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CME-4B – Saudi Asset Managers Rules and Regulations: free practice test

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Practice test questions with answers and explanations

Try the questions in the test above first, then open each one here to see the correct answer and why every other option is wrong.

01A manager outsources preparation of fund terms to a specialist. A misleading statement is discovered. What happens to the manager’s regulatory responsibility?

Practice question Unit: Investment Funds Regulations

  1. AIt transfers entirely to the specialist

    Using a specialist does not transfer all regulatory responsibility.

  2. BIt ends when the contract is signed

    A contract does not release the manager from its duties.

  3. CIt is limited to selecting the specialist

    Responsibility includes accurate terms, not merely selection.

  4. DIt remains with the manager ✓ Correct answer

    Delegation does not reduce the manager’s regulatory responsibilities.

Reference: Investment Funds Regulations, current consolidated source Article 9(e).

02Manager negligence causes a proven loss to a fund. To whom is the manager responsible for that loss?

Practice question Unit: Investment Funds Regulations

  1. AOnly the broker

    The manager’s responsibility is not confined to the broker.

  2. BThe unitholders ✓ Correct answer

    The manager is responsible to unitholders for losses caused by its negligence.

  3. COnly the external auditor

    The auditor is not the sole beneficiary of this duty.

  4. DNobody, because investing involves risk

    Market risk does not excuse losses caused by negligence.

Reference: Investment Funds Regulations, current consolidated source Article 9(e).

03A portfolio has been unchanged for two years, so its manager has performed no risk assessment during that period. What correction is required?

Practice question Unit: Investment Funds Regulations

  1. AAssess only when the portfolio changes

    An unchanged portfolio does not remove periodic assessment.

  2. BAssess every five years

    Five years is less frequent than required.

  3. CRely solely on investors’ risk assessments

    The manager’s duty is separate from investors’ assessment.

  4. DAssess at least annually ✓ Correct answer

    Procedures include risk assessment at least once a year.

Reference: Investment Funds Regulations, current consolidated source Article 9(f).

04The Authority requests the results of a fund’s compliance monitoring programme. What should its manager do?

Practice question Unit: Investment Funds Regulations

  1. ARefuse because the programme is internal

    Internal status does not remove the reporting duty.

  2. BRefer the request to unitholders

    The manager must provide the results.

  3. CSupply the compliance results ✓ Correct answer

    Implementation results must be supplied on request.

  4. DSend only fund performance

    Performance does not replace compliance results.

Reference: Investment Funds Regulations, current consolidated source Article 9(j).

05A manager wants to restrict investor nationality solely as a commercial preference, without an Authority decision or another legal restriction. What is the position?

Practice question Unit: Investment Funds Regulations

  1. AIt is always permitted by manager decision

    Commercial preference alone is insufficient.

  2. BEvery fund must admit only one nationality

    The regulations do not require a single nationality.

  3. CThe restriction is not permitted ✓ Correct answer

    Eligibility normally cannot be limited by nationality unless the Authority determines otherwise.

  4. DBroker approval makes it permissible

    Broker approval is not the regulatory exception.

Reference: Investment Funds Regulations, current consolidated source Article 9(g).

06Two language versions of fund financial statements conflict over a liability. Which text prevails?

Practice question Unit: Investment Funds Regulations

  1. AThe Arabic text ✓ Correct answer

    The Arabic text prevails if versions conflict.

  2. BAlways the English text

    English is an additional version and does not automatically prevail.

  3. CThe version chosen by the largest investor

    Investment size does not determine precedence.

  4. DWhichever was printed later

    Printing date does not determine precedence.

Reference: Investment Funds Regulations, current consolidated source Article 11(a).

07A fund develops roads and utilities on raw land, divides it into plots and sells them. Which objective fits?

Practice question Unit: Real Estate Investment Funds Regulations

  1. AConstruction of buildings for sale

    No buildings are being constructed.

  2. BInitial development followed by sale ✓ Correct answer

    Preparing and subdividing raw land for sale is initial development under Article 10(a)(1).

  3. CTrading securities

    The underlying activity is land development, not securities trading.

  4. DHolding completed property for rent

    The land is sold rather than retained for rent.

Reference: CME-4B workbook ed.1.10, ch.2 §1, p.33; Real Estate Investment Funds Regulations (24 November 2025), Article 10(a)(1).

08A fund builds apartments on developed land and sells the apartments before winding up. Which model fits?

Practice question Unit: Real Estate Investment Funds Regulations

  1. ACustody services

    Custody does not describe property construction.

  2. BInitial subdivision alone

    The project goes beyond subdivision to building apartments.

  3. CBuild for sale ✓ Correct answer

    Constructing apartments for sale fits the construction-development model in Article 10(a)(2).

  4. DPermanent rental ownership

    The stated plan ends with sale rather than permanent ownership.

Reference: CME-4B workbook ed.1.10, ch.2 §1, p.33; Real Estate Investment Funds Regulations (24 November 2025), Article 10(a)(2).

09Which objective combines development with a temporary income phase before disposal?

Practice question Unit: Real Estate Investment Funds Regulations

  1. ADevelop, lease, sell ✓ Correct answer

    Article 10(a)(3) includes development followed by leasing for a period and eventual sale.

  2. BOnly divide undeveloped plots

    Subdivision alone does not include leasing and eventual sale.

  3. CDevelop and immediately sell

    Immediate sale omits the planned leasing phase.

  4. DOnly buy financial derivatives

    Derivatives are not the real estate development cycle described.

Reference: CME-4B workbook ed.1.10, ch.2 §1, p.33; Real Estate Investment Funds Regulations (24 November 2025), Article 10(a)(3).

10Before accepting an order, a registered person has reasonable grounds to believe it is part of a manipulation scheme. What should happen?

Practice question Unit: Market Conduct Regulations

  1. AExecute half the requested quantity

    Reducing quantity still executes the suspect order.

  2. BDo not accept or execute the order ✓ Correct answer

    Article 11(a) prohibits acceptance or execution when the stated grounds exist.

  3. CExecute it with a warning to the client

    A warning does not remove the prohibition.

  4. DAccept it if the client signs an indemnity

    A private indemnity cannot override the regulatory duty.

Reference: CME-4B workbook ed.1.10, ch.3 §1.1–1.2, pp.49–50; Market Conduct Regulations (2021), Article 11(a).

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