CISI Securities Exam: Practice Questions & Study Guide

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CISI Securities Exam includes accurate and
verified questions covering core topics such
as equity and debt instruments, derivatives,
financial markets, settlement and clearing,
portfolio management, and risk. Designed
for candidates pursuing the CISI


What is the difference between cross rate and direct rate?
(2) - . . ANSWER ✔ ✔A direct rate involves one domestic
currency, while a cross rate involves two foreign currencies
that are calculated through a third currency eg (EUR/JPY,
GBP/AUD, AUD/NZD, and USD/CHF)


What are French gov bonds called, when are coupon
interest payments paid and when is settlement? (2) - . .
ANSWER ✔ ✔OATs, PAID ANNUALLY and T+2


What are the different German gov bonds called, when are
the interest payments paid, and when is settlement? (2) - .
. ANSWER ✔ ✔- Schatz < 2 years
- Bobl 5 years
- Bund > 10 years

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PAID ANNUALLY
T+2


What are the names of the different US bonds, their
maturities, and their settlement? (2) - . . ANSWER ✔ ✔-
T-bills, less than a year and T+0
- T-notes, 2-10 years and T+1
- T-bonds, > 10 years and T+1


What is meant by ex-dividend?(2) - . . ANSWER ✔ ✔This
is the day on which a stock begins trading without the
dividend. If you buy the stock on or after this day, you are
not entitled to the dividend payment. In other words, the
stock is trading "ex" or "without" the dividend.


What is meant by cum-dividend?(2) - . . ANSWER ✔
✔This is the opposite of ex-dividend. It refers to a stock
that is trading with the dividend included. If you buy the
stock before the ex-dividend date, you are entitled to
receive the dividend payment, and the stock is said to be
trading "cum" or "with" the dividend.

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What's the difference between floating and fixed charge?
(2) - . . ANSWER ✔ ✔A floating charge is created over a
changing pool of assets, while a fixed charge is created
over specific assets that cannot be sold or used without the
lender's consent until the debt is fully repaid.


What are bonds issued with a fixed charge referred to
as?(2) - . . ANSWER ✔ ✔Debenture


What is the purpose of an SPV?(2) - . . ANSWER ✔ ✔A
legal entity is set up for a specific purpose or project to
limit risk exposure and protect the interests of investors or
lenders. They can hold assets, enter contracts, and raise
capital independently of the sponsor.


What are covered bonds?(2) - . . ANSWER ✔ ✔Debt
securities backed by a pool of high-quality assets, like
mortgages or public sector loans. They are issued by banks
and other financial institutions and are considered lower-
risk investments because they are backed by assets that
generate steady cash flows.

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What are the different types of trustees in structured
finance transactions?(2) - . . ANSWER ✔ ✔- Note
trustees: Represent the interests of securities holders.
- Security trustees: Hold securities or properties for the
benefit of secured parties.
- Share trustees: Hold shares in an issuing SPV to ensure
off-balance-sheet treatment.
- Successor trustees: Replace a trustee with conflicts of
interest or cannot continue due to work requirements.


What are the three tiers of debt?(2) - . . ANSWER ✔ ✔-
Senior debt: This is the highest-ranking debt, which has
priority over all other debt and must be repaid first in the
event of default.
- Subordinated debt: This is a middle-ranking debt that is
subordinated to senior debt but has priority over equity.
- Mezzanine debt: This is the lowest-ranking debt, which is
subordinated to senior and subordinated debt.


What is the par value?(2) - . . ANSWER ✔ ✔The face value
or nominal value of a bond or stock. It represents the
amount that the issuer agrees to pay back to the