RDR gap fill test: Understanding the main investment theories

Congratulations, reader, for completing our RDR gap fill article on the main investment theories.

For this to qualify as structured learning, and to confirm that you have read and understood the learning outcomes in the article, you must pass a short test.

TAKE THE TEST HERE

Once you have done this, you will be able to download a certificate to present to your accredited body.

Your accredited body will be responsible for checking you are compliant to continue practising from 1 January 2013, when the RDR comes into force.

This will include checking you have a relevant QCF Level 4 qualification or have filled any knowledge 'gaps' between now and 31 December 2012.

The article you have just read covers the learning outcome:

Demonstrate an understanding of the merits and limitations of the main investment theories

• Chartered Insurance Institute gaps covered: 35-40
• Institute of Financial Planning gaps covered: 103-113

Professional Adviser recommends you take the time to read the article properly - utlising where necessary material from the recommended reading list put together by author Jackie Lockie (see below) - before attempting the test.

The test below contains ten multiple-choice questions related entirely to the article. You must answer all ten to pass and claim your certificate.

You will be given two attempts to answer any one question correctly. You will also be given two more opportunities to go back in and correct your mistakes should you fail to pass the test.

TAKE THE TEST HERE

*Jackie Lockie's recommended reading list

Books:

• The Four Pillars of Investing, William Bernstein
• Random Walk Theory: A Random Walk Down Wall Street, Burton G. Malkiel
• Arbitrage Pricing Theory by Ross (1976)
• The Investment Answer, Daniel C. Goldie and Gordon S. Murray
• The wisdom of crowds, James Surowiecki
• Investment Strategies for the 21st Century, Frank Armstrong (free downloadable book)

Papers:

• Multi-factor investing, Eugene F. Fama, Dimensional Funds Advisors
• Explaining stock returns, A Literature Survey, James L Davis,
• Kahneman and Tversky (1979) Prospect Theory

Further learning and articles:

• Articles are too numerous to list them all but a notably good one is 18 April 2011 - Investment Adviser article by Samuel Lee, Morningstar - Index turnover costs puts trackers at a disadvantage.
• Risk gets riskier: Bill Sharpe is worried about what's being done with his famous ratio - October 2002 Institutional Investor article by Hal Lux.
• Want to know more about futures and CFDs? See the Chartered Institute of Securities and Investment www.cisi.org for courses and material on the subject.

Want to learn more about investment theories? The AIC is launching an adviser site with an online webinar on this subject in September 2011. Contact eventsteam@theaic.co.uk to reserve a place and more information on dates for this and other related courses.