Friday Five – 13 April – 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

IMPORTANT!  These questions relate to examinable tax year 2017/18, examinable by the CII until 31 August 2018.  They do not relate to tax year 2018/19 which is only examinable by the CII from 1 September 2018.

1. A firm categorised by the FCA as a ‘flexible portfolio’ firm will be subject to which of the FCA’s three supervision strategies?
   1. Proactive firm/group supervision only
   2. Event driven reactive supervision only
   3. Event driven reactive supervision and thematic issue or product supervision
   4. Proactive firm/group supervision and thematic issue or product supervision

2. Exon PLC has a beta of 1.2, the expected return of the market portfolio is 6% and the expected return on a Treasury bill is 3.3%. Using the CAPM formula, what is Exon’s expected return?
   1. 9.06%
   2. 8.52%
   3. 6.54%
   4. 9.24%

3. Which of the following actions would HMRC most likely take into account when assessing if someone has acquired a new domicile status? Tick all that apply.
   1. Sally sells her Kensington flat to buy a new home for her and her family in Madrid
   2. Evan is travelling around America for 12 months and will then return to the UK
   3. Ross let out his property as he is spending an increasing amount of time in Sweden with his new girlfriend
   4. Poppy’s Australian business is flourishing so she has sold her UK home and bought an apartment in Sydney and told everyone she is emigrating

4. At age 80, Sidney dies, leaving behind a wife and child. Sidney had uncrystallised benefits. How can the fund pay out any lump sum death benefits?
   1. No LTA test needed and can pay out a lump sum subject to 45% tax charge.
   2. Benefit crystallisation event so LTA test needed with any excess taxed at 55%.
   3. No LTA test needed and lump sum is payable tax free if paid within 2 years.
   4. No LTA test needed and lump sum taxable at the recipient’s rate of tax.

5. Which of the following statements is TRUE in relation to most private medical insurance policies?
   1. They are designed to cover chronic conditions
   2. They do not allow the insured a choice of hospital in which to receive treatment
   3. They are restricted to UK residents and do not provide cover for treatment abroad
   4. They provide benefits for a maximum of 5 treatments over the term of the policy

Answers

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

2. C – See R02 Study Text, Chp 3
   Grab our taster mock exam paper for CII R02. Click here to download.

3. AD – See R03 Study Text, Chp