END OF CHAPTER QUESTIONS 1-5 - CISI FINANCIAL REGULATIONS QUESTIONS WITH CORRECT

END OF CHAPTER QUESTIONS 1-5 - CISI
FINANCIAL REGULATIONS QUESTIONS WITH
CORRECT ANSWERS GRADED A+ FOR 2025-
2026 ASSURED EXCEL!!

Chptd4dQd16:dWhenddodthedprospectusdadvertisementsdrulesdapply?d(NOTE,dnotdcovereddindthedsli
desdsoddon'tdworrydtoodmuch)d-
ddCORRECTdANSWERSThedprospectusdrulesdapplydtodoffers,dordadmissiondtodtrading,dofdtransferrab


ledsecuritiesdindrespectdofdwhich:



1.dAdprospectusdisdrequireddunderdS85dFSMA.



2.dWheredandelectiondtodproducedadprospectusdhasdbeendmadedunderdS87dFSMA.



Chptd4dQd17:dWhendisdadfirmdpermitteddtodundertakedandunsoliciteddcommunicationd(colddcalling)d
withdadretaildclient?d-
ddCORRECTdANSWERS1.dThedrecipeintdhasdandexisitngdclientdrelationshipdwithdthedfirmdanddwouldd


envisagedsuchdadcall,dor;



2.dThedcalldrelatesdtodadgernallydmarktabledpackageddproductd(notdadhgher-
volatilitydfunddordadlifedpolicydlinkeddtodsuchdadfund),dor;



3.Itdrelatesdtodadcontrolleddactivitydrelstingdtodadlimiteddrangedofdinvetsments,dincludingddeopositsd
anddreadilydrealisabledinvetsmentsd(notdwarrantsdordmakedablednon-geareddpackageddproducts).



Chptd4dQd18:dWhatdaredthedrulesdondchurningdanddwhoddodtheydapplydto?d-
ddCORRECTdANSWERSChurningdisdover-


dealingdfordadclientdtodgeneratedextradfees.dCOBSdsaysdthatdadseriesdofdtransactionsdindisolationdtha
tdlooksdsuitabledmaydnotdbedifdtradesdaredsodfrequentdasdtodbeddeterminantaldtodthedclient.

,Itdappliesdtodfirmsdtradingdondbehalfdofdtheirdclients,degdinvestmentdmanagers.



Chptd4dQd19:dWhatdisdthedpurposedofdthedsuitabilitydrules?d-
ddCORRECTdANSWERSTodensuredpersonaldrecommendationsd(orddecisionsdtodtrade)daredsuitabledfo


rdthedclient'sdneeds.



Chptd4dQd20:dWhatdisdthedappropriatenessdtest?d-
ddCORRECTdANSWERSTodprovidedprotectiondfordnon-adviseddtransactions.




Chptd4dQd21:dWhatdisdthedpurposedofdthedcancellationdrules?d-
ddCORRECTdANSWERSTodensuredthatdclientsdhavedthedopportunitydtodreconsiderdtheirddecisiondwit


hindadcertaindperioddofdtimedanddaredabledtodcanceldthedtransactiondifdtheydwishdto.



Chptd4dQd22:dStatedfourdstepsdfirmsdcoulddtakedtodpreventdordmanagedconflictsdofdinterest.d-
ddCORRECTdANSWERS1.dFordexternaldinvestmentdresearch,dhavedinformationdcontrolsdtodstopdinfor


mationdflowingdtodthedrestdofdthedfirmd(Chinesedwall)



2.dPreparedconflictsdofdinterestdpolicy



3.dWheredconflictdarises,densureddisclosuredisdmaded(onlydasdlastdresort)



4.dKeepdrecordsdofdactivitiesdwhendconflictdofdinterestdhasdarisen.



Chptd4dQd23:dWhatdisdtheddifferencedbetweendinvestmentdresearchdanddresearchdrecommendatio
ns?d-
ddCORRECTdANSWERSInvestmentdresearchdisdinformationdrecommendingdandinvestmentdstrategy,d


includingdopiniondasdtodthedvalue/pricedofdinvestments,dasdintendeddforddistributiondtodthedpublicd
(asdopposeddtodjustdfordusedwithindthedfirm).

, Itdhasdtodbedclearlydlabelleddasdinvestmentdresearchdanddpresenteddasdandobjectivedordindependen
t

explanation.



Chptd4dQd24:dWhatdpaymentsdaredpermitteddunderdthedinducementsdrules?d-
ddCORRECTdANSWERS1.dFeesdanddnon-monetarydbenefitsdpaiddbydclients




2.dProperdfeesdpaiddbydfirm,dwhichdarednecessarydfordthedprovisiondofdservices.



3.Feesdanddnon-monetarydbenefitsdpaiddto/bydadthirddparty.



Chptd4dQd25:dWhatdisdthedpurposedofdthedbestdexecutiondrequirements?d-
ddCORRECTdANSWERSFordfirmsdtoddemonstratedtodtheirdclientsdhowdtheydobtaindthedbestdpossibled


tradingdresults.



Chptd4dQd26:dWhatdisdandorderdexecutiondpolicy?d-
ddCORRECTdANSWERSThedpolicy,dwhichdtellsdclientsdhowdthedfirmdseekdtodobtaindthedbestdpossibled


resultdfordthem,dmustdcontain:



1.dThedfactorsdconsidereddwhendchoosingdthedexecutiondvenue.



2.dHowdprice,dcost,dspeeddanddlikelihooddofdexecutiondaredconsidered.



3.dCleardinstructiondthatdifdadclientdhasdadspecificdinstructionditdmaydimpactdthedfirm'sdabilitydtodobt
aindthedbestdpossibledresults.