a formula you have practised twenty times is worth more than one you have read about.
The Process of Giving Investment Advice is thirteen marks and looks like common sense until the questions arrive. Know your customer, attitude to risk against capacity for loss, suitability and the shape of a compliant recommendation are tested precisely, and the everyday answer is often the wrong one.
The two five-mark elements at the end, portfolio construction and performance review, are where tired candidates stop revising. Ten marks is an eighth of the paper.
How to use your result
Treat 70% as a practice threshold, not a readiness promise. A stronger signal is a run of timed scores above the threshold with no element repeatedly falling behind. Read the Taxation line first. If it is below half, that alone is 20% of the paper in trouble, and it is also the element that responds fastest to drilling because the material is finite and mostly numeric.
Use the answer review to understand each miss, then revisit the relevant part of the Investment, Risk & Taxation exam guide. To drill a single topic rather than sit a whole paper, start with the free Investment, Risk & Taxation practice questions.
Looking for official material? Investment, Risk & Taxation past papers: what actually exists explains what CISI actually publishes and how to combine it with question practice. For more full papers, see the paid plans, from £59.
Independent practice material: PasskeyPrep is not affiliated with, endorsed by or accredited by the Chartered Institute for Securities & Investment. These questions were written independently against the syllabus. They are not copied from a live CISI exam or official past paper.
Frequently asked questions
Is this Investment, Risk & Taxation mock exam really free?
Yes. All 80 questions are free to sit, with no account, email address or card. Submit and you get a weighted score, an eight-element breakdown and an explanation for every answer.
Does this mock match the real IRT exam format?
It uses 80 questions, a 120-minute timer, a 70% practice threshold and the published weightings across the eight syllabus elements. The questions are original PasskeyPrep practice material, not the CISI examination platform or official exam questions.
Which units make up the Investment Advice Diploma?
Two compulsory core units, UK Regulation & Professional Integrity and Investment, Risk & Taxation, plus one Level 4 technical unit such as Financial Planning & Advice.
How current are the tax figures?
Tax questions are written against current UK rates and allowances rather than an older workbook edition. Always check the tax year your own study material is written for before you rely on a figure.