CIMA Certified Investment Management
Analyst Certification Exam Preparation Guide
[CIMA CIMA]
**Question 1.** Which statistical measure indicates the average distance of data points from
the mean?
A) Skewness
B) Kurtosis
C) Standard deviation
D) Median
Answer: C
Explanation: Standard deviation quantifies the dispersion of observations around the mean,
measuring average distance.
**Question 2.** In time‑value‑of‑money calculations, the effective annual rate (EAR) differs
from the nominal annual rate because it:
A) Ignores compounding frequency
B) Incorporates compounding within the year
C) Uses simple interest only
D) Applies only to zero‑coupon bonds
Answer: B
Explanation: EAR converts a nominal rate with a given compounding frequency into an
equivalent annual rate that reflects intra‑year compounding.
**Question 3.** Which of the following best describes a normal distribution’s property?
A) Mean equals mode but not median
B) Symmetrical with mean = median = mode
, CIMA Certified Investment Management
Analyst Certification Exam Preparation Guide
[CIMA CIMA]
C) Positive skewness for most financial returns
D) Heavy tails compared with a t‑distribution
Answer: B
Explanation: A normal distribution is perfectly symmetric; its mean, median, and mode are
identical.
**Question 4.** The primary purpose of a sampling distribution is to:
A) Estimate population variance directly
B) Determine the exact population mean
C) Approximate the distribution of a sample statistic
D) Replace the need for hypothesis testing
Answer: C
Explanation: A sampling distribution shows how a statistic (e.g., sample mean) would vary
across repeated samples from the same population.
**Question 5.** Which macro‑economic policy tool is most directly used to influence
short‑term interest rates?
A) Government spending
B) Tax rate adjustments
C) Open‑market operations
D) Exchange‑rate interventions
Answer: C
, CIMA Certified Investment Management
Analyst Certification Exam Preparation Guide
[CIMA CIMA]
Explanation: Central banks conduct open‑market operations (buying/selling securities) to affect
the money supply and thus short‑term rates.
**Question 6.** During the “trough” phase of a business cycle, which asset class typically
shows the strongest relative performance?
A) Long‑term government bonds
B) High‑yield corporate bonds
C) Defensive equities (e.g., utilities)
D) Real estate investment trusts (REITs)
Answer: C
Explanation: Defensive equities tend to hold value better than cyclical stocks during economic
lows, while bonds may suffer from falling yields.
**Question 7.** Which of the following best characterises an emerging market?
A) Fully developed capital markets with low volatility
B. High GDP per capita and stable political institutions
C) Rapid economic growth but less market depth and higher political risk
D) Predominantly agricultural economies with no foreign investment
Answer: C
Explanation: Emerging markets show fast growth, limited market liquidity, and heightened
political/economic risk.
**Question 8.** A mutual fund’s expense ratio primarily reflects:
, CIMA Certified Investment Management
Analyst Certification Exam Preparation Guide
[CIMA CIMA]
A) Management fees only
B) Trading commissions and brokerage costs
C) All operating expenses expressed as a percentage of assets
D) The fund’s turnover rate
Answer: C
Explanation: The expense ratio aggregates management fees, administrative costs, and other
operating expenses relative to assets under management.
**Question 9.** Which of the following statements about exchange‑traded funds (ETFs) is true?
A) ETFs trade only at the end‑of‑day NAV
B) ETFs generally have higher expense ratios than mutual funds
C) ETFs can be bought and sold throughout the trading day like stocks
D) ETFs are not allowed to hold foreign securities
Answer: C
Explanation: ETFs are listed on exchanges and can be traded intraday at market prices.
**Question 10.** A Unit Investment Trust (UIT) differs from a mutual fund because a UIT:
A) Actively manages its portfolio
B) Has a fixed portfolio that is not actively traded
C) Allows unlimited share issuance and redemption
D) Charges performance fees based on excess returns
Analyst Certification Exam Preparation Guide
[CIMA CIMA]
**Question 1.** Which statistical measure indicates the average distance of data points from
the mean?
A) Skewness
B) Kurtosis
C) Standard deviation
D) Median
Answer: C
Explanation: Standard deviation quantifies the dispersion of observations around the mean,
measuring average distance.
**Question 2.** In time‑value‑of‑money calculations, the effective annual rate (EAR) differs
from the nominal annual rate because it:
A) Ignores compounding frequency
B) Incorporates compounding within the year
C) Uses simple interest only
D) Applies only to zero‑coupon bonds
Answer: B
Explanation: EAR converts a nominal rate with a given compounding frequency into an
equivalent annual rate that reflects intra‑year compounding.
**Question 3.** Which of the following best describes a normal distribution’s property?
A) Mean equals mode but not median
B) Symmetrical with mean = median = mode
, CIMA Certified Investment Management
Analyst Certification Exam Preparation Guide
[CIMA CIMA]
C) Positive skewness for most financial returns
D) Heavy tails compared with a t‑distribution
Answer: B
Explanation: A normal distribution is perfectly symmetric; its mean, median, and mode are
identical.
**Question 4.** The primary purpose of a sampling distribution is to:
A) Estimate population variance directly
B) Determine the exact population mean
C) Approximate the distribution of a sample statistic
D) Replace the need for hypothesis testing
Answer: C
Explanation: A sampling distribution shows how a statistic (e.g., sample mean) would vary
across repeated samples from the same population.
**Question 5.** Which macro‑economic policy tool is most directly used to influence
short‑term interest rates?
A) Government spending
B) Tax rate adjustments
C) Open‑market operations
D) Exchange‑rate interventions
Answer: C
, CIMA Certified Investment Management
Analyst Certification Exam Preparation Guide
[CIMA CIMA]
Explanation: Central banks conduct open‑market operations (buying/selling securities) to affect
the money supply and thus short‑term rates.
**Question 6.** During the “trough” phase of a business cycle, which asset class typically
shows the strongest relative performance?
A) Long‑term government bonds
B) High‑yield corporate bonds
C) Defensive equities (e.g., utilities)
D) Real estate investment trusts (REITs)
Answer: C
Explanation: Defensive equities tend to hold value better than cyclical stocks during economic
lows, while bonds may suffer from falling yields.
**Question 7.** Which of the following best characterises an emerging market?
A) Fully developed capital markets with low volatility
B. High GDP per capita and stable political institutions
C) Rapid economic growth but less market depth and higher political risk
D) Predominantly agricultural economies with no foreign investment
Answer: C
Explanation: Emerging markets show fast growth, limited market liquidity, and heightened
political/economic risk.
**Question 8.** A mutual fund’s expense ratio primarily reflects:
, CIMA Certified Investment Management
Analyst Certification Exam Preparation Guide
[CIMA CIMA]
A) Management fees only
B) Trading commissions and brokerage costs
C) All operating expenses expressed as a percentage of assets
D) The fund’s turnover rate
Answer: C
Explanation: The expense ratio aggregates management fees, administrative costs, and other
operating expenses relative to assets under management.
**Question 9.** Which of the following statements about exchange‑traded funds (ETFs) is true?
A) ETFs trade only at the end‑of‑day NAV
B) ETFs generally have higher expense ratios than mutual funds
C) ETFs can be bought and sold throughout the trading day like stocks
D) ETFs are not allowed to hold foreign securities
Answer: C
Explanation: ETFs are listed on exchanges and can be traded intraday at market prices.
**Question 10.** A Unit Investment Trust (UIT) differs from a mutual fund because a UIT:
A) Actively manages its portfolio
B) Has a fixed portfolio that is not actively traded
C) Allows unlimited share issuance and redemption
D) Charges performance fees based on excess returns
