CySEC Basic Examination Mock Exam 3
1. Which of the following powers do not belong to CySec?
Is the supervisory authority of IFs (Investment Firms)
It establishes, maintains and regularly updates a public register
Demands information from any person, summon and questions them
Provides ESMA with all the necessary information upon their request
2. The initial capital requirement for authorizing to offeri the service of portfolio management and the ancillary service of safekeeping of financial instruments
�125.000
�80.000
�40.000 and a professional indemnity insurance of €1m per claim and €1.5m per year
�730.000.000
3. Clients monies may be deposited:
In a qualifying money market instrument
In insurance undertakings
In UCITS
In AIFS
4.When a CIF disseminates investment research and recommendation, the CIF must ensure:
That the recommendation is suitable for the client
The recommendation is appropriate for the client
The issuer on whom the research was performed has not reviewed the draft research recommendation
The CIF is paid a fee for such a research by the issuer the research is concerned
5. A transaction was executed between the AIF and its external manager. The assets involved will be valued:
By the depositary
By an independent expert
By CySEC
By the external manager
6. An AIFM that also offers Portfolio Management with discretionary powers will:
Not invest the client’s portfolio in units of the AIF
Obtain prior approval from client before investing his portfolio in units of the AIF
The AIFM cannot have discretionary powers in a portfolio
The AIFM cannot have discretionary powers in a portfolio unless the client has close links with the AIF
7. What is not a prerequisite for information to be defined as inside?
It should have been made public
It should be of precise nature
It should be price-sensitive
It should relate to one or more financial instruments
8. Prior to offering services in another member state for the first time, a management company must notify CySEC of its intentions. The notification must include the following information except
Description of risk management process
Activities and services to be provided
Name of member state
Shareholders names
9. Violation of the provisions regarding amendment of CIF details, the law provides fine:
Maximum fine of €175.000
Maximum fine of €200.000
Maximum fine of €341.720
Maximum fine of €350.000
10. Which of the following is an investment service:
Systematic Internaliser
Execution of orders
Safekeeping of assets
Forex services
11. A product provider provides (without charge) training to the staff of an investment adviser that is an investment firm at a luxurious hotel
No illegal action. Training is held as the law requires
The Investment firm is conducting training sessions following Compliance's recommendation
Such training paid for by the provider is more likely to impair the investment firm's duty to act in the best interests of the client and so not be permitted
Such training paid for by the provider is more likely to benefit the investment firms' client and as such it is allowed
12.A qualifying shareholding is someone who
Possesses a direct holding in an IF which is 10% or more of the capital or voting rights
Possesses a direct or indirect holding in an IF which is 10% or more of the capital or voting rights
Possesses a direct or indirect holding in an IF which is 20% or more of the capital or voting rights
Any shareholder of an IF
13.A CIF when providing information to clients regarding past performance of a FI, the following information must be provided:
It must disclose the sources and currency
It must disclose the sources, currency and commission paid
It must disclose the sources, currency, commission paid and a warning that the figures are merely historic
It must disclose the sources, currency, commission paid, warning that the figures are merely historic and any assumptions must be disclosed
14. When a bank receives client funds which are not deposits as defined in the banking law, it must promptly place them into one or more accounts identified as client funds which are opened with the following institutions except
Central bank
A bank or credit institution authorised in a member state
A credit institution authorised in a third country
A payment service provider
15. Where the AIFM cooperates with a prime broker:
Must obtain prior approval by CySEC
Must obtain consent of client
Must inform the depositary
Must inform the competent authority of the depositary if in another member state
16. International AML provisions are aimed at requiring firms to:
Identify customers & suspicious transactions at the placement and layering stages
Keep adequate records which should prevent the integration stage being reached, but also provide an audit trail for investigators
Report suspicious activity or behaviour to the relevant regulatory/legislative authority
All of the above
17. When an EU IF wishes to establish a branch in Cyprus, it must notify the following information:
Address, Directors, shareholders, program of operations
Address, organizational structure and program of operations
Address structure, shareholder and program of operations
Address people directing the business, organizational structure and program of operations
