A Look at Recent Past Papers for the CII AF4 Exam – April 2024
In this article, we are taking a look at the questions asked in four past papers of the CII’s Advanced Diploma in Financial Planning AF4 exam – this is the unit that tests investment planning.
This article is correct as at 16 April 2024.
In the table below, we show the questions that were asked in October 2023, March 2023, September 2022 and May 2022.
| Modern Portfolio Theory and benefits of diversification. | Income calculation. | Calculation using CAPM and theory. | Factors for review. |
| Standard deviation – theory and calculation. | Risks within portfolio and the reasons. | Macaulay duration. | Calculation of MWR. |
| Risks of a portfolio and one reason for each. CPI vs RPI. | Maturity options for Index-Linked Savings Certificates. | Using Investment Association sectors as benchmarks. | Income Tax for a REIT. |
| Broad and narrow money. | Benefits of investing in NS&I including tax. | Factors that affect interest rate increases. | Commercial property. |
| Money supply. Return on equity calculation and theory. Factors influencing ATR. | Value-based investment style. | Alpha. | Risks of commercial property funds. |
| Mitigating capacity for loss. | Calculation of TWR and theory. | Correlation. | Top-down investment. |
| Behavioural finance. | ACD and depository roles within an OEIC. | Risks of using ETFs. | Momentum investment and GAARP styles. |
| EISs and tax planning. | Tax treatment of dividends from VCTs and SEISs and calculation. | Factors for active management. | Efficient market hypothesis. |
| Alpha calculation and theory. | Reinvestment relief with a SEIS. | Current and capital account. | Active vs passive. |
| Gearing and investment trusts/trading at a discount. | Information ratio calculation and theory. | Conditions to qualify as a PAIF. | Conventional and variable unitised with-profits and bonuses. |
| Income options on a platform’s cash account. | Segmentation of investment bond, tax treatment with top-slicing relief. | Herding and endowment effect. | Money market funds. |
| Tactical vs strategic asset allocation. | Unfettered fund of funds vs manager of managers fund. | Thematic-based funds. | Sustainable withdrawal rates. |
| Sequencing risk. | UK’s current and capital accounts. | Compound annual returns. | Factors to consider for an investment strategy. |
| Redemption yield calculation. | Dividend cover and yield calculation and theory. | SRI and examples. | Collective funds vs direct equities. |
| Characteristics of Gilts. Benefits and drawbacks of gilt-based collectives vs owning Gilts directly. | Factors affecting share prices. | Sharpe Ratio. | Diversification rules for a retail UCITS OEIC. |
| Interest rates and fixed interest securities. | Behavioural finance. | Volatility managed funds. | Calculation of beta. |
| Quantitative tightening. | Benefits of direct equity vs collectives. | Platforms. | Principles of multi-factor models. |
| Yield curves. | Rebalancing process. | ROCE. | Active vs passive. |
| Investor protection and gilts. | Interim/final dividends. | Exercising warrants. | |
| Dividends vs bonuses. | Calculation of diluted NAV per share. | ||
| EIS - tax benefits and qualifying rules. | Preference shares. | ||
| Operating profit and dividend cover calculations. | |||
| Conventional vs index-linked gilts. | |||
| Breakeven inflation rates. | |||
| Investment grade vs sub-investment grade bonds. |
The AF4 exam is challenging as not only is the information within J10 and R02 assumed knowledge, it is also important to keep up to date with changes in the economy as questions on this will often appear.
Using as many past exam guides as possible will ensure that the level of detail needed is appreciated and that answers should always be related to the information given in the case study. The main calculations that appear throughout the syllabus should also be practised in full before attempting this exam.
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