CII R0 Diploma · R02
CII R02 Exam Guide — Investment Principles and Risk (2025/26)
R02 is widely considered the toughest knowledge-based R0 paper. It blends macroeconomics, portfolio theory, asset-class behaviour and quantitative risk measures. Because it includes multi-response and calculation items, you cannot rely on multiple-choice intuition — you must be fluent with formulas (Sharpe, beta, standard deviation, holding-period return) and able to apply them under time pressure.
Format
100 questions — mix of standalone MCQs and multi-response items
Duration
2 hours
Pass mark
65%
Study hours
80–100 hours
R02 syllabus breakdown
| Syllabus area | Weight | What it covers |
|---|---|---|
| Macroeconomic environment | ~10% | GDP, inflation, interest rates, monetary and fiscal policy. |
| Asset classes | ~25% | Equities, bonds, cash, property, alternatives — risk and return characteristics. |
| Collective investments | ~15% | OEICs, unit trusts, investment trusts, ETFs and structured products. |
| Investment theory | ~20% | MPT, CAPM, EMH, behavioural finance and diversification. |
| Portfolio construction | ~15% | Asset allocation, rebalancing, suitability and risk profiling. |
| Performance measurement | ~15% | Sharpe, Treynor, Jensen, alpha, beta and benchmarks. |
Recommended R02 study plan
- 1
Week 1–2
Asset classes and macroeconomics. Build comparison tables across asset types.
- 2
Week 3–4
Collective investments and tax wrappers. Memorise structures and key differences.
- 3
Week 5–6
Modern portfolio theory and risk measures. Practise every formula until automatic.
- 4
Week 7–8
Behavioural finance, suitability and portfolio construction case scenarios.
- 5
Week 9
Three timed mocks. Track which LOs you keep losing marks in.
- 6
Week 10
Targeted revision of weak LOs and one final mock under exam conditions.
R02 exam tips
- Practise Sharpe, beta and standard deviation calculations until you can do them in under 90 seconds.
- For multi-response questions, all correct options must be selected — partial answers score zero.
- Read carefully whether a question asks for nominal or real return.
- When an MPT question gives you efficient frontier data, sketch it on scrap paper.
Common R02 mistakes
- Confusing arithmetic and geometric mean returns.
- Mixing up the formulas for Sharpe and Treynor ratios.
- Forgetting that beta measures systematic risk only.
- Ignoring the time horizon when matching client risk profile to asset allocation.
Key topics covered in R02
Related R02 topics across the R0 syllabus
CII R0 modules overlap heavily. Use these cross-links to follow a topic from one paper into the next — exactly how the CII tests them in practice.
Investment income tax (R03)
Once you understand asset classes in R02, R03 shows how the income and gains are taxed.
Pension investment options (R04)
R04 applies R02 portfolio principles inside SIPPs, drawdown and lifestyle strategies.
Investment recommendations in case studies (R06)
R06 tests how you turn R02 theory into written, justified client recommendations.
R02 exam FAQs
How many calculation questions are in R02?
Roughly 25–30 of the 100 questions involve a calculation or numerical interpretation. Practising under timed conditions is essential.
Is R02 harder than R03?
Most candidates find R02 conceptually harder, while R03 is more calculation-heavy. R02 has a much wider syllabus and lower average first-time pass rate.