18. CySEC must reply to a CIF authorization within:
6 months
3 months
20 days
2 days
19. Which of the following is incorrect regarding the valuation process for AIF?
For closed-ended AIFs, the valuation must be carried out at a frequency appropriate for the assets held
The valuations are either performed by an external independent valuer or the AIFM itself
For closed-ended AIFs, the valuation must be carried out in the event of an increase or decrease of the capital by the relevant AIF
The valuation procedures must ensure that assets are valued and the net asset value per unit is calculated at least once a year
20. When executing a client’s order:
Similar orders by different clients may be aggregated and executed together
Clients orders may be aggregated only with prior consent by client
Clients orders can never be aggregated
Retail clients’ orders must be executed first and in priority from professional clients’ orders
21. Simplified due diligence is not sufficient for:
Listed companies trading on an exchange
Retail Clients who want to invest in financial instruments and/or investment services covered by the EU Directive
Public authorities of EEA countries
Credit of financial institutions covered by the EU Directive
22. The CEO and the Chairman of a CIF:
Must always be the same person
Could only be the same person if justified by the CIF and approved by Cysec
Should be of sufficiently good repute
There is no relevant requirement
23. Depositary’s functions include:
The redemption of units
The provision of accounting services
The maintenance of the register
Regulatory compliance monitoring
24. The proceeds of redemption of a UCITS must be paid to the investor:
The day after redemption application
Whenever UCITS has liquidity
At a weeks’ time the latest
Within 4 working days from the day of redemption application
25. The CEO and the Board of Directors discuss the acquisition of a specific company. They call a shareholder to suggest and discuss the idea. A secretary is writing minutes in the meeting. Who of the following might not be a possessor of inside information?
The CEO
The external auditor
The secretary writing minutes in the meeting
Secretary writing minutes in the meeting
26. Information shall be deemed as having been “made public” when there occurs one, or more of the following situations:
It is discussed at a board meeting
It is discussed at a board meeting in the presence of the Company’s legal advisors
It is referred to in an article published in a newspaper
All of the above
27. When a tied agent holds clients monies:
This constitutes a criminal offence, punishable with imprisonment maximum 5 years and an administrative fine of maximum €350.000
This constitutes an administrative offence punishable with a fine of maximum €350.000
This constitutes an administrative offence punishable with a fine of maximum €175.000
This constitutes a criminal offence, punishable with imprisonment maximum 5 years and/ or a fine of maximum €350.000 and an administrative fine of maximum €350.000
28. Which of the following is a circumstance under which CySec might refuse to provide information or co-operate with an investigation?
Such investigation might adversely affect the reliability of CySec officials
Final court judgment is expected to be delivered in less than 48 hours related to the current investigation
Judicial proceedings have already been initiated
Such investigation might “hurt” political parties involved in the current case
29. The Best Execution policy includes:
Criteria for client selection
Criteria for client categorization
Criteria for venue selection
Is signed by retail clients only
30. In the event a person falling under its supervision fails to comply with the provisions of the Prevention and Suppression of Money Law, CySEC may:
Impose an administrative fine up to €512.580,40
Impose an administrative fine of up to €200.000 and in case the failure continues, a fine of €1.000 may be imposed for every day the failure
Impose an administrative fine up to €350.000
Impose an administrative fine up to €341.720
31. Redemption of units must be made:
Within 2 working days at the value of the unit on the day the request was made
Within 2 working days at the value of the unit on the day of redemption
Within 4 working days at the value of the unit on the day the request was made
Within 4 working days at the value of the unit on the day of redemption
32. On application for authorization for UCITS:
CYSEC has to reply within 2 months for a common fund and 6 months for a VCIC
CYSEC has to reply within 4 months for a common fund and 2 months for a VCIC
CYSEC has 3 months to reply
CYSEC has 6 months to reply
33. When outsourcing, the CIF must ensure:
That it obtains prior approval by CYSEC
The outsourcing partner has authorization to operate
That is obtains prior approval by the client
The outsourcing party shares resources with the CIF
34. The initial capital requirement for an AIFM is:
�200.000 for internally managed funds and €300.000 for externally managed funds
�300.000 for internally managed funds and €125.000 for externally managed funds
�125.000 for internally managed funds and €300.000 for externally managed funds
�300.000 for internally managed funds and €200.000 for externally managed funds
35. In case the issuer judges that the public disclosure of inside information may prejudice his legitimate interests, he may apply to CySEC for delayed publication of the said information, provided that:
The information is only known by the employees of the company
The information is very sensitive and if it is published it will have a serious impact on the prices of financial instruments
The non-disclosure of the information will be misleading to the public
The issuer is still under negotiations and the agreement is not yet finalized. Disclosing the information now may lead to a collapse in the agreement
36. For the purposes of application of the present Law, where it is stated the obligation of public disclosure by issuers, this shall be made with the following ways:
By announcement to CYSEC and CSE which list it on the internet site
By announcement to CYSEC and CSE and the Central Bank which list it on the internet site.
