Breaking it Down: Chartered Investment Manager (CIM®) Designation

What is the CIM®?
The Chartered Investment Manager (CIM®) designation offers credentials as a prerequisite in order to qualify for a license to become a Portfolio Manager.

The Steps to CIM® Designation:

The Canadian Securities Institute (CSI) ™ offers two routes for obtaining your CIM designation.

The CSI Routes:

1. CSC + IMT + PMT = CIM (Can be found on CSI Website)
2. CSC + WME + AIS + PMT = CIM (Can be found on CSI Website)

Foran Financial supports the first option only with the following seminars:
• The Foran Investment Management Techniques seminar (IMT).
• CSI ‘s IMT™ includes 2 exams, the first is technical knowledge and the second is a case study which tests application.
• People find the second exam “not as easy”
• The Foran Portfolio Management Techniques seminar (PMT).

Note: Students can complete these Seminars in any order according to their personal schedules.

If you have any questions about the WME, IMT and PMT seminars, please leave a comment below or give us a call.

If you are interested in registering for a course or purchasing one of our products, you can do so online or over the phone.

Update: Vancouver Seminars

Vancouver seminars are going great! Here’s one response from the IMT session last week.

“Ron was (as always) SUPER great…..it’s the ONLY way to do one of these courses….for sure.”

Finishing up this weekend with PMT. If you are interested in joining us, get your order in soonest! We’re finalizing materials out tomorrow.

–Alison

Investment Management Techniques (IMT) Exam Prep

Questions

 

1. Which statements are correct about laddering?

I. Laddering involves building a portfolio of debt securities with staggered maturities, so that a portion of the portfolio matures at regular intervals.

II. A laddering portfolio is normally structured so that an equal dollar portion of the portfolio is placed in each maturity interval.

III. To maintain the ladder, as debt securities mature, the maturity amount is reinvested at the long-term end of the ladder. Over time, the portfolio comes to include only debt instruments that were originally purchased at the longest allowable maturity date.

IV. Purchases are made in all interest rate cycles, regardless of expectations, with the idea that over time this will even out overall returns.

a)            I, II
b)            I, III, IV
c)            I, II, IV
d)            I, II, III, IV

2. This risk relates to the hedge fund as a business entity and results from the fact that many hedge funds are small, newly created businesses that depend on one or more “star” managers for their success. Such organizations are highly focused on promoting and supporting the skills of the manager(s) and may lack the organizational depth, managerial talent and strategic planning capabilities necessary to ensure growth or even survival. For most hedge funds, this risk results from potential system failures as well as faulty settlement, reporting and accounting procedures. This risk is significant in single-strategy funds and needs to be addressed through due diligence. This is?

a)            first-order risk
b)            second-order risk
c)            third-order risk
d)            operational risk

Answers

1. d) I, II, III, IV
Chapter 10: Analysis of Debt Securities II: Price Volatility and Investment Strategies

2. d) operational risk
Chapter 12: Analysis of Non-Conventional Asset Classes and their Structures

For more Investment Management Techniques questions check out our IMT Quiz Book.

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IMT Exam Questions

Questions

 

Chapter 15: Managing Your Client’s Investment Risk

1. Equity monetization is a mechanism offered by banks and their investment dealer subsidiaries that allow individuals to hedge the price exposure of a concentrated position in a publicly listed stock, and raise money against that hedged position cost-effectively. The shares are hedged using an equity monetization structure. These structures could include a (an)?

I. equity forward structure

II. exchangeable debenture structure

III. retractable preferred share structure

IV. equity collar structure

a) I, II, III

b) II, III, IV

c) I, II, IV

d) I, II, III, IV

 

Chapter 15: Managing Your Client’s Investment Risk

2. Suitable candidates for equity monetization include?

I. Corporate insiders, including directors and senior officers of publicly listed corporations, who have been with the company for a long time and have accumulated a significant position in shares or stock options in their company, and who have a substantial concentration risk.

II. Controlling or significant shareholders of publicly listed companies. Controlling or significant shareholders can use equity monetization to diversify their substantial concentration risk on the stock. These shareholders also tend to have a low cost base on their shares, so tax deferral is an important feature along with the ability to vote, which allows them to maintain their influence over the issuer.

III. Owners-managers of private companies that have gone public. These shareholders are usually exposed to concentration risk, and may have a low cost base on their shares, since they received or purchased shares in the company before it went public.

