Critics of the CII AF4 exam will see: it’s not ‘just maths’ anymore – April 2016 Exam Review

The AF4 exam like any of the AF exams is a challenge but the pass rate shows that it is possible, with the correct amount of preparation, to get through it. In this article, we go through the questions from the April 2016 exam – useful for those preparing to sit CII AF4.

Over the past four years, CII figures show that around 60% of candidates pass, which puts it as one of the more impressive pass rates out of the AF subjects. In 2015, the annual pass rate was 63.88%.

The structure of the exam has also come in for some criticism in the past too, with the comment often heard that it’s more of a maths exam. It was with great interest, therefore, that we read through the exam paper from this April. If you haven’t seen it, here it is:

http://www.cii.co.uk/media/6827667/af4_april_2016_qp.pdf

Question 1

This is the big 80-mark question, and on first glance, it seems a fair one with corporate bonds and investment trusts being the main investments in the client’s portfolio. The question was split between 12 theory questions and only 4 calculations to do which took up only 17 of the marks, meaning 63 were on offer for knowledge on fixed interest investments and collectives (unit trusts were also brought in on the last question).

Question 2

This question was on a shareholding and a small table of figures from the company’s accounts were given. In this question, 15 marks were awarded for the calculations and 25 marks for theory. Again, it was a fair question; return on equity and return on capital employed and interest cover calculations were all required, and these have come up plenty of times before, so students using any past papers should have been well prepared for them. The theoretical questions also were fair.

Question 3

Here, 5 marks were awarded for calculations and 35 for theory. This time, the question was on performance of two funds, so students had to work out annual returns and money weighted returns. The theory included questions on a passive strategy and index tracking.

We feel that all of the subjects tested in April’s exam are very well covered in the supporting manuals – particularly J10 Discretionary Investment Management; although, R02 Investment Principles and Risk is useful too. It goes without saying too that you need to keep up to date with the current economic environment and how this impacts the different asset classes, as there is usually a question relating to this. For most advisers, this is what they would do anyway, so hopefully those questions never cause a particular problem. If both manuals were studied in full and you kept up to date with economic developments, then a student should have been well placed to pass this paper. As you’ll know the pass rate is 55% which means scoring 88 marks of the 160 available.

Comparing to October 2015’s Exam

We wondered how this exam paper compared with the previous one in October 2015. If you haven’t seen this one, here is the link:

http://www.cii.co.uk/media/6451934/af4_october_2015_qp.pdf

This paper tested very different areas, but the split between calculations and theory were very similar; Question 1 allocated 17 marks for calculations and 63 for theory. In Question 2, there were 6 marks for calculations, 34 for theory and Question 3 gave 8 marks for calculations meaning 32 were for theory. The criticism in the past, that AF4 is a maths test, no longer seems the case.
Anyone planning for October’s exam needs to get a good study plan in place. Use the past papers to look at the type of questions that are being asked and the calculations that come up time and time again. It will soon be clear which ones to focus on.

Also, keep in mind that with any written paper, you need to answer the question that is specifically being asked – read it several times to make sure you know what is being asked!

Allocate your time well – the first question in April’s exam was worth 5 marks – so at least 5 bullet points were needed. Remember too that you can answer the questions in any order you like – just remember to number them clearly so the examiner knows.

Grab the resources you need!

If you’re studying for your CII AF4 exam, and you’re wanting some extra practice, grab our free taster to try out one of Brand Financial Training’s resources for yourself.  Click the link to download the AF4 mock paper taster now!

Over to You…

If you’re planning on sitting AF4 in the near future, are you sticking to your study plan?