By announcement to CYSEC and CSE and Central Bank which list it on the internet site and by announcement to the Internet site of the issuer, provided the issuer maintains an Internet site for 5 years
By announcement to CYSEC and CSE which list it on the internet site and by announcement to the Internet site of the issuer
37. What is the penalty for not publishing an inside information without the prior agreement of CySEC:
�300.000
�175.000
�200.000
�341.720
38. A subsidiary of a European Investment firm wanting to offer services in Cyprus:
Must apply to CySEC for authorization
Must inform CySEC prior to offering the services
Must inform its competent authority of such intention
Must inform ESMA
39. A subsidiary of a non EU Investment firm wanting to offer cross border services in Cyprus must:
Apply to CySEC for authorization
Does not need authorization
Must inform its competent authority of such intention
Must inform CySEC prior to offering the services
40. A CIF must implement procedures to identify:
When the CIF is making a profit from the client
When the CIF is charging a commission to the client
When the client is in the same business with another client
When the CIF has an interest to advance the benefits of one client over another
41.Which of the following is not a reason for a CIF to undertake periodic internal reviews?
To ensure that the rules and conditions governing its authorization remain appropriate
To ensure that the employees are sufficiently educated and trained
To prevent conflicts of interest between the CIF and its clients or between two clients
To make sure that the rules and conditions cover organizational requirements, ongoing capital requirements and outsourcingand professional secrecy
42. Which of the following statements best defines “Best Execution Policy”?
Best execution refers to the best possible result for clients taking into account volume, open interest, and price
Best execution refers to the best possible result for clients taking into account priority of transactions (first come first serve basis), price, costs and speed of markets
Best execution refers to the best possible outcome for clients taking into account the money available in the account of the client, the probable loss derived from the trade, margin requirements and margin of safety levels
Best execution refers to the best possible result for clients when executing an order in terms of profit marking, risk-assessment and account profitability
43. An AIF is:
Similar to a UCITS
Needs to be authorized pursuant to UCITS law of 2012
Raises capital from the public but is not authorized pursuant to UCI law of 2012
Does not need authorization at all
44. An AIFM may not provide potential investors with the following information:
Any delegates it uses, the valuation method and a description of the liquidity risk management procedures
The main instruments in which it is trading
The principal exposures and major concentrations
The percentage of assets that have an illiquid nature
45. A person emloyeed in a CIF that has made a suspicious report not in good faith will have to pay a penalty of:
�300.000
�750.000
�512.580
�341.720
46. The unlawful nature of the use of inside information shall be excluded and the person responsible pursuant to the provisions of this section shall not be punished, if he proves that during the use of the information there existed any of the following conditions:
He has not disclosed the reasons for making the recommendation
He would have executed the transaction in any way
He was not aware that the information was public
All of the above.
47. When a CIF receives instructions from a 3rd party to execute services for a client from another CIF then it
Is responsible to verify the information provided
Is responsible for any loss suffered due to the CIF’s mistakes
Is responsible for the accuracy and completeness of the information provided
Is responsible for executing transaction
48. A large entity that is categorized as a professional client is one that has:
Turnover at least €40m
Turnover at least €20m
Balance Sheet total €40m
Own funds at least €20m
49. Who has the overall responsibility for the CIF and approve and oversee the implementation of the CIF’s strategic objectives, risk prevention strategy and internal governance
The shareholder(s)
The board
The compliance function
The CySEC
50. A retail client who has opted to be treated as a professional, when asking for investment advice, the CIF must assess:
He has the knowledge and experience to assess the risks of the proposed transaction
He has the knowledge and experience to assess the risks of the proposed transaction and he can bear the financial risks
He can bear the financial risks
He can bear the financial risks and the advice given meets his investment objectives
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