Exam ICWIM Topic 1 Question 49 Discussion
Actual exam question for CISI's ICWIM exam
Question #: 49
Topic #: 1
Question #: 49
Topic #: 1
An adviser is reviewing a client's portfolio, which has a time horizon of 15 years and is made up primarily of bonds and cash but with some exposure to equities and other higher-risk investments. It is reasonable to believe that the client's risk appetite is:
Suggested Answer: B Vote an answer
Risk appetite is determined by investment time horizon, asset allocation, and financial goals.
* Why is Option B Correct?
* A 15-year time horizon allows for some exposure to risk, but a heavy allocation to bonds and cash suggests a conservative approach.
* The presence of some equities implies a moderate willingness to take risk.
* Why Not Other Options?
* A (Low risk) # A pure cash and bond portfolio would be low risk, but equities add some risk.
* C (Mid risk) # A balanced portfolio would have higher equity exposure.
* D (Mid-high risk) # A higher-risk portfolio would be equity-heavy.
# Reference: CFA Institute (Risk Profiling), CISI Wealth & Investment Management.
* Why is Option B Correct?
* A 15-year time horizon allows for some exposure to risk, but a heavy allocation to bonds and cash suggests a conservative approach.
* The presence of some equities implies a moderate willingness to take risk.
* Why Not Other Options?
* A (Low risk) # A pure cash and bond portfolio would be low risk, but equities add some risk.
* C (Mid risk) # A balanced portfolio would have higher equity exposure.
* D (Mid-high risk) # A higher-risk portfolio would be equity-heavy.
# Reference: CFA Institute (Risk Profiling), CISI Wealth & Investment Management.
by Esther at May 10, 2025, 02:43 PM
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