IV. Shareholders involved in mergers and acquisitions based on share exchanges. When a Canadian company is acquired by another publicly listed Canadian company, and the consideration offered is either shares in the acquirer or a combination of cash and shares, the selling shareholders can get a tax rollover when they sell their shares to the acquirer. The selling shareholders do not pay tax on the acquisition date; they pay tax only when they sell the acquirer’s shares.

a) I, II

b) III, IV

c) I, II, III

d) I, II, III, IV

 

Answers

 

1. c) I, II, IV

 

2. d) I, II, III, IV

 

For more Investment Management Techniques questions check out our IMT Quiz Book.

Keep up to date on our courses and products by liking us on Facebook and following our Twitter Feed.

 

 

Investment Management Techniques Exam Prep

Questions

 

Chapter 17: Portfolio Monitoring, and Performance Appraisal

1. The return on a mutual fund is 12%; its beta is 1.4; its standard deviation is 10; and the risk-free rate is 3%. Calculate the Sharpe ratio ?

a)            0.58

b)            10.0

c)            6.42

d)            0.90

 

Chapter 17: Portfolio Monitoring, and Performance Appraisal

2. Distinguish between policy return, allocation return, and selection return.

I. Performance attribution analysis begins with the investment policy statement that guides the management of the portfolio. The first step in attribution analysis is to determine the portfolio’s policy return. A portfolio’s policy return is equal to the return on the portfolio based on the strategic asset allocation decision.

II. The second step in attribution analysis is to measure the return on the portfolio based on the decision to shift the portfolio’s weights from the strategic asset allocation, which is called the portfolio’s allocation return. The decision to deviate a portfolio’s weights from the strategic allocation can be made by the client or it can be left to the discretion of the manager. If it is at the discretion of the portfolio manager, then the allocation return is included in the evaluation of the portfolio manager.

III. The final decision in attribution analysis is to measure the portfolio manager’s ability to select individual securities, which is known as the selection effect.

IV. The selection effect is the difference between the actual portfolio return and the policy return.

a)            I, II

b)            I, II, III

c)            I, II, IV

d)            I, II, III, IV

 

Answers

 

1. d) 0.90

(12 – 3)/ 10  = 0.90

 

2. b) I, II, III

Statement IV is incorrect. The selection effect is the difference between the actual portfolio

return and the allocation return, not the policy return.

 

For more Investment Management Techniques questions check out our IMT Quiz Book.

Keep up to date on our courses and products by liking us on Facebook and following our Twitter Feed.

 

 

Investment Management Techniques

Questions

Chapter 6: Analysis of Equity Securities II: Company Analysis & Valuation

1. Which of the following are risk analysis ratios?

 

I. cash flow to total debt

II. quick ratio

III. debt to equity ratio

IV. interest coverage

V. earnings per share

 

a) I, III, IV

b) I, II, III, IV

c) II, III, V

d) I, II, V

 

Chapter 7: Analysis of Equity Securities III: Technical Analysis

2. This indicator measures momentum on a stock by comparing the relative strength of price gains on a day that a stock closes up, to the strength of price declines on days that a stock closes down. This is the ?

 

a) MACD

b) RSI

c) Stochastic indicator

d) PSR

 

Answers

 

1. a) I, III, IV

2. b) RSI; the relative strength index

IMT Exam Questions

Questions

1. Standard finance assumes that investors ?

I. are risk seeking

II. have rational expectations

III. manage their portfolios as a whole

IV. compartmentalize their investments

a) I, II, IV
b) II, III
c) I, II, III
d) I, III

 

Chapter 2: Understanding a Client’s Risk Tolerance

2. Which of the following describes mental accounting?

 

I. It was first identified by University of Chicago professor Milton Friedman in 1980

II. Mental accounting describes people’s tendency to categorize and evaluate economic outcomes by grouping assets into non-fungible (non-interchangeable) mental accounts.

III. Mental accounting causes investors to irrationally treat various sums of money differently based on where these sums are mentally categorized.

IV. The way that money is obtained (work, inheritance, gambling, bonus, and so on) or the nature of the money’s intended use (for example, leisure or necessities) can affect how that money is treated.

a) I, II
b) I, II, III
c) II, III, IV
d) I, II, III, IV

 

Answers

1. b) II, III

Statement I is incorrect. It assumes that investors are risk-averse

Statement IV is incorrect. It assumes that investors manage their portfolios as a whole.

2. c) II, III, IV

It was first identified by University of Chicago professor Richard Thaler in 1980.

For more Investment Management Techniques questions check out our IMT Quiz Book.

