Saudi CME-1A Cheat Sheet
Cheat sheet: use a compact CME-1A reference for institutions, economics, securities, transaction flow, derivatives, funds, conduct, products, advice, and core formulas.
Use the tables for a quick pre-exam check. Expand a topic’s notes for explanations, examples, and additional distinctions.
Financial-institution map
| Institution or participant | Exam-useful role |
|---|---|
| Central bank | Monetary policy, currency and reserve functions, and financial-system stability roles |
| Retail or commercial bank | Deposits, payments, lending, and related customer services |
| Investment bank | Capital raising, underwriting, advisory, trading, and market services |
| Stock exchange or trading venue | Organized market access, trading rules, price discovery, and transaction infrastructure |
| Clearing system | Calculates and manages post-trade obligations and may interpose a central counterparty |
| Settlement system or depository | Transfers cash and securities, records ownership, and supports safekeeping |
| Fund manager | Manages pooled assets according to the mandate |
| Custodian, trustee, or depositary | Holds or oversees assets and performs the role defined by the structure |
| Adviser | Gathers client facts, evaluates needs and constraints, and supports suitable recommendations |
Instrument distinctions
| Instrument | Core claim | Main cues |
|---|---|---|
| Ordinary share | Residual ownership | Voting, variable dividend, capital gain or loss, lowest priority on liquidation |
| Preference share | Preferred equity claim | Usually specified dividend and priority over ordinary shares, with terms set by issue |
| Bond | Contractual debt claim | Principal, coupon, maturity, seniority, security, credit risk, and interest-rate risk |
| Money-market instrument | Short-term funding claim | Short maturity, liquidity, issuer credit, discount or money-market yield convention |
| Fund unit or share | Interest in pooled assets | Mandate, structure, valuation, liquidity, charges, and manager role |
| Derivative | Value linked to an underlying | Rights or obligations, leverage, hedge or speculation, counterparty, and settlement |
Transaction flow
flowchart LR
A[Order and execution] --> B[Trade confirmation]
B --> C[Clearing and obligation calculation]
C --> D[Settlement of cash and securities]
D --> E[Custody, records, and servicing]
Derivative comparison
| Contract | Standard exam distinction |
|---|---|
| Forward | Private agreement to transact later on agreed terms; counterparty exposure is central |
| Future | Standardized exchange-traded contract with margin and daily settlement features |
| Option | Buyer has a right, not an obligation; seller or writer carries the corresponding obligation |
| Swap | Parties exchange defined cash-flow exposures, such as fixed and floating interest payments |
Core calculations
| Measure | Compact form |
|---|---|
| Dividend yield | Annual dividend per share / current share price x 100 |
| Flat or running bond yield | Annual coupon / current bond price x 100 |
| Holding-period return | (Income + change in value) / initial value x 100 |
| Fund net asset value per unit | (Assets - liabilities) / units outstanding |
| Real return approximation | Nominal return - inflation rate |
Check the units, sign, time period, and denominator before choosing an answer. A sensible estimate should precede exact arithmetic.
Advice sequence
flowchart LR
A[Establish role and authority] --> B[Gather client facts]
B --> C[Identify needs and constraints]
C --> D[Assess risk and alternatives]
D --> E[Recommend and disclose]
E --> F[Document, implement, and review]
Precise exam versions, candidate rules, and source wording can change. Verify current details through the official resources .
Notes and examples
Final review sequence
- Complete one unseen mixed set under time.
- Classify every miss by element and decision type.
- State the controlling distinction without looking at the answer options.
- Drill the two weakest elements with new questions.
- Verify changing syllabus and candidate details in official sources.
- Return to mixed practice and confirm the same error no longer repeats.
Start with the scope boundary
CME-1A tests international securities-and-investment foundations. CME-1B covers Saudi capital-market regulations. Do not import a local Saudi rule into a CME-1A answer unless the question explicitly supplies it as a fact.
For examinations from September 10, 2026, use CISI syllabus version 19 as the controlling English syllabus. Match your examination date to the version shown by the Financial Academy before relying on a detail that may have changed.
Elements 1-2: institutions and economics
- Separate retail, commercial, investment, private, and central-bank functions.
- Identify whether the question concerns saving, borrowing, investing, risk transfer, payment, custody, intermediation, or advice.
- Distinguish state-controlled, market, and mixed economic systems.
- Trace how growth, inflation, unemployment, interest rates, exchange rates, fiscal policy, and monetary policy affect borrowers, savers, firms, and asset prices.
Common trap: selecting a plausible economic effect without checking its direction or the actor affected.
Elements 3-4: equities and bonds
- Equity represents ownership; debt represents a contractual claim.
- Keep ordinary and preference shares, rights issues, bonus issues, stock splits, repurchases, dividends, and corporate actions separate.
- Distinguish primary issuance from secondary trading and trade execution from clearing and settlement.
- For bonds, identify issuer, principal, coupon, maturity, seniority, security, credit risk, interest-rate risk, yield, and redemption terms.
- Bond prices and market yields generally move in opposite directions.
Common trap: choosing an income or capital feature that belongs to the other instrument class.
Elements 5-7: markets, derivatives, and funds
- Classify money-market instruments, foreign exchange, property, commodities, private equity, private credit, and crypto before comparing risk.
- A forward is privately agreed; a future is standardized and exchange-traded; an option gives the buyer a right; a swap exchanges defined cash-flow exposures.
- Separate hedging from speculation and identify the exposure being changed.
- Distinguish open-ended funds, closed-ended funds, exchange-traded funds, private funds, and their pricing or liquidity implications.
- Identify the roles of manager, trustee or depositary, custodian, administrator, distributor, and investor.
Common trap: recognizing the product name but missing the risk transfer, liquidity, or counterparty consequence.
Elements 8-10: regulation, products, and advice
- Regulation supports market integrity, financial stability, consumer protection, confidence, and orderly markets.
- Apply the CISI conduct principles to the actor and decision, not as slogans detached from facts.
- Keep pensions, mortgages, life assurance, general insurance, and other protection or savings products tied to their purpose and risk.
- Advice questions should follow a sequence: establish role and authority, gather client facts, identify needs and constraints, assess risk, compare suitable solutions, disclose material information, document, and review.
- A fiduciary or ethical duty does not remove the need for evidence, suitability, disclosure, or authorization.
Common trap: jumping to a product before establishing the client’s objective, time horizon, liquidity need, and risk capacity.