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CySEC Basic Examination Mock Exam 1

1. What is the initial capital requirement for UCITS with more than one compartment?

200k euros for each compartment

125k euros for each compartment

200k euros in total for the UCITS

125k euros in total for the UCITS

2. After receiving its authorization, the UCITS may invest its assets according to the law within a period of:

1 month

3 months

6 months

12 months

3. Up to what percentage of additional capital required from an AIFM can be provided in the form of a guarantee by a credit institution?

25%

50%

75%

100%

4. Which of the following situations would not be a potential source of conflict of interest for an AIFM?

Between the AIFM and AIFs managed by the AIFM

Between two AIFs managed by the AIFM

Between an AIF managed by the AIFM and an AIF delegated by the AIFM to another AIFM

Between an AIF managed by the AIFM and a pension fund managed by the AIFM

5. Which of the following duties is not a requirement for effective liquidity management of AIFMs?

Employ an appropriate liquidity management system

Ensure that all investments included in the AIF have at least weekly liquidity

Adopt procedures which enable them to monitor the liquidity risk of the AIF

Ensure that the liquidity profile of the investments of the AIF complies with its underlying obligations

6. Which of the following would not be a permitted investment for UCITS?

10% of total assets in various transferable securities trading on a regulated market of Cyprus

20% of total assets in various money market instruments trading on a regulated market of Germany

10% of total assets in various transferable securities trading on a regulated market in Africa, not included in the list approved by the Minister of Finance and not mentioned in the fund's instruments of incorporation.

20% of total assets in various transferable securities trading on a regulated market in Africa included in the list but not approved by the Minister of Finance and mentioned in the fund's instruments of incorporation.

7. When dealing with an eligible counterparty, the CIF:

Does not need to assess the client’s knowledge and expertise

Needs to warn the client if the particular investment or financial product is not appropriate for them

Needs take all reasonable steps to obtain the best possible result for the client

Needs to provide appropriate information to the client on its order execution policy

8. A suspicious transaction was reported to MOKAS. During further investigations, MOKAS may use as the first point of contact :

The Audit Function

The Board of Directors

The Compliance Function

The CEO only

9. The price of assets used in the valuation of Undertakings for Collective Investment in Transferable Securities (UCITS), if no stock exchange transaction was made on the date of valuation, would take the:

Previous day's closing price

Valuation day's bid price

Valuation day's ask price

Valuation day's mid price

10. Which of the following is not a condition for AIFMs to delegate to third parties the task of carrying out functions on their behalf?

The AIFM shall notify the competent authority of its home Member State before the delegation arrangements become effective

the AIFM must be able to demonstrate that the delegate is qualified and capable of undertaking the functions in question and that it was selected with all due care

The AIFM can delegate an activity only for a specified time period and the delegation must be withdrawn when this period lapses

the AIFM shall not delegate its functions to the extent that it becomes a letterbox entity

11. A potential employee who was bankrupt:

Should not be appointed

Approved and monitoring his activities in the company

Ask for extra reference letters from a bank

No extra measures are needed

12. Who appoints the Compliance Officer in a bank?

CEO

BOD

CBC

13. Company wishes to appoint X and Y but only X appears on the public register, before being appointed Y has to…..

Be pre-approved by CySEC

Do nothing

Pass an internal test

Cannot be appointed

14. Persons are permitted to use inside information to:

Buy and sell the financial instrument for their own account

Indiscriminately communicate to other people

Make investment decisions for clients

Undertake the duties of their position

15. A CIF shareholder increases his shares. For which of the below percentages of ownership, a permission is needed by CBC:

15%-17%

5%-7%

28%-32%

45-48%

16. Information provided to a client via email, if:

There is proof of regular use of the email by the client

The client is working at an IT Company

Customer support prefers sending emails to clients

The client has an IT related degree

17. When redemption of a UCITS, if closed price of the day is not available, then it can be used the:

Closing previous day without adjustments

Closing previous day with adjustments

Latest price

Next day with adjustments

18. A client opens an account in the Bank. It is required enhanced due diligence because:

He is currently unemployed

Deposit of 18,000 EUR

Deposit of 9,000 EUR

His age is under 17years old

19. Bank carries out simplified due diligence:

On a regulated credit institution in France

For non face-to-face customers

For trust accounts

For PEP accounts

20. A CIF authorisation lapses automatically:

If it has not used in the last 3 months

If it has not been used in the first 3 months

No services have been provided in the last 6 months after activation

When they have provided false information

21. VCIC is not required to appoint a depositary as long as:

At least 80% of the shares are marketed through exchange

At least 70% of the shares are marketed through exchange

At least 50% of the shares are marketed through exchange

At least 10% of the shares are marketed through exchange

22. Once a CIF authorisation is withdrawn:

Obligations to be settled within three months

Obligations to be settled within six months

Obligation has to be settled within one month

Obligations has to be settled immediately

23. UCITS units may be redeemed

Within four working days at the value of the unit on the day the request was made

Within four working days at the value of the unit on the day of redemption

Three months after the redemption application

Six months after the redemption application

24. The CEO and the Board of Directors discuss in an evening meeting the acquisition of a specific listed company. The CEO goes home late and tells his wife. She immediately calls a friend and informs her about the acquisition. The next day and following Board instructions, the CEO, calls an advisor who will perform due diligence and informs him about the company’s intention to acquire a third company. Which act was not prohibited?

