CISI IAD Exam at a Glance

Facts verified Oct 25, 2026 against Chartered Institute for Securities & Investment. Dates that have passed are removed automatically.

Free CISI Investment Advice Study Tools

Interactive CISI Investment Advice resources on PracticeTestGeeks, free to start:

• CISI IAD Fixed Income Securities 1 — 7 questions with answer explanations
• CISI Investment Advice flashcards — review key terms and concepts card by card
• CISI Investment Advice study guide — topic-by-topic overview of what the exam covers
• CISI Investment Advice cheat sheet — one-page printable summary for last-minute review

CISI IAD Study Tips

• Create a structured study schedule at least 4-6 weeks before your CISI IAD exam date.
• Focus on understanding core concepts rather than memorising answers for the CISI Level 4 Diploma in Investment Advice.
• Use our free practice tests to identify weak areas and track your progress over time.
• Review the official CISI IAD exam syllabus to ensure complete topic coverage.
• Take timed practice sessions to build your exam pace and reduce test-day anxiety.

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Sample CISI Investment Advice Practice Questions

Try these questions from our free CISI Investment Advice practice tests. The correct answer and an explanation follow each question.

1. What is a 'free cash flow' (FCF) yield?

   • A. The dividend yield of a company that has no debt
   • B. Free cash flow (operating cash flow minus capex) divided by the market capitalisation, expressed as a percentage
   • C. The yield on a company's corporate bonds relative to gilts
   • D. The difference between a company's earnings yield and its dividend yield

   Answer: B. Free cash flow (operating cash flow minus capex) divided by the market capitalisation, expressed as a percentage

   FCF yield = free cash flow / market capitalisation. Free cash flow is the cash generated after capital expenditure — it is the cash available to return to shareholders via dividends or buybacks. A high FCF yield may indicate an undervalued company generating strong cash returns.

2. In a period of quantitative easing (QE) by the Bank of England, what is the expected effect on gilt prices?

   • A. Gilt prices fall as supply increases
   • B. Gilt prices remain unchanged
   • C. Gilt prices rise as the Bank purchases gilts
   • D. Gilt prices become more volatile but trend-neutral

   Answer: C. Gilt prices rise as the Bank purchases gilts

   During QE, the Bank of England purchases gilts from the secondary market, increasing demand and pushing prices upward. This in turn reduces gilt yields, lowering borrowing costs across the economy. The mechanism works through asset price channels to stimulate economic activity.

3. What is the role of the Financial Ombudsman Service (FOS) in relation to investment advice complaints?

   • A. To prosecute firms for regulatory breaches
   • B. To provide an independent dispute resolution service for complaints between consumers and financial firms
   • C. To authorise and regulate financial advisers
   • D. To set compensation limits for the FSCS

   Answer: B. To provide an independent dispute resolution service for complaints between consumers and financial firms

   The FOS is an independent body that resolves disputes between consumers and financial services firms. If a consumer is unhappy with a firm's response to their complaint (or the firm hasn't responded within 8 weeks), they can refer the matter to the FOS. The Ombudsman can award compensation up to the applicable limit. It is distinct from the FCA (which regulates) and the FSCS (which compensates when firms fail).

4. What is 'hedging' with derivatives and why do investors use it?

   • A. Using derivatives to speculate on price increases
   • B. Using derivatives to reduce or offset the risk of adverse price movements in existing portfolio positions, protecting against losses while retaining upside potential
   • C. Using derivatives to increase portfolio leverage and amplify returns
   • D. Using derivatives to avoid paying stamp duty on share purchases

   Answer: B. Using derivatives to reduce or offset the risk of adverse price movements in existing portfolio positions, protecting against losses while retaining upside potential

   Hedging involves taking an offsetting derivative position to protect against adverse price movements. For example, buying put options on an equity portfolio protects against a market fall. It is analogous to insurance — paying a premium (cost) to limit potential losses.

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