Introduction to Securities and

Investment
(International)

Effective from 10 September 2024

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 Introduction to Securities & Investment (International)

Objective of the Examination

The objective of the examination is to provide candidates with a basic introduction to the
financial services industry with a particular focus on investments.

The examination will test candidates’ knowledge and understanding of the following
elements:

• Introduction
• Economic Environment
• Equities/Stocks
• Bonds
• Other Markets and Investments
• Derivatives
• Investment Funds
• Financial Services Regulation
• Other Financial Products
• Financial Advice

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Syllabus Structure

The syllabus is divided into elements. These are broken down into a series of learning
objectives.

Each learning objective begins with one of the following prefixes: know, understand or
be able to calculate. These words indicate the different levels of skill to be tested.
Learning objectives prefixed:

• know require the candidate to recall information such as facts, rules and
principles

• understand require the candidate to demonstrate comprehension of an issue,

fact, rule or principle

• be able to calculate require the candidate to be able to use formulae to perform

calculations

Candidate Update

Candidates are reminded to visit cisi.org/candidateupdate regularly for updates on

industry changes that could affect their examination.

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Examination Specification

Each examination paper is constructed from a specification that determines the

weightings that will be given to each element. The specification is given below.

It is important to note that the numbers quoted may vary slightly from examination to
examination as there is some flexibility in order to ensure that each examination has a
consistent level of difficulty.

Examination specification: 50 multiple choice questions

Element
Element Questions
number
1 Introduction 3
2 Economic Environment 4
3 Equities/Stocks 9
4 Bonds 7
5 Other Markets and Investments 5
6 Derivatives 4
7 Investment Funds 6
8 Financial Services Regulation 5
9 Other Financial Products 4
10 Financial Advice 3
Total 50

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Assessment Structure

A one-hour examination, consisting of 50 multiple choice questions.

Candidates sitting the examination by computer based testing may be asked to answer
up to 10% additional trial questions. These will not be separately identified and do not
contribute to the result. Candidates who are asked to answer additional questions will be
given proportionately more time to complete the test.

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Summary Syllabus

Element 1 Introduction
1.1 The Financial Services Industry
Element 2 Economic Environment
2.1 Economic Environment
Element 3 Equities/Stocks
3.1 Equities/Stocks
Element 4 Bonds
4.1 Characteristics
4.2 Government Bonds
4.3 Corporate Bonds
4.4 Bonds
Element 5 Other Markets and Investments
5.1 Cash Deposits
5.2 The Money Market
5.3 Property
5.4 The Foreign Exchange Market
Element 6 Derivatives
6.1 Derivatives Uses
6.2 Futures
6.3 Options
6.4 Terminology
6.5 Derivatives/ Commodity Markets
6.6 Swaps
6.7 Credit Default Swaps
Element 7 Investment Funds
7.1 Introduction
7.2 Open-Ended/Mutual Funds
7.3 Closed-Ended Investment Companies
7.4 Exchange-Traded Funds
7.5 Alternative Investment Funds

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Element 8 Financial Services Regulation

8.1 Introduction
8.2 Financial Crime
8.3 Insider Trading and Market Abuse
Element 9 Other Financial Products
9.1 Retirement Planning
9.2 Loans
9.3 Mortgages
9.4 Life Assurance
Element 10 Financial Advice
10.1 Areas of Financial Advice
10.2 Process for giving financial advice
10.3 Legal concepts relevant in financial advice

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Element 1 Introduction

1.1 The Financial Services Sector

On completion, the candidate should:

1.1.1 know the role of the following within the financial services sector:

• retail banks/ commercial banks

• savings institutions

• investment banks

• private banks

• pension funds

• insurance companies

• fund managers

• stockbrokers

• custodians

• platforms

• third-party administrators (TPAs)

• industry trade and professional bodies

• sovereign wealth funds

• peer to peer/crowdfunding

1.1.2 know the function of and differences between retail and professional/
commercial business and who the main customers are in each case

1.1.3 know the role of investment distribution channels including:

• independent and restricted advice

• execution only

• robo advice

1.1.4 know about the following themes

• Fintech

Environmental, Social, and Governance (ESG)

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Element 2 Economic Environment

2.1 Economic Environment

On completion, the candidate should:

2.1.1 know the factors which determine the level of economic activity:

• state-controlled economies

• market economies

• mixed economies

• open economies

2.1.2 know the stages of the economic cycle and the role of government in
determining:

• economic policy

• fiscal policy

• monetary policy

2.1.3 know the function of central banks

Federal Reserve
European Central Bank
Bank of England
Bank of Japan

2.1.4 understand the impact of the following economic data:

