Newly Released CISI ICWIM Exam PDF

What is an Accumulation and Maintenance Trust?

This is a trust designed primarily for minors or young beneficiaries.

Trustees have discretion over income and capital distributionsuntil a specified event or age, after which the discretion typically ceases.

When Does Discretion Cease?

Generally, trustees' discretion ends at theend of a prescribed periodor when the beneficiary reaches a predetermined age, often 18 or 25.

This ensures the trust complies with legal requirements, such as therule against perpetuitiesin some jurisdictions.

ICWIM Study Guide, Chapter on Trusts: Details the rules around accumulation and maintenance trusts.

Trust Law Principles: Highlights limitations of trustee discretion.

References

Understanding Bullet Payments:

A bullet payment is a single payment of principal and interest at maturity.

Zero coupon bonds do not provide periodic interest payments, making them associated with bullet payments.

Elimination of Other Options:

A: Treasury bonds typically pay semiannual interest.

C: Convertible bonds may have periodic interest.

D: Premium bonds involve prize draws, not bullet payments.

References:

ICWIM Module 3: Coverage of fixed income securities and payment structures.

Understanding Execution-Only Sales:

Execution-only sales occur when the client makes a financial transaction without receiving any advice or recommendations from the intermediary.

The client assumes full responsibility for the decision.

Elimination of Other Options:

A: Charges are typically present in execution-only sales.

C: The product is being sold; the sale cannot occur without it.

D: Guarantees are unrelated to the advisory process.

References:

ICWIM Module 4: Focus on financial advice models, including execution-only services.

In an order-driven market, an electronic order book is used to match buy and sell orders based on strict price and time priority. This system ensures transparency and fair pricing since all orders are visible to market participants.