Chartered Investment Manager (CIM) designation Practice Questions And Answers

This is a limited environment for financial contract trades and one where accurate unbiased statistics on the fair value of the standardized commodity can be challenging to access.

The factors for general credit uncertainty are as follows: the economic climate varies from gloomy to brilliant, and vice versa, and business productivity has a cyclical impact that increases and decreases depending on demand.

Private banking and retail customers need to be well informed of the uncertainties associated when purchasing any new goods. The highly discussed security of capital provided by organized goods basically consists of two components An alternative and An expenditure in profits.

There is also the fact that reports are dispersed in the annual reporting statements of many countries and therefore only known by a fairly limited number of experienced citizens.

Relevant trusts that can only be formed by living persons are: investment trusts, rendered to construct an estate during an individual’s prosperous years, thus offering relief from land maintenance issues during diminishing years, life insurance trusts, which comprise of the profits of the creator’s life policies. These plans are rendered payable to the trustee with which they were invested, and invests in Pension, in which trust funds are formed by companies for the paying of retirement and other benefits to workers.

The safest approach for legal risk reduction is to regularly include board leaders and senior managers, create a well-documented legal disclosure program through frequent monitoring, ensure the compliance regulation operates correctly without cover-ups, and evaluate findings by internal and external auditing.

This definition demonstrates that an embedded derivative is a contract function and its existence implies that cash flows correlated with that function are close to a standalone derivative.

As wealthy individuals are more pragmatic in their market valuation and investment choices, private banking clients are gradually adopting an institutional investor’s management style, distinguished by Advice-led yet self-made investment decisions and a partnership focused on the standard of investment advisors and account managers.

Such bonds were designed to optimize exposure to the underlying assets thereby ensuring capital security at the note’s maturity. In its context, DTM has a duality of price dependency, since rather than being related solely to the underlying portfolio, the value of the notes is measured in respect to the level of an index.

An choice is an contract that grants the investor the ability to purchase and sell the underlying asset at a fixed amount, on the day of execution or expiration, but not on the commitment. A call option requires the lender to obtain the underlying asset; a put option grants the investor the opportunity to offer it.

The coefficient of variation is a measure of relative dispersions (unlike standard deviation, which is the measure of absolute dispersions). The coefficient of variation can be calculated by dividing the standard deviation by the mean.

The beta coefficient is the most common measure of systematic risk. It is generally used for analyzing a diversified portfolio. A well- diversified portfolio will only contain systematic risk, and so the beta coefficient can be described as the measure of volatility for a diversified portfolio. A beta of 1.0 indicates that the stock is moving exactly with the market; anything higher indicates that the stick is more risky than the market, and anything less indicates that the stock is less risky than the market.

The price/earnings/growth (PEG) ratio is found by dividing the P/E ratio by the estimated earnings growth rate. When the dividends are significant, the dividend yield should be added to the growth rate when calculating PEG ratio. This ratio indicates the price that the market placed on earning expectations.

Political risk, which is also known as regulatory or country risk, is the chance that changes in government, restrictions imposed on foreign exchange flows, and/or environmental and other regulations may expose a firm to unforeseen costs.

A PAP offers four kinds of insurance: liability coverage, which covers the people named in the policy when they are liable for damages caused by their own auto; medical coverage, in the event that the insured or anyone in the insured’s car needs medical treatment; uninsured motorist coverage, which protects drivers when they are in an accident with another driver who is not insured; and coverage for damage to the insured’s automobile. This last section contains both collision coverage, which insures against accidents with other cars, and comprehensive physical damage, which insures against every other kind of damage.

A policy owner may wish to terminate or change a policy for a number of reasons. This is often done if the insurance company that issued the policy is in financial trouble, or if the policy is performing poorly. One may want to replace a policy if one has quit smoking and is now eligible for a better premium. Sometimes, people replace a short-term policy with a long-term policy if they feel they can reduce cost.

Net present value, meanwhile, is the amount of cash flow, expressed in terms of present value, that a project will generate after repaying invested capital and the required rate of return on that capital. When NPV is positive, shareholder wealth increases.

When an individual reaches the spending phase of his or her life cycle, he or she will begin to seek investments that offer security and the preservation of capital. Although individuals in this phase will want to stick with low-risk investments, it is a good idea for them to maintain some more adventurous investments as a partial protection against inflation.

There are a few factors consumers should consider before deciding whether to buy or lease a home. Most of the time, people will lease (or rent) when they do not have the requisite funds to make a down payment. Purchasing a home creates a number of tax advantages for the buyer. In addition, creditors tend to give better treatment to homeowners. A purchased home may become an appreciating asset for the owner.

Most people should maintain an emergency fund with enough to cover between three and six months of expenses in case of job loss. Although there are state unemployment insurance programs that will help individuals who want to work but cannot, these funds are limited and subject to many restrictions.