• Gross Domestic Product (GDP)

• balance of payments

• budget deficit / surplus

• level of unemployment

• exchange rates

• inflation/ deflation

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Element 3 Equities/Stocks

3.1 Equities/Stocks
On completion, the candidate should:

3.1.1 know how a company is formed and the differences between private and
public companies

3.1.2 know the features and benefits of ordinary and preference shares /
common stock and preferred stock:

• dividend

• capital gain

• share benefits

• right to subscribe for new shares

• right to vote

3.1.3 be able to calculate the share dividend yield

3.1.4 understand the advantages, disadvantages and risks associated with

owning shares / stock:

• price risk

• liquidity risk

• issuer risk

• foreign exchange risk

3.1.5 know the definition of a corporate action and the difference between
mandatory, voluntary and mandatory with options, including takeovers and
mergers

3.1.6 understand the following terms:

• bonus / scrip / capitalisation issues / stock splits / reverse stock

splits

• rights issues / open offer

• dividend payments

• buybacks

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3.1.7 be able to calculate:

• theoretical ex rights price

• theoretical ex bonus price

3.1.8 know the purpose and format of annual general meetings

3.1.9 know the function of a stock exchange

• primary/ secondary market

• listing

3.1.10 understand the characteristics of depositary receipts:

• American depositary receipt

• global depositary receipt

• dividend payments

• how created / pre-release facility

• rights

3.1.11 know the types and uses of the main global stock exchange indices

3.1.12 know how shares are traded:

• on-exchange / over-the-counter

• multilateral trading facilities

• order-driven / quote-driven

3.1.13 know the method of holding title and related terminology: registered and
bearer; immobilised and dematerialised

3.1.14 understand the role of the central counterparty in clearing and settlement

3.1.15 understand how settlement takes place:

• participants

• process

• settlement cycles

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Element 4 Bonds

4.1 Characteristics
On completion, the candidate should:

4.1.1 understand the characteristics and terminology of bonds:

• coupon

• redemption

• nominal value

• yields

4.2 Government Bonds

4.2.1 know the definition and features of government bonds:

• types

• US

• UK

• China

• Germany

• Japan

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4.3 Corporate Bonds

On completion, the candidate should:

4.3.1 know the definitions and features of the following types of bond:

• domestic

• foreign

• eurobond

• asset-backed securities, including covered bonds

• zero coupon

• hybrids (convertible/preferred)

• floating rate notes

• medium term notes

4.4 Bonds
On completion the candidate should:

4.4.1 know the potential advantages and disadvantages of investing in different

types of bonds

4.4.2 be able to calculate the flat yield of a bond

4.4.3 understand the role of credit rating agencies and the difference between
investment and non-investment grades

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Element 5 Other Markets and Investments

5.1 Cash Deposits

On completion, the candidate should:

5.1.1 know the characteristics of fixed-term and instant access deposit accounts

5.1.2 know the advantages and disadvantages of investing in cash

5.1.3 know the differences between crypto currencies and fiat currencies

5.2 The Money Market

On completion, the candidate should:

5.2.1 know the difference between a capital market instrument and a money
market instrument

5.2.2 know the definition and features of the following:

• Treasury Bill

• Commercial Paper

• Certificate of Deposit

• Money market funds

5.2.3 know the advantages and disadvantages of investing in money market

instruments

5.3 Property
On completion, the candidate should:

5.3.1 know the characteristics of property investment:

• commercial / residential property

• direct / indirect investment

5.3.2 know the potential advantages and disadvantages of investing in property

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5.4 The Foreign Exchange Market

On completion, the candidate should:

5.4.1 know the basic structure of the foreign exchange market including:

• currency quotes

• settlement

• spot / forward

• short-term currency swaps

5.4.2 be able to calculate a forward exchange rate using interest rate parity
formula

Element 6 Derivatives

6.1 Derivatives Uses

On completion, the candidate should:

6.1.1 know the uses and application of derivatives

6.2 Futures
On completion, the candidate should:

6.2.1 know the definition and function of a future

6.3 Options
On completion, the candidate should:

6.3.1 know the definition and function of an option

6.3.2 understand the following terms:

• calls

• puts

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6.4 Terminology
On completion, the candidate should:

6.4.1 understand the following terms:

• long

• short

• open

• close

• holder

• writing

• premium

• covered

• naked

6.5 Derivatives/ Commodity Markets

On completion, the candidate should:

