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Free CIMA Practice Questions

10 free, exam-style Certified Investment Management Analyst (CIMA) practice questions with answers and explanations. No signup required. Work through them below, then take the full free CIMA practice test to study every exam domain.

The CIMA exam has 120 questions and runs 4 hours.

These 10 free CIMA questions are organized by exam domain, so you can see how each part of the Certified Investment Management Analyst blueprint is tested. Reveal the answer and explanation under each question.

Domain 2: Investments 25% of exam

Question 1

A bond has a modified duration of 7. If market interest rates rise by 50 basis points, the bond's price will change by approximately:

  1. −0.5%
  2. −3.5%
  3. −7.0%
  4. +3.5%
Show answer & explanation

Correct answer: B - −3.5%

Question 2

Two option-free bonds have identical yields. Bond A matures in 5 years with an 8% coupon; Bond B matures in 5 years with a 3% coupon. Which statement is correct?

  1. Bond A has higher duration and greater interest-rate risk
  2. Both have identical duration because their maturities match
  3. Bond B has higher duration and greater interest-rate risk
  4. Duration cannot be compared without knowing each credit rating
Show answer & explanation

Correct answer: C - Bond B has higher duration and greater interest-rate risk

Question 3

A client seeks passive commodity exposure through a fund that continually rolls near-month futures contracts. The futures market has been in persistent contango. Over time, this roll process will MOST likely:

  1. Enhance returns as contracts roll to cheaper near months
  2. Have no net effect, since roll gains and losses cancel yearly
  3. Remove all tracking error relative to the spot commodity price
  4. Detract from returns as contracts roll to pricier months
Show answer & explanation

Correct answer: D - Detract from returns as contracts roll to pricier months

Question 4

An advisor wants to offer a private fund restricted to 'qualified purchasers' rather than merely 'accredited investors.' Compared with the accredited-investor standard, the qualified-purchaser standard:

  1. Requires a substantially higher level of investable assets
  2. Requires only that a minimum annual income threshold be met
  3. Applies solely to institutions and never to individual investors
  4. Is a looser standard established and enforced directly by FINRA
Show answer & explanation

Correct answer: A - Requires a substantially higher level of investable assets

Domain 3: Behavioral Finance, Portfolio Theory and Construction 25% of exam

Question 5

The risk-free rate is 2.5%, the expected market return is 9%, and a security has a beta of 1.2. According to the CAPM, what is the security's expected return?

  1. 13.3%
  2. 12.3%
  3. 11.5%
  4. 10.3%
Show answer & explanation

Correct answer: D - 10.3%

Question 6

On a chart of the Security Market Line, a stock plots ABOVE the line. Based on the CAPM framework, this indicates that the stock is MOST likely:

  1. Overvalued, since any point off the line represents mispricing downward
  2. Undervalued, offering more return than its systematic risk requires
  3. Fairly valued, because it still lies within the capital market line
  4. Simply riskier than the market, because its beta must exceed 1.0
Show answer & explanation

Correct answer: B - Undervalued, offering more return than its systematic risk requires

Question 7

An investor quickly sells stocks that have risen above their purchase price but refuses to sell those trading below it, hoping to 'get back to even.' This pattern BEST illustrates:

  1. Anchoring to an arbitrary reference number
  2. Mental accounting across separate buckets
  3. The disposition effect, rooted in loss aversion
  4. Confirmation bias in processing new data
Show answer & explanation

Correct answer: C - The disposition effect, rooted in loss aversion

Domain 4: Performance Analysis 10% of exam

Question 8

A portfolio returned 11% over the period. The risk-free rate was 3%, and the portfolio's standard deviation was 16%. What is the portfolio's Sharpe ratio?

  1. 0.50
  2. 0.69
  3. 1.38
  4. 8.00
Show answer & explanation

Correct answer: A - 0.50

Question 9

Two managers report identical Sharpe ratios. Manager A runs a client's entire portfolio; Manager B runs one of twelve sleeves within an already well-diversified portfolio. Which measure is MOST appropriate for evaluating Manager B specifically?

  1. The Sharpe ratio, since it is the accepted industry standard for all funds
  2. Standard deviation, since total volatility is what ultimately harms clients
  3. The Treynor ratio, since only systematic risk matters for one sleeve
  4. Maximum drawdown, since worst-case loss best reflects true downside danger
Show answer & explanation

Correct answer: C - The Treynor ratio, since only systematic risk matters for one sleeve

Question 10

Using a CAPM analysis (risk-free rate 2.5%, market return 9%, beta 1.2), a portfolio actually returned 12%. What is the portfolio's Jensen's alpha?

  1. 3.0%
  2. 1.7%
  3. 0.9%
  4. −1.7%
Show answer & explanation

Correct answer: B - 1.7%

The rest of the CIMA blueprint

The CIMA exam also covers these domains. Drill them in the full free practice test:

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