The disclosure by the CEO of the information to his wife

The disclosure by the CEO of the information to the advisor

The disclosure by the wife of the information to her friend

All of the above

25. The CEO and the BOD 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?

CEO

External auditor

Secretary writing minutes in the meeting

The shareholder

26. Bank submits the insiders list to CySEC:

When requested

Once per month

By 31 January each year

End of June and end of December

27. Alternative Investment Fund Managers Directive provides that:

An EU authorized AIFM may market its units anywhere in EU

An EU authorized AIFM may market its units to professional investors anywhere in EU

An EU authorized AIFM may market its units to professional investors anywhere worldwide

An EU authorized AIFM may market its units to investors anywhere worldwide

28. Client and transaction information must be kept:

For the duration of the relationship

For 5 years from the start of the relationship

For 5 years from the date of transaction

For 5 years after the relationship has expired

29. 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, provided that

The information is only known by the employees of the company

The information is sensitive and if it is published it will have a small 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

30. The obligation of public disclosure by issuers shall be made:

By announcement to CySEC and CSE which list it on the internet site and by announcement to the Internet site of the issuer

By announcement to CySEC

By announcement to CSE

By announcement to the internet site of the issuer

31. The compliance officer must:

Have knowledge of the law and legislation

Have knowledge of the law and legislation and prior experience

Have a senior management position

Have just adequate academic background

32. The spouse of a manager of an issuer, needs to publish a transaction she has made for her own account in financial instruments of the issuer:

By the end of each month

By the end of each year

Prior to the start of the next working day of the stock exchange after the transaction has taken place

By 31 January each year

33. A CIF must monitor the effectiveness of its order execution arrangements regularly in order to:

Report compliance to the Board of Directors

Assess whether the execution venues continue to provide the best possible results for the client

Evaluate the services provided by the execution venues

Ensure that there are enough execution venues to support the clients' orders

34. The stage at which the ultimate beneficiary appears to be holding legitimate funds is the:

Placement

Layering

Integration

Layering & integration

35. Under MiFID, clients are classified as?

Retail, professional or intermediate

Private, professional or intermediate

Private, intermediate or eligible counterparty

Retail, professional or eligible counterparty

36. What is the minimum number of feeder UCITS for a master UCITS, in order to have the choice to raise capital from other investors as well?

37. Which of the following may not be generally categorized as a professional client:

A US Investment Firm

A Russian bank

An individual working in an Investment Firm as an investment advisor

A close-end listed investment organization

38. The compliance function reports:

To the CEO

To the shareholders

To the internal auditor

To the Board of Directors

39. A newly hired employee:

Must receive an induction training to ensure awareness with procedures of the company

No need to go through an induction training program if the employee is from another similar sized company

Must begin from working at the operational level and then moving on to control functions

Enroll on the next scheduled training available

40. What is the max penalty for not complying with the provisions of the Prevention and Suppression of Money Laundering and Terrorist Financing Law:

�125.000

�200.000

�350.000

�341.720

41. A person employed by a CIF must:

Submit a criminal record certificate

Submit his university degrees

Not have a portfolio in another CIF

Be clients of the CIF

42. A CIF when providing information to clients regarding past performance of a Financial Institution, 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

43. What is a qualifying holding in an investment firm?

50% or more of the share capital or the voting rights

33% or more of the share capital or the voting rights

20% or more of the share capital or the voting rights

10% or more of the share capital or the voting rights

44. What is not a condition for granting authorization by CySEC?

The CIF must have a separate compliance unit

To have at least 2 managerial staff with good reputation and sufficient experience

CYSEC must approve of the shareholders and beneficiaries of the investment firm

The CIF must have its registered office in Cyprus

45. Which information may not be included in the prospectus and key investor information for UCITs:

Short description of the investment objectives and investment policy

Past-performance or performance scenarios

Costs and associated charges

Valuation method

46. Which of the following is an ancillary service:

Investment advice

Placing of financial instruments without a firm commitment

Operating an MTF

Credits and loans

47. When does CYSEC withdraw a CIF’s authorization?

When the CIF has renounced its license

When there are suspicions that a violation may endanger the client’s interests

When the CIF systematically infringes the provisions of the law

If the CIF has not used its license for the last 6 months

48. UCITs in the form of a Variable Capital Investment Company (VICI) may not have a depositary.

It is not allowed. Every UCITS must have a depositary

If the UCITS is listed.

When the board of the VICI undertakes to perform the duties of the depositary as well.

If the VCIC is listed with at least 80% of its shares traded in the stock exchange

49. 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

50. Whenever a CIF appoints a new director:

The CIF must inform CySEC within 5 days

The CIF must inform CySEC within 1 month

The CIF must inform CySEC within 1 month of the appointment and then obtain approval

The CIF must obtain prior approval from CySEC within 1 month

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