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Investment Management Techniques

Questions

 

Chapter 3: Asset Allocation and Investment Strategy

4. ________ refers to the benchmark asset mix designed to achieve the client’s long-term goals and objectives, while taking into account any investment constraints. For example, a client’s asset allocation may be 5% cash, 25% bonds, and 70% equities, with a constraint that only 25% of the portfolio will be allocated to non-North American equities.

a) Insured asset allocation

b) Strategic asset allocation (SAA)

c) Tactical asset allocation

d) Rebalancing

 

Chapter 9: Analysis of Debt Securities I: Valuation and the Term Structure of Interest Rates

6. Investor Alex purchases T-bills maturing in 130 days time, at a price of $98.40. Calculate the annualized yield on the T-bills using the Bank Discount Rate basis?

a) 4.32%

b) 3.97%

c) 4.50%

d) 4.43%

 

 

Answers

 

4. b)       strategic asset allocation (SAA)

6. d)       4.43%

Assume a $100 face value T-bill

= [($100 – $98.40)/$100] x (360/130) x 100

= ($1.60/$100) x (360/130) x 100

= 4.43%

IMT Exam Questions

Questions

Chapter 14: International Investing

1. What are characteristics of American Depository Receipts (ADRs)?

 

I. American Depository Receipts (ADRs) are an efficient method of direct international equity investment. Buying ADRs is the equivalent of buying the company’s common stock, but on the investor’s domestic exchange.

II. ADRs are exchange-listed shares of a trust, or special purpose company (SPC), whose sole purpose is to hold a certain number of common shares of the issuer’s common stock.

III. These pledged shares form the collateral for the ADR trust, and are placed on deposit with a custodian bank or other reliable financial intermediary in the home country of the underlying company.

IV. ADRs are issued only for the most liquid and well known international companies. ADRs are only listed on U.S. stock exchanges.

a) I, II

b) I, II, III

c) I, II, IV

d) I, II, III, IV

Chapter 15: Managing Your Client’s Investment Risk

2. The coefficient of determination (R2) between Loblaws and the S&P/TSX Composite is 0.30. What percentage of the movement in Loblaws stock is due to unsystematic factors?

a) 30%

b) 70%

c) 9%

d) 91%

Answers

1. d) I, II, III, IV

2. b) 70%

Note that R2 is given, as opposed to the coefficient of correlation. Therefore 30% of the movement in Loblaws stock is due to systematic factors and 70% (100% – 30%) is due to unsystematic factors.

These questions are sampled from the Foran IMT Quiz Workbook. For a full listing of our seminars and quiz books go to our website or call our office at  (416) 947 1922.

IMT Practice Exam Questions

Questions

Chapter 6: Analysis of Equity Securities II: Company Analysis & Valuation

1. What is correct about IFRS versus GAAP?

 

I. The major ‘philosophical’ difference between the two accounting methodologies is that IFRS is almost entirely principle-based whereas Canadian and U.S. GAAP are primarily rules-based.

II. Rules-based accounting is more rigid, meaning specific procedures are observed when preparing financial statements. This makes for less ambiguity but also increases the complexity of the . process. There is also more difficulty in making rules that fit every situation.

III. In principle-based accounting, guidelines are more general because the goal is to have the completed financial statements achieve a set of good reporting objectives. An example of a good reporting objective is sufficient disclosure of data so that an investor can make an objective analysis.

IV. A principle-based process can be adapted to many more situations than a rules based process. Also by having a wide adoption of principle-based standards, comparison of financial statements among firms across industries or across countries will be easier to do.

a) I, II

b) III, IV

c) I, II, III

d) I, II, III, IV

 

Chapter 10: Analysis of Debt Securities II: Price Volatility and Investment Strategies

 

2. The modified duration on Transalta Utilities 7% coupon bonds maturing in 12 years is 9 years. The bonds have no embedded options. The convexity is 50 basis points per 1% change in interest rates. Which of the following statements are correct for a 1% change in yields?

I. a 1% increase in yields should cause the bond price to drop 9.5%

II. a 1% increase in yields should cause the bond price to drop 8.5%

III. a 1% decrease in yields should cause the bond price to rise 9.5%

IV. a 1% decrease in yields should cause the bond price to rise 8.5%

a) I, III

b) I, IV

c) II, III

d) II, IV

 

Answers

 

1. d) I, II, III, IV

2. c) II, III

Convexity will lessen the fall in the bond price to 8.5% (9% – ½%) .

Convexity will increase the rise to 9½% (9% + ½%).

 

These questions are sampled from the Foran IMT Quiz Workbook. For a full listing of our seminars and quiz books go to our website or call our office at  (416) 947 1922.