CISI Exam (Chartered Institute For Securities & Investment)
CISI EXAM (CHARTERED INSTITUTE FOR SECURITIES &
INVESTMENT) INCLUDES ACCURATE AND VERIFIED QUESTIONS
TAILORED TO VARIOUS CERTIFICATIONS SUCH AS THE
INTERNATIONAL INTRODUCTION TO SECURITIES AND
INVESTMENT, INVESTMENT OPERATIONS CERTIFICATE
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
How long do the listing rules require a company to have a trading record for ?(4) - ANSWER-3
years
Who has responsibility for the admission of companies for AIM?(4) - ANSWER-LSE
What minimum percentage of a companies shares must be in public hands for it to be admitted
to the official list?(4) - ANSWER-10%
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, CISI Exam (Chartered Institute For Securities & Investment)
What are the stages of an IPO?(4) - ANSWER-1. Decision: the issuing company decides to raise
capital via an IPO.
2. Prospectus: the company's advisers, including the investment bank, reporting accountants,
and legal advisers, prepare an official document that outlines the terms of the IPO.
3. Sale of securities: the investment bank leads the sale and may establish a syndicate of co-
managers to assist in selling the securities to their clients.
What is the greenshoe option?(4) - ANSWER-A provision in an underwriting agreement that
allows underwriters to sell additional shares beyond the original offering amount, typically
exercised if demand for shares is strong and the price is trading above the offering price
What are the three major ways that a company can use an IPO to become listed for the first
time?(4) - ANSWER-- Offers for sale: In an offer for sale, existing shareholders sell their shares to
the public. This allows the company to become publicly traded without issuing any new shares.
- Placings: In a placing, the company issues new shares to a select group of institutional
investors, who then sell those shares to the public. This can be a quicker and more efficient way
to raise capital than an offer for sale, but it may also result in a lower price for the shares.
- Introductions: In an introduction, the company does not raise any new capital, but instead
becomes listed by transferring its shares from a private market to a public one. This can be a
cost-effective way for established companies to gain access to public markets without going
through a full IPO process.
What is a placing? (4) - ANSWER-A private sale of shares to institutional investors arranged by a
financial institution or broker-dealer.
What is an introduction? (4) - ANSWER-Also known as an initial public offering (IPO), is when a
private company becomes a public company by offering shares to the general public for the first
time.
2|Page
, CISI Exam (Chartered Institute For Securities & Investment)
What is an offer for sale? (4) - ANSWER-When an existing shareholder or the company itself
sells shares to the public through a stock exchange.
What are the two ways in which an offer for sale can go through?(4) - ANSWER-- Fixed-price
method: Under the fixed-price method, the seller sets a specific price at which shares will be
sold, and investors can purchase shares at that price.
- Tender method: Under the tender method, the seller invites investors to submit bids
specifying the number of shares they want to purchase and the price they are willing to pay. The
seller then determines the clearing price, which is the lowest price at which all shares can be
sold, and investors who bid at or below this price can purchase shares.
After what period of time would a company on AIM without a nominated adviser or broker be
removed?(4) - ANSWER-3 months
Under the listing rules, companies must restrict their ability to issue warrants to what
MAXIMUM percentage of issued share capital?(4) - ANSWER-20%
What is a bought deal?(4) - ANSWER-A type of securities offering in which an underwriter
purchases all of the securities being offered by the issuing company and then resells them to
investors. This type of offering is typically used for larger or harder-to-sell offerings, and can be
completed quickly.
What is underwriting in finance?(4) - ANSWER-Underwriting is when a financial institution
agrees to purchase shares from a company if there is not enough demand from the public.
What are the different roles within a syndicate for a securities offering?(4) - ANSWER-- Book
runner: The lead underwriter responsible for managing the offering and coordinating the efforts
of the other underwriters in the syndicate.
- Co-lead: An underwriter that shares responsibility with the book runner for managing the
offering.
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, CISI Exam (Chartered Institute For Securities & Investment)
- Co-manager: An underwriter that helps sell the securities and may have some responsibility
for the marketing of the offering.
- Marketing: The underwriters responsible for promoting the securities offering to potential
investors.
- Book-building: The underwriters responsible for collecting indications of interest from
potential investors to help determine the offering price.
What are the requirements to be admitted to the Official List in the UK?(4) - ANSWER--
Minimum expected market capitalisation of £30m,
- Trading record of at least three years
- At least 10% of the company's shares must be in public hands
What are the requirements to be admitted to AIM in the UK?(4) - ANSWER-Must appoint a
nominated adviser and a broker
What are the requirements to be admitted to The General Standard segment in the Frankfurt
Stock Exchange?(4) - ANSWER-- Valid and audited securities prospectus,
- A reporting history dating back at least three years,
- A probable total price value of at least €1.25 million,
- Free float of at least 25%
How does a offer for sale and offer for subscription differ? (4) - ANSWER-Offer for subscription is
where a company offers new shares to the public can subscribe to these shares directly to the
company whereas, offer for sale is when existing share holders sell their shares to the public.
What is an OTF? (5) - ANSWER-Organized Trading Facility, is a multilateral system where multiple
parties can come together to buy and sell financial instruments such as stocks, bonds, and
derivatives
4|Page
CISI EXAM (CHARTERED INSTITUTE FOR SECURITIES &
INVESTMENT) INCLUDES ACCURATE AND VERIFIED QUESTIONS
TAILORED TO VARIOUS CERTIFICATIONS SUCH AS THE
INTERNATIONAL INTRODUCTION TO SECURITIES AND
INVESTMENT, INVESTMENT OPERATIONS CERTIFICATE
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
How long do the listing rules require a company to have a trading record for ?(4) - ANSWER-3
years
Who has responsibility for the admission of companies for AIM?(4) - ANSWER-LSE
What minimum percentage of a companies shares must be in public hands for it to be admitted
to the official list?(4) - ANSWER-10%
1|Page
, CISI Exam (Chartered Institute For Securities & Investment)
What are the stages of an IPO?(4) - ANSWER-1. Decision: the issuing company decides to raise
capital via an IPO.
2. Prospectus: the company's advisers, including the investment bank, reporting accountants,
and legal advisers, prepare an official document that outlines the terms of the IPO.
3. Sale of securities: the investment bank leads the sale and may establish a syndicate of co-
managers to assist in selling the securities to their clients.
What is the greenshoe option?(4) - ANSWER-A provision in an underwriting agreement that
allows underwriters to sell additional shares beyond the original offering amount, typically
exercised if demand for shares is strong and the price is trading above the offering price
What are the three major ways that a company can use an IPO to become listed for the first
time?(4) - ANSWER-- Offers for sale: In an offer for sale, existing shareholders sell their shares to
the public. This allows the company to become publicly traded without issuing any new shares.
- Placings: In a placing, the company issues new shares to a select group of institutional
investors, who then sell those shares to the public. This can be a quicker and more efficient way
to raise capital than an offer for sale, but it may also result in a lower price for the shares.
- Introductions: In an introduction, the company does not raise any new capital, but instead
becomes listed by transferring its shares from a private market to a public one. This can be a
cost-effective way for established companies to gain access to public markets without going
through a full IPO process.
What is a placing? (4) - ANSWER-A private sale of shares to institutional investors arranged by a
financial institution or broker-dealer.
What is an introduction? (4) - ANSWER-Also known as an initial public offering (IPO), is when a
private company becomes a public company by offering shares to the general public for the first
time.
2|Page
, CISI Exam (Chartered Institute For Securities & Investment)
What is an offer for sale? (4) - ANSWER-When an existing shareholder or the company itself
sells shares to the public through a stock exchange.
What are the two ways in which an offer for sale can go through?(4) - ANSWER-- Fixed-price
method: Under the fixed-price method, the seller sets a specific price at which shares will be
sold, and investors can purchase shares at that price.
- Tender method: Under the tender method, the seller invites investors to submit bids
specifying the number of shares they want to purchase and the price they are willing to pay. The
seller then determines the clearing price, which is the lowest price at which all shares can be
sold, and investors who bid at or below this price can purchase shares.
After what period of time would a company on AIM without a nominated adviser or broker be
removed?(4) - ANSWER-3 months
Under the listing rules, companies must restrict their ability to issue warrants to what
MAXIMUM percentage of issued share capital?(4) - ANSWER-20%
What is a bought deal?(4) - ANSWER-A type of securities offering in which an underwriter
purchases all of the securities being offered by the issuing company and then resells them to
investors. This type of offering is typically used for larger or harder-to-sell offerings, and can be
completed quickly.
What is underwriting in finance?(4) - ANSWER-Underwriting is when a financial institution
agrees to purchase shares from a company if there is not enough demand from the public.
What are the different roles within a syndicate for a securities offering?(4) - ANSWER-- Book
runner: The lead underwriter responsible for managing the offering and coordinating the efforts
of the other underwriters in the syndicate.
- Co-lead: An underwriter that shares responsibility with the book runner for managing the
offering.
3|Page
, CISI Exam (Chartered Institute For Securities & Investment)
- Co-manager: An underwriter that helps sell the securities and may have some responsibility
for the marketing of the offering.
- Marketing: The underwriters responsible for promoting the securities offering to potential
investors.
- Book-building: The underwriters responsible for collecting indications of interest from
potential investors to help determine the offering price.
What are the requirements to be admitted to the Official List in the UK?(4) - ANSWER--
Minimum expected market capitalisation of £30m,
- Trading record of at least three years
- At least 10% of the company's shares must be in public hands
What are the requirements to be admitted to AIM in the UK?(4) - ANSWER-Must appoint a
nominated adviser and a broker
What are the requirements to be admitted to The General Standard segment in the Frankfurt
Stock Exchange?(4) - ANSWER-- Valid and audited securities prospectus,
- A reporting history dating back at least three years,
- A probable total price value of at least €1.25 million,
- Free float of at least 25%
How does a offer for sale and offer for subscription differ? (4) - ANSWER-Offer for subscription is
where a company offers new shares to the public can subscribe to these shares directly to the
company whereas, offer for sale is when existing share holders sell their shares to the public.
What is an OTF? (5) - ANSWER-Organized Trading Facility, is a multilateral system where multiple
parties can come together to buy and sell financial instruments such as stocks, bonds, and
derivatives
4|Page
