CIC Cheat Sheet 2026

The 30 highest-yield CIC facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. Under the Investment Advisers Act, an investment adviser is prohibited from charging a performance fee to a client unless the client is a: → Qualified client meeting net worth or AUM thresholds
2. Which strategy aims to outperform market benchmarks? → Active management
3. What is fiduciary duty? → Acting in client's best interest
4. Under the Investment Advisers Act of 1940, the fiduciary duty owed by an investment adviser to a client is comprised of which two primary components? → Duty of Care and Duty of Loyalty
5. An investment counselor uses a Monte Carlo simulation primarily to: → Model a range of possible outcomes by running thousands of random scenarios
6. What is liquidity in financial analysis? → Cash conversion ability
7. Which of the following best defines 'active return'? → Portfolio return minus the benchmark return over the same period
8. What does asset allocation determine? → Distribution across asset classes
9. What is the primary objective of investment policy planning? → To align investments with client goals
10. What is meant by risk-adjusted return? → Return relative to risk
11. What is 'tracking error' in the context of portfolio performance? → The standard deviation of the difference between portfolio returns and benchmark returns
12. A portfolio's beta of 1.4 indicates that for every 1% move in the market, the portfolio is expected to move: → 1.4%
13. In Brinson-Hood-Beebower (BHB) performance attribution, which three effects are analyzed? → Allocation effect, selection effect, and interaction effect
14. The Uniform Securities Act at the state level primarily governs investment advisers who: → Manage less than $100 million in AUM and have not registered with the SEC
15. Which document outlines investment objectives and constraints? → Investment policy statement
16. Which strategy seeks to balance risk and return dynamically? → Tactical asset allocation
17. Which portfolio construction approach seeks to minimize tracking error relative to a benchmark? → Enhanced indexing
18. Value at Risk (VaR) at the 95% confidence level over one day means that losses will exceed the VaR estimate on approximately: → 1 out of 20 days
19. Which of the following actions would be considered a violation of a Certified Investment Counselor's fiduciary duty of care? → Failing to conduct due diligence on a complex investment product before recommending it.
20. What is asset allocation in investment planning? → Distributing investments across asset classes
21. Which of the following best describes the Sharpe Ratio? → Excess return per unit of total risk (standard deviation)
22. Which principle emphasizes transparency with clients? → Disclosure
23. Which type of investment goal is MOST appropriately defined in real, inflation-adjusted terms? → A long-term retirement funding goal.
24. The SEC's Regulation Best Interest (Reg BI) applies primarily to: → Broker-dealers making recommendations to retail customers
25. Reinvestment risk is MOST relevant for which type of fixed-income security? → Callable bonds paying high coupons
26. A portfolio manager uses a collar strategy, which involves: → Buying a put option and selling a call option on an existing long position
27. Which SEC rule requires investment advisers to adopt written policies and procedures reasonably designed to prevent violations of the Advisers Act? → Rule 206(4)-7
28. The standard deviation of a portfolio that holds two perfectly positively correlated assets compared to holding each asset alone is: → Equal to the weighted average of the individual standard deviations
29. Under the Investment Advisers Act of 1940, an investment adviser's fiduciary duty is composed of which two primary obligations? → Duty of Care and Duty of Loyalty.
30. ERISA fiduciary standards apply to investment advisers who manage assets in: → Qualified retirement plans such as 401(k) and pension funds