Friday Five – 10 February – 5 Questions in 5 Minutes

Welcome to this week’s Friday Five – 5 Questions in 5 Minutes Every Friday

What’s this all about?

It’s a bit of Friday Fun where we provide you with 5 questions relevant to a mix of CII exams. The challenge is for you to answer them in 5 minutes. Answers at the bottom of the page.

Questions

These questions relate to examinable tax year 2016/17, examinable until 31 August 2017.

1. How are IFA businesses affected by the FCA’s Capital Adequacy rules?
   1. Most IFA businesses are exempt from the “Capital Requirements Directive”, but would be subject to a variety of financial tests
   2. Most IFA firms are required to undertake detailed risk assessments and stress testing scenarios
   3. Most IFA businesses are completely unaffected by any capital adequacy testing
   4. An IFA is merely required to document all assets and liabilities

2. What should be considered in determining the success or failure of a portfolio through performance evaluation? Tick all that apply
   1. If the client’s return expectations have been exceeded
   2. The composition of the portfolio compared with a suitable benchmark portfolio
   3. Changes in the fund manager’s ratings e.g. S&P ratings
   4. The effects of asset allocation
   5. Stock selection and / or sector choice

3. Harry has received £150 interest from his unit trust corporate bond holding and has been advised that basic rate tax has been deducted. Although both net and gross figures are put on his tax return, which figure will be used to calculate his tax liability?
   1. £187.50
   2. £180.00
   3. £165.00
   4. £150.00

4. Neil’s critical illness policy has been set up on a reviewable basis. Which of the following is the new rate based on when the reviews are undertaken?
   1. The policyholder’s health
   2. The policyholder’s age
   3. Claims experience of the insurer
   4. Changes in the amount of claims made within the industry

5. Bereavement payment is a one-off non-means-tested tax-free payment of:
   1. £5,000.
   2. £3,600.
   3. £2,500.
   4. £2,000.

Answers

1. A – See R01 Study Text, Chp 5:2
   Grab our taster mock exam paper for CII R01. Click here to download.

2. BDE – See R02 Study Text, Chp 9
   Grab our taster mock exam paper for CII R02. Click here to download.

3. A – See R03 Study Text, Chp 1
   Grab our taster mock exam paper for CII R03. Click here to download.

4. C – See R05 Study Text, Chp 7
   Grab our taster mock exam paper for CII R05. Click here to download.

5. D – See R08 Study Text, Chp 5
   Grab our taster mock exam paper for CII R08. Click here to download.

How did you find this week’s questions? Did you complete them in 5 minutes? Did you get them all correct? Do you disagree with any?

Do let us know by leaving a comment below – we promise to read them all. (Humour particularly appreciated on a Friday!)