6.5.1 know the characteristics of the derivatives and commodity markets

6.5.2 know the potential advantages and disadvantages of investing in the

derivatives and commodity markets

6.6 Swaps
On completion, the candidate should:

6.6.1 know the definition and function of interest rate swaps

6.7 Credit Default Swaps

On completion, the candidate should:

6.7.1 know the definition and function of credit default swaps

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Element 7 Investment Funds

7.1 Introduction
On completion, the candidate should:

7.1.1 understand the potential advantages, disadvantages, and risks of

collective investment

7.1.2 know the difference between active and passive (eg index) management

7.1.3 know the types of funds and how they are classified

7.2 Open-Ended/Mutual Funds

On completion, the candidate should:

7.2.1 know the characteristics and different types of open-ended fund / mutual
fund:

• US

• Europe

7.3 Closed-Ended Investment Companies

On completion, the candidate should:

7.3.1 know the characteristics of closed-ended investment companies:

• share classes

• gearing

• Real Estate Investment Trusts (REITs)

7.3.2 know the meaning of the discounts and premiums in relation to the pricing
of closed-ended investment companies

7.3.3 know how closed-ended investment companies’ shares are traded

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7.4 Exchange-Traded Funds

On completion, the candidate should:

7.4.1 know the main characteristics of exchange-traded funds:

• trading

• replication methods

• synthetic / non-synthetic

7.5 Alternative Investment Funds

On completion, the candidate should:

7.5.1 know the basic characteristics of hedge funds:

• risks

• cost and liquidity

• investment strategies

7.5.2 know the basic characteristics of private equity:

• raising finance

• realising capital gain

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Element 8 Financial Services Regulation

8.1 Introduction
On completion, the candidate should:

8.1.1 understand the need for regulation and authorisation of firms

8.1.2 understand the main aims and activities of financial services regulators

8.1.3 know the Chartered Institute for Securities & Investment Code of Conduct

8.1.4 understand the key principles of professional integrity and ethical

behaviour in financial services

8.2 Financial Crime

On completion, the candidate should:

8.2.1 know what money laundering is, the stages involved and the related
criminal offences

8.2.2 know how firms / individuals can be exploited as vehicles for financial
crime:

• fraud

• cybercrime

• terrorist financing

8.3 Insider Trading and Market Abuse

On completion, the candidate should:

8.3.1 know the offences that constitute insider trading and market abuse and the
instruments covered

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Element 9 Other Financial Products

9.1 Retirement Planning

On completion, the candidate should:

9.1.1 know the benefits provided by pensions

9.1.2 know the basic features and risk characteristics of retirement funds:

• state schemes

• corporate retirement plans:

o defined benefit

o defined contribution

• personal schemes

9.2 Loans
On completion, the candidate should:

9.2.1 know the differences between bank loans, overdrafts and credit card
borrowing

9.2.2 know the difference between the quoted interest rate on borrowing and the
effective annual rate of borrowing

9.2.3 be able to calculate the effective annual rate of borrowing, given the
quoted interest rate and frequency of payment

9.2.4 know the difference between secured and unsecured borrowing

9.3 Mortgages
On completion, the candidate should:

9.3.1 understand the characteristics of the mortgage market:

• interest rates

• loan to value

9.3.2 know the definition of and types of mortgage:

• repayment

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• interest only

• offset

9.3.3 know the prohibition on interest and the types of mortgage contracts that
exist in Islamic Finance

9.4 Life Assurance

On completion, the candidate should:

9.4.1 know the basic principles of life assurance and the definition of the
following types of life policy:

• term assurance

• whole of life

Element 10 Financial Advice

10.1 Areas of Financial Advice

On completion, the candidate should:

10.1.1 understand the main areas of financial advice:

• budgeting

• protection

• borrowing

• investment and saving

• later life planning

• estate planning

• tax planning and offshore considerations

10.2 Process for giving financial advice

On completion, the candidate should:

10.2.1 understand the key factors in the financial advice process:

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• the client relationship

• affordability, suitability, attitude to risk

• matching solutions with needs

• use of communication skills in giving advice

• monitoring and reviewing clients’ circumstances

• information given to clients

• consumer rights and remedies, including awareness of their

limitations

10.3 Legal concepts relevant in financial advice

On completion, the candidate should:

10.3.1 understand the key legal concepts relating to:

• legal persons (wills / intestacy / personal representatives /

trustees / companies / limited liabilities / partnerships

• contract, capacity to contract

• agency

• real estate, personal property and joint ownership

• powers of attorney

• insolvency and bankruptcy

• identifying, reporting scams

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