ICWIM Exam Dumps - International Certificate in Wealth & Investment Management

Bearer shares are physical certificates that grant ownership, and the rights to those shares are with the bearer. If the certificate is lost or stolen, the investment could effectively be unrecoverable since ownership cannot be traced back to the investor.

Not being publicly named (A): This is an advantage of bearer shares, not a disadvantage.

Difficulty in valuation (C): Bearer shares’ value is similar to registered shares based on market conditions.

Impossible to sell part (D): Fractional transactions can still occur with bearer shares.

Variance measures dispersion by averaging squared deviations from the mean. Squaring is useful mathematically because it avoids negative values and penalises large deviations, but it creates a practical interpretation problem: the result is expressed in squared units. For example, if returns are measured in percentage points, variance is in squared percentage points, which is not intuitive to interpret or compare directly with the original data. Standard deviation is the square root of variance, which converts the dispersion measure back into the same units as the underlying data. This makes standard deviation easier to interpret as a typical distance from the mean and more directly usable in investment contexts, such as comparing volatility across assets, assessing tracking error, and estimating risk budgets. It is not necessarily easier to calculate than variance because it is derived from it, and it is not immune to small sample issues. The examinable reason it is more useful is the unit consistency, which supports clearer communication of risk and more meaningful comparison across portfolios and asset classes.

📌 Reference: CISI Code of Ethics, CFA Standards of Professional Conduct.

Risk appetite is determined by investment time horizon, asset allocation, and financial goals.

Why is Option B Correct?

A 15-year time horizon allows for some exposure to risk, but a heavy allocation to bonds and cash suggests a conservative approach.

The presence of some equities implies a moderate willingness to take risk.

Why Not Other Options?

A (Low risk) → A pure cash and bond portfolio would be low risk, but equities add some risk.

C (Mid risk) → A balanced portfolio would have higher equity exposure.

D (Mid-high risk) → A higher-risk portfolio would be equity-heavy.

📌 Reference: CFA Institute (Risk Profiling), CISI Wealth & Investment Management.

Key person protection is a type of business insurance where a company takes out a life insurance policy on a key employee, such as a CEO or top executive.

Why is Option D Correct?

An insurable interest must exist → The company must demonstrate financial loss if the key person dies or becomes incapacitated.

The policy protects against lost revenue, recruitment costs, and operational disruption.

Why Not Other Options?

A (Ever-increasing premiums) → Premiums may increase, but this is not a requirement.

B (Protection against staff leaving) → Key person insurance does not cover resignations.

C (Undefined sum) → The insured amount is calculated based on business impact.

📌 Reference: FCA Business Protection Regulations, CISI Wealth & Investment Management.

Earnings per share (EPS) measures profitability per share. A higher EPS means a company has more earnings available for dividends or reinvestment.

Why is Option B Correct?

An increase in EPS improves the company’s ability to pay dividends, as there are more profits available per share.

Why Not Other Options?

A (Share base widened) → EPS is based on net income, not share count.

C (Market share risen) → Higher EPS does not mean higher revenue or market share.

D (P/E ratio increased) → The P/E ratio depends on share price movements, not just EPS.

📌 Reference: CFA Institute (Earnings Analysis), CISI Wealth & Investment Management.

Investor Categories Based on Investable Assets

Mass Affluent: $100,000–$1,000,000

High-Net-Worth Individuals (HNWI): $1,000,000–$5,000,000

Very-High-Net-Worth Individuals (VHNWI): $5,000,000–$30,000,000

Ultra-High-Net-Worth Individuals (UHNWI): Over $30,000,000

Why $900,000 Falls into HNWI?

Although $900,000 is close to the HNWI threshold, the term is often used flexibly for individuals who are near the $1M mark.

Banks and wealth managers generally consider $900,000 within this category because they have similar service needs.

ICWIM Textbook, Chapter on Investor Profiling: Defines HNWI thresholds and explains their investment behavior.

Wealth Management Industry Standards: High-net-worth classification begins near $1M.

ReferencesThus, the investor would normally be categorized as B. High-net-worth.

Private equity firms raise capital primarily from institutional investors such as pension funds, insurance companies, and sovereign wealth funds.

Why is Option A Correct?

Institutional investors provide large capital commitments for private equity funds.

Private equity firms pool these funds to acquire and restructure companies.

Why Not Other Options?

B (Management buyouts) → A buyout strategy, not a funding source.

C (Initial public offerings, IPOs) → Private equity firms exit investments through IPOs, but this is not a funding source.

D (Placings) → Common in public equity markets, not private equity.

📌 Reference: CFA Institute (Private Equity Structures), CISI Wealth & Investment Management.