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CMA Kenya Regulations and Market Practice (Kenya)

Practice Questions100 questions

2026 Statistics

Key Facts: CMA Securities & Investment Exam

100

Multiple-Choice Questions

CISI Syllabus

2 hours

Time Limit

CISI Exam Regulations

70%

Passing Score Required

CISI Standards

£133

Standard Exam Fee

CISI 2026 Price List

Level 3

Qualifications Level

CISI UK Ofqual Registry

CBT

Computer-Based Exam Format

CISI / Prometric

The CMA Securities & Investment exam (CISI Level 3) consists of 100 questions, has a 2-hour duration, and costs £133 plus a registration fee. A score of 70% is required to pass. The exam covers global investment foundations with Kenya-specific market applications, emphasizing equities, bonds, investment funds, derivatives, and ethical regulations.

Sample CMA Securities & Investment Practice Questions

Try these sample questions to test your CMA Securities & Investment exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Which of the following institutions is responsible for registering and regulating all capital market intermediaries in Kenya?

A.Central Bank of Kenya (CBK)

B.Capital Markets Authority (CMA)

C.Nairobi Securities Exchange (NSE)

D.Unclaimed Financial Assets Authority (UFAA)

Explanation: The Capital Markets Authority (CMA) is the primary regulatory body responsible for licensing, regulating, and supervising capital market intermediaries in Kenya. It was established under the Capital Markets Act to facilitate the development of orderly, fair, and efficient capital markets. The Central Bank of Kenya regulates banking institutions, and the NSE is a self-regulatory trading platform.

2What is the primary role of a custodian in the securities industry?

A.To execute client buy and sell orders on the stock exchange

B.To hold and safeguard financial assets on behalf of investors

C.To manage the investment portfolio and make buying decisions

D.To underwrite new shares during an Initial Public Offering (IPO)

Explanation: A custodian is a specialized financial institution that holds and safeguards securities and other financial assets on behalf of investors. They prevent theft, loss, or misuse of assets, and handle administrative duties like corporate actions and income collection. Stockbrokers execute trades, fund managers manage portfolios, and investment banks underwrite IPOs.

3Which type of bank focuses primarily on providing services to retail customers, such as checking accounts and personal loans?

A.Investment Bank

B.Commercial Bank

C.Central Bank

D.Merchant Bank

Explanation: Commercial banks provide retail banking services directly to individuals and small businesses, including savings accounts, personal loans, and payment services. In Kenya, commercial banks are licensed and regulated by the Central Bank of Kenya (CBK). Investment banks focus on advisory and capital raising for corporations, and central banks manage national monetary policy.

4What is the key difference between retail and wholesale banking?

A.Retail banking serves individual customers, while wholesale banking serves large corporations and institutional clients.

B.Retail banking deals with securities trading, while wholesale banking focuses on traditional savings and loans.

C.Retail banking is unregulated, while wholesale banking is strictly supervised by the CMA.

D.Retail banking operates internationally, while wholesale banking is restricted to domestic markets.

Explanation: Retail banking targets individual consumers and small businesses with products like consumer loans and savings accounts. Wholesale banking serves corporate entities, institutional investors, and other financial institutions with large-scale transactions and advisory services. Both retail and wholesale operations are regulated by the Central Bank of Kenya.

5Which of the following best describes the role of a stockbroker in the Kenyan capital markets?

A.A person who decides what investments a mutual fund should make

B.An intermediary licensed by the CMA to buy and sell shares on behalf of investors on the NSE

C.An entity that holds cash deposits and pays interest directly to individual savers

D.An official body responsible for drafting national financial legislation

Explanation: A stockbroker acts as an agent representing clients who wish to buy or sell securities on the Nairobi Securities Exchange (NSE). In Kenya, stockbrokers must be licensed by the CMA and admitted as trading participants of the NSE. Fund managers decide mutual fund investments, banks take deposits, and parliament passes legislation.

6In the Kenyan context, what is the role of the Central Depository and Settlement Corporation (CDSC)?

A.To license stockbrokers and investment banks

B.To facilitate the holding of securities in electronic form and ensure safe settlement of trades

C.To set interest rates for commercial banks

D.To underwrite government Treasury bonds

Explanation: The CDSC acts as a central depository that dematerializes physical share certificates, allowing securities to be held electronically. It also manages the clearing and settlement of trades executed on the Nairobi Securities Exchange (NSE), ensuring cash is transferred and shares are delivered (Delivery versus Payment). The CMA licenses brokers, the CBK sets interest rates, and the CBK acts as the fiscal agent for government bonds.

7What is the primary objective of a pension fund?

A.To provide short-term credit to commercial businesses

B.To collect savings from workers and invest them to provide retirement income

C.To trade currencies in the foreign exchange market for speculative profits

D.To guarantee the deposits of commercial banks in case of insolvency

Explanation: A pension fund accumulates contributions from employers and employees during their working years. These funds are invested in a diversified portfolio (equities, bonds, property) to grow and provide a steady retirement income. They have long-term investment horizons. Commercial banks provide business credit, and the Kenya Deposit Insurance Corporation (KDIC) guarantees bank deposits.

8Which of the following functions is performed by an Investment Bank but NOT by a standard Stockbroker in Kenya?

A.Executing customer buy orders on the NSE

B.Advising corporations on mergers, acquisitions, and corporate restructuring

C.Providing research reports on listed companies to clients

D.Opening CDS accounts for retail investors

Explanation: Investment banks are licensed to offer corporate advisory services, including advising on mergers and acquisitions (M&A), underwriting new securities issues, and corporate restructuring. Standard stockbrokers focus primarily on executing trades on the exchange, retail advisory, and CDS account openings, and do not have full investment banking advisory licenses.

9An insurance company accumulates premiums from policyholders and invests them in the capital markets. How does this benefit the economy?

A.It reduces the tax rate on individual capital gains.

B.It pools risk and acts as a major institutional investor providing long-term capital.

C.It guarantees that stock prices will never drop below their purchase price.

D.It eliminates the need for commercial banks to issue loans.

Explanation: Insurance companies collect premium payments and pool risks. The funds collected form reserve pools that are invested in long-term financial assets like government bonds and equities. This makes insurance companies vital institutional investors that supply long-term capital to the financial markets, supporting economic growth. They do not dictate tax rates or guarantee stock prices.

10Why is a central securities depository (such as CDSC) critical for the implementation of a T+3 settlement cycle?

A.It eliminates the need for cash transfers between buyers and sellers.

B.It enables computerized book-entry transfers of ownership, bypassing physical document delivery.

C.It guarantees that all investments will yield positive returns within three days.

D.It operates as the primary underwriter for all corporate debentures.

Explanation: A T+3 settlement cycle means trades must settle three business days after execution. This speed is only possible because a central securities depository holds shares electronically (dematerialized). Transfers of ownership occur via electronic book-entry adjustments, avoiding the slow process of printing and physically transporting paper share certificates. Cash transfers are still required, and no positive returns are ever guaranteed.

About the CMA Securities & Investment Exam

The Introduction to Securities & Investment (Kenya) is a Level 3 professional certification designed to provide candidates with a comprehensive introduction to the financial services sector with a specific focus on the Kenyan securities market. Tailored in partnership with the Capital Markets Authority (CMA) of Kenya, the exam covers macroeconomics, money markets, foreign exchange, equity shares, corporate debt, derivatives, mutual funds, regulatory standards (including AML/anti-money laundering), and basic principles of financial planning.

Assessment

100 multiple-choice questions

Time Limit

2 hours

Passing Score

70%

Exam Fee

£133 (plus £35 registration) (CMA Kenya / Chartered Institute for Securities & Investment (CISI))

CMA Securities & Investment Exam Content Outline

10%

Financial Services Industry

Financial institutions, investment banking, market participants, retail and wholesale sectors.

10%

Economic Environment

Macroeconomic factors, Gross Domestic Product, inflation, interest rates, central bank functions, and fiscal policy.

10%

Financial Assets and Markets

Money market instruments, certificates of deposit, currency markets, and commercial property investments.

15%

Equities

Ordinary and preference shares, dividend distributions, rights issues, stock exchanges, and settlement systems.

15%

Bonds

Government bonds (Treasury bills/bonds), corporate bonds, pricing, yields, and redemption features.

10%

Derivatives

Futures contracts, call and put options, swaps, underlying assets, and risk management/speculation.

10%

Investment Funds

Collective investment schemes, unit trusts, investment trusts, ETFs, and open-ended funds.

10%

Financial Services Regulation

Market abuse, insider dealing, money laundering stages, international bodies (FATF), and professional standards.

10%

Other Financial Products & Financial Advice

Retirement packages, insurance products, debt financing, mortgages, and client advice frameworks.

How to Pass the CMA Securities & Investment Exam

What You Need to Know

Passing score: 70%
Assessment: 100 multiple-choice questions
Time limit: 2 hours
Exam fee: £133 (plus £35 registration)

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

CMA Securities & Investment Study Tips from Top Performers

1Master the difference between equities and debt instruments, particularly payment structures and creditor hierarchies.

2Understand key economic metrics like GDP, CPI (Inflation), and balance of payments, and how central banks use interest rates to manage money supply.

3Differentiate between various derivative contracts: futures (obligations), options (rights), and swaps.

4Learn the three stages of money laundering: placement, layering, and integration, and the actions that constitute market abuse.

5Get comfortable with bond pricing principles: yield to maturity, coupon rates, and why interest rates and bond prices move in opposite directions.

6Review collective investment schemes, paying close attention to open-ended (unit trusts/OEICs) vs. closed-ended (investment trusts) structures.

Frequently Asked Questions

What is the CMA Kenya / CISI Securities certification?

This certification is a joint initiative by the Capital Markets Authority (CMA) of Kenya and the Chartered Institute for Securities & Investment (CISI) UK. It establishes professional competency standards for practitioners working in stockbroking, investment banking, fund management, and investment advisory firms in Kenya.

How many questions are on the exam, and what is the passing score?

The exam consists of 100 multiple-choice questions to be answered in 2 hours. The passing score is 70%, meaning you must answer at least 70 questions correctly.

Is there a prerequisite for this exam?

There are no academic or professional prerequisites required to sit for the Introduction to Securities & Investment (Kenya) exam. It is open to all candidates interested in starting a career in financial services.

What happens if I fail the exam?

If you do not pass the exam, you can book another attempt. You will need to pay the standard exam booking fee of £133 for each retake.

Is the certificate recognized internationally?

Yes. The Chartered Institute for Securities & Investment (CISI) is a globally recognized professional body. Passing this Level 3 qualification demonstrates a standard of knowledge recognized in over 80 countries, while the specific module highlights Kenyan market context.