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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 Level 3 Certificate in Securities, this exam assesses foundational knowledge required for roles in investment operations, trading, and securities analysis.
What is the formula for conversion premium?(2) - ANSWER- Conversion premium = (Market price of convertible bond - Conversion price) ÷ Conversion price x 100
What's the formula for present value of a bond?(2) - ANSWER- PV = C / (1+r)^1 + C / (1+r)^2 + (C+FV) / (1+r)^1
What is Modified Duration? (2) - ANSWER-Modified duration is a measure of the sensitivity of a bond's price to changes in interest rates. It is calculated as the percentage change in a bond's price for a 1% change in interest rates, adjusted for the bond's remaining time to maturity and coupon payments. 1 / 3
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- Time to maturity: Longer maturity bonds have higher modified
duration than shorter maturity bonds, as they have more exposure to changes in interest rates.
- Coupon rate: Lower coupon rate bonds have higher modified
duration than higher coupon rate bonds, as they are more sensitive to changes in interest rates.
What are PIK notes?(2) - ANSWER-Type of bond that allows the issuer to pay interest in the form of additional securities rather than cash, and are typically subordinated to other debt.
What is the difference between exchangeable and convertible bonds?(2) - ANSWER-Convertible bonds allow the bondholders to convert their bonds into shares of the issuing company's stock, while exchangeable bonds allow conversion into shares of a different company's stock.
What is a stepped bond? (2) - ANSWER-Type of bond in which the coupon rate changes over time, usually increasing at certain pre-determined intervals
What is commercial paper?(2) - ANSWER-Commercial paper is a type of short-term unsecured promissory note issued by 2 / 3
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corporations, banks, and other financial institutions to raise funds for their short-term cash needs.
What are the differences between warrants and covered warrants?(2) - ANSWER-Warrants are issued by the company while covered warrants are issued by banks. Warrants have greater risk, while covered warrants have some degree of protection. Covered warrants can be exercised at any time, while warrants have a specific exercise period.
What are the two main money market instruments? (2) - ANSWER-T-bills (issued by govs) and Commercial paper (issued by companies)
Whats the formula for dirty price? (2) - ANSWER-Clean Price + Accrued Interest
What are Eurobonds cleared through? (2) - ANSWER- Clearstream or Euroclear
What are REITs? (4) - ANSWER-Real estate investment trusts:
investment in real estate or loans secured by real estate
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