1 Ethics and Integrity in Financial Services
1.1 Ethics and Integrity
On completion, the delegate should:
1.1.1 know the key principles of ethical behaviour in financial services
1.1.2 know the meaning and characteristics of Environmental, Social, and
Corporate Governance (ESG)
1.1.3 know the role of responsible investments
1.1.4 know types of impact investing:
• gender lens investing
• micro finance

2 Introduction – Saving and Borrowing
2.1 Savers/Borrowers
On completion, the candidate should:
2.1.1 know how the financial services industry can be viewed as linking
those with surplus money (savers) and those with a need for money
(borrowers) in the following ways:
• via banks (deposits, loans)
• via equities (ownership stake)
• via bonds (I owe you’s)
2.1.2 know that borrowers include companies and governments and that
governments issue bonds rather than equities
2.1.3 know the relationship between the level of risk and the prospect of
reward
2.1.4 know that the financial services industry also includes markets to
enable investors in equities and bonds to buy or sell investments
2.1.5 know that the financial services industry also includes insurance
providers to enable financial risks to be managed
2.1.6 know that the financial services industry also includes foreign
exchange dealers to allow one currency to be exchanged for
another to facilitate international trade

3 Banking
3.1 Banking
On completion, the candidate should:
3.1.1 know the difference between retail and commercial banking and the
types of customer – individuals / corporates
3.1.2 know the nature and types of borrowing available to retail
customers:
• from banks – loans, mortgage loans, overdrafts
• from banks and credit card companies – credit cards
• from other sources – pawnbrokers, payday loans
3.1.3 know the difference between the quoted interest rate on borrowing
and the effective annual rate of borrowing
3.1.4 be able to calculate the annual effective rate given the quoted rate
and frequency of interest payment
3.1.5 know the difference between secured and unsecured borrowing
3.1.6 know what types of borrowing are likely to be relatively expensive –
pawnbrokers / payday loans, credit cards, overdrafts, unsecured
loans; and cheaper – secured loans, eg mortgages
3.1.7 know that investment banks help companies to raise money and
advise them on strategy, eg mergers and acquisitions
3.1.8 know the role of central banks:
• banker to banking system
• banker for the government
• regulatory role (interest rate setting)

4 Equities
4.1 Equities
On completion, the candidate should:
4.1.1 know the reasons for issuing shares (stock) – to finance a company
4.1.2 know the definition of an initial public offering (IPO)
4.1.3 know the potential sources of return from shares:
• dividend
• capital gain
4.1.4 be able to calculate the dividend yield given the share price and the
dividends paid in the year
4.1.5 know that shares provide their owners with the right to vote at
company meetings / assemblies
4.1.6 know the risks involved in owning shares:
• lack of profit
• bankruptcy/collapse

5 Bonds
5.1 Bonds
On completion, the candidate should:
5.1.1 know the definition of a bond and the reasons for issue:
• alternative to loans or issuing shares
5.1.2 know the bond issuers:
• governments
• corporates
5.1.3 know the features of bonds:
• repayment date
• frequency of interest payments
• tradeable
5.1.4 know the key terms:
• nominal
• coupon
• redemption / maturity
• yield
5.1.5 know the advantages and disadvantages of investing in bonds:
• regular income
• fixed maturity date
• credit risk
5.1.6 know the role of credit rating agencies:
• investment grade / non-investment grade
5.1.7 understand the benefits and risk of leverage in a company’s
financing structure

6 Derivatives
6.1 Derivatives
On completion, the candidate should:
6.1.1 know the uses and application of derivatives
6.1.2 know the definition and function of a future
6.1.3 know the definition and function of an option (calls and puts)

7 Markets

7.I Markets
On completion, the candidate should:
7.1.1 know the function of a stock exchange
7.1.2 know the reasons why a company makes an initial public offering
(IPO)
7.1.3 know the purpose of a stock exchange index:
• single market
• global markets
7.1.4 know the following stock market indices and which market they
relate to:
• Dow Jones Industrial Average
• S&P 500
• Nasdaq
• FTSE 100
• DAX
• Hang Seng
• Nikkei 225

8 Other Areas of Financial Services
8.1 Fund Management
On completion, the candidate should:
8.1.1 know the principle of collective investment schemes:
• comparison with direct investment
• pooling
• diversification
• expertise

8.2 Foreign Exchange
On completion, the candidate should:
8.2.1 know the basic characteristics of the foreign exchange market:
• currency trading
• exchange rate
• cryptocurrencies

8.3 Insurance
On completion, the candidate should:
8.3.1 know the types of insurance available:
• personal
• corporate
• the concept of syndication

8.4 Retirement Planning
On completion, the candidate should:
8.4.1 know the importance of planning for retirement

8.5 Financial Technology (Fintech)
On completion, the candidate should:
8.5.1 know the application of technology in collective investment:
• platforms
• screening tools
8.5.2 know how crowd funding works
8.5.3 know the principles of peer-to-peer finance
8.5.4 know how global stock markets have benefitted from the application
of Fintech:
• technology indices
• high frequency trading
8.5.5 know the basic principles of distributed ledger technology

END

99% of all Risk Reward course delegates to CISI exams earned  86% or higher pass marks the first time.

Delegates completing this course will gain both specialist technical and behavioural knowledge, its application and how to calculate the topics covered in the syllabus, published by the CISI (2021).

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