CISI Updated ICWIM Exam Questions and Answers by reign

The ongoing charges figure (OCF) of a mutual fund is included in its Key Investor Information Document (KIID). The KIID provides standardized and essential information about a fund’s costs, risks, and performance, ensuring transparency for investors.

In an upward-sloping yield curve, long-term bonds typically have higher yields than short-term bonds. As the bond nears maturity:

Price Appreciation: The bond price rises as the yield declines due to the pull-to-par effect.

Capital Gains Opportunity: A fund manager can sell the bond before maturity for a profit if interest rates remain unchanged.

Yield and Price Relationship: Bond prices move inversely to yields. When yields fall, prices rise, allowing for a profit upon sale.

???? Reference: CISI Wealth & Investment Management (Fixed-Income Securities), CFA Institute (Bond Pricing & Yield Curves).

The supply curve shifts left when production becomes more expensive or difficult.

Why Does a Leftward Shift Occur?

Increased raw material costs make production more expensive, leading to a reduction in supply.

Higher wages, taxes, or stricter regulations can also shift the supply curve left.

What Causes a Rightward Shift?

Technological improvements lower costs and increase supply.

Lower raw material costs reduce production expenses, encouraging more supply.

???? Reference: CISI Wealth & Investment Management (Economic Principles), Microeconomics - Supply & Demand.

A benchmark is a reference point used to compare the performance of an investment portfolio. The chosen index should accurately reflect the investment strategy and asset class.

Why is Option D Correct?

A benchmark must represent a realistic investment alternative to compare against the portfolio.

If a portfolio invests in UK equities, an appropriate benchmark would be the FTSE 100 or FTSE All-Share Index.

If a portfolio invests globally, a relevant benchmark could be the MSCI World Index.

Why Not Other Options?

A (Client familiarity) → While clients may know an index, this does not mean it is the best benchmark.

B (Avoiding difficulty) → Constructing a benchmark must be based on investment strategy, not convenience.

C (Removing tracking error) → No benchmark eliminates tracking error; it only measures it.

???? Reference: CFA Institute (Benchmark Selection), CISI Wealth & Investment Management.