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Practice Questions100 questions

2026 Statistics

Key Facts: CII J12 Exam

75 Q

Exam Questions

CII J12 Syllabus

120 min

Time Limit

CII J12 Exam Guidelines

65%

Pass Mark

CII Examination Regulations

CII J12 is a 75 MCQ / 120-minute exam focused on UK securities advice, dealing rules, market structure, settlement (CREST/T+2), and financial calculations.

Sample CII J12 Practice Questions

Try these sample questions to test your CII J12 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 is a key characteristic of cumulative preference shares?

A.If a dividend is missed in any year, the entitlement accumulates and must be paid before ordinary shareholders receive a dividend

B.They grant full voting rights on all ordinary company resolutions at the Annual General Meeting

C.Dividend payments automatically increase in line with annual growth in company profits

D.In the event of liquidation, cumulative preference shareholders rank behind ordinary shareholders

Explanation: Cumulative preference shares carry the right that if the fixed dividend cannot be paid in any given financial year due to insufficient profits, the unpaid dividend accumulates as an arrearage. All accumulated preference dividends must be settled in full before any dividend can be declared or paid to ordinary shareholders.

2An investor purchases ordinary shares in a company at £4.00 per share. The company pays an annual dividend of 20p per share. What is the dividend yield on this investment?

A.5.0%

B.4.0%

C.2.0%

D.8.0%

Explanation: Dividend yield is calculated as (Annual Dividend per Share / Current Share Price) * 100%. Expressing 20p in pounds gives £0.20. Therefore, Dividend Yield = (£0.20 / £4.00) * 100% = 5.0%.

3A company's share price is £12.50 and its reported Earnings Per Share (EPS) is £0.80. What is its Price-to-Earnings (P/E) ratio?

A.15.63

B.10.00

C.6.40

D.12.50

Explanation: The Price-to-Earnings (P/E) ratio is calculated as Current Market Price per Share / Earnings Per Share (EPS). P/E = £12.50 / £0.80 = 15.625, which rounds to 15.63.

4A firm announces a 1-for-4 rights issue at an issue price of £2.00 per share. Prior to the announcement, the cum-rights share price is £3.00. What is the theoretical ex-rights price (TERP) per share?

A.£2.80

B.£2.50

C.£2.60

D.£2.20

Explanation: Theoretical Ex-Rights Price (TERP) = [(N * Cum-rights price) + Issue Price] / (N + 1). Here N = 4. TERP = [(4 * £3.00) + £2.00] / (4 + 1) = (£12.00 + £2.00) / 5 = £14.00 / 5 = £2.80.

5In fixed income trading, how is the 'dirty price' of a Gilt or corporate bond calculated from its 'clean price'?

A.Dirty Price = Clean Price + Accrued Interest

B.Dirty Price = Clean Price - Accrued Interest

C.Dirty Price = Clean Price * (1 + Coupon Rate)

D.Dirty Price = Clean Price / Duration

Explanation: In bond markets, traded bonds accrue interest daily between coupon dates. The clean price is the quoted price excluding accrued interest. The actual settlement price paid by the buyer (the dirty price) equals the clean price plus accrued interest up to the settlement date.

6A Treasury Gilt has a coupon of 5.0% and is currently trading at a clean price of £105.00 per £100 nominal. What is the running yield (interest yield) of this Gilt?

A.4.76%

B.5.00%

C.5.25%

D.4.50%

Explanation: Running yield (also known as interest yield or current yield) = (Annual Coupon / Clean Market Price) * 100%. Running yield = (£5.00 / £105.00) * 100% = 4.7619%, which rounds to 4.76%.

7An investor holds £20,000 nominal of a Gilt with a 6% annual coupon paid semi-annually (£600 every 6 months). Exactly 91 days have accrued in a 182-day semi-annual coupon period. What is the accrued interest payable on settlement?

A.£300.00

B.£600.00

C.£150.00

D.£450.00

Explanation: Semi-annual coupon payment = £20,000 * 6% / 2 = £600. Accrued interest fraction = 91 days / 182 days = 0.5. Accrued Interest = £600 * 0.5 = £300.00.

8Which of the following statements correctly describes a Zero-Coupon Bond?

A.It pays no periodic interest payments and is issued at a discount to par value, redeeming at par at maturity

B.It pays interest only when company profits exceed a pre-determined threshold

C.It pays interest quarterly based on a variable benchmark rate such as SONIA

D.It can be converted into ordinary shares at the option of the bondholder on interest payment dates

Explanation: A zero-coupon bond pays no regular coupon interest payments during its lifetime. Instead, it is issued at a discount to its face (par) value and redeems at full par value at maturity. The return to the investor is the capital gain between issue/purchase price and par redemption price.

9What is meant by the 'conversion premium' of a convertible corporate bond?

A.The amount by which the market price of the convertible bond exceeds its conversion value into underlying equity

B.The extra annual coupon interest paid above government Gilts of equivalent maturity

C.The penalty fee paid by the issuer if it chooses to redeem the bond prior to maturity

D.The tax charge applied when converting debt into equity shares

Explanation: The conversion premium measures how much more expensive it is to acquire underlying equity by buying and converting the bond compared to buying the equity directly in the open market. It is calculated as [(Convertible Bond Price - Conversion Value) / Conversion Value] * 100%.

10How do company-issued warrants differ fundamentally from exchange-traded call options?

A.Warrants are issued directly by the underlying company and result in the creation of new shares upon exercise, diluting existing equity

B.Warrants always have shorter maturities, typically expiring within 30 days of issue

C.Call options are issued directly by the company to raise new capital, whereas warrants trade on exchanges between investors

D.Warrants can only be exercised by institutional investors holding more than 5% of company shares

Explanation: Warrants are long-dated call options issued directly by a company. When exercised, the company issues brand-new ordinary shares to the warrant holder in exchange for cash, increasing total shares outstanding and causing dilution. Exchange-traded call options are contracts between secondary market investors and do not create new shares.

About the CII J12 Exam

CII J12 Securities Advice and Dealing tests technical knowledge of securities instruments, market operations, dealing principles, trade execution, and settlement infrastructure.

Assessment

75 multiple-choice questions covering securities types, global regulation, dealing practice, clearing, settlement, and custody.

Time Limit

2 hours (120 minutes)

Passing Score

65% (49 out of 75 marks)

Exam Fee

£234 - £334 (Chartered Insurance Institute (CII))

CII J12 Exam Content Outline

30%

Securities & Equities

Ordinary and preference shares, corporate bonds, gilts, derivatives, corporate actions, and valuation metrics.

25%

Global Market Structure & Regulation

UK regulatory framework, FSMA 2000, MAR, MiFID II, primary vs secondary markets, order-driven vs quote-driven markets.

25%

Dealing Principles & Practice

Order types (limit, market, stop-loss), best execution, client classification, order routing, trade reporting, and spreads.

20%

Clearing, Settlement & Custody

CREST settlement, central counterparties (CCPs), T+2 rolling settlement, DvP, custody safekeeping, and asset segregation.

How to Pass the CII J12 Exam

What You Need to Know

Passing score: 65% (49 out of 75 marks)
Assessment: 75 multiple-choice questions covering securities types, global regulation, dealing practice, clearing, settlement, and custody.
Time limit: 2 hours (120 minutes)
Exam fee: £234 - £334

Keys to Passing

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

CII J12 Study Tips from Top Performers

1Master core financial formulas including P/E ratios, dividend yields, market cap, and bond accrued interest calculations.

2Understand the difference between order-driven markets (SETS) and quote-driven markets (SEAQ/Market Makers).

3Memorize trade settlement timelines (standard T+2 for equities/corporate bonds) and CREST mechanism operational principles.

Frequently Asked Questions

What is the pass mark for CII J12?

The pass mark for CII J12 is 65% (49 out of 75 questions answered correctly).

How long is the CII J12 exam?

The exam duration is 2 hours (120 minutes) for 75 multiple-choice questions.

What topics are tested in CII J12?

The exam covers Securities & Equities, Market Structure & Regulation, Dealing Principles & Practice, and Clearing, Settlement & Custody.

Are calculations included in the CII J12 exam?

Yes, candidates must calculate price-to-earnings (P/E) ratios, dividend yields, accrued interest on bonds/gilts, settlement dates (T+2), and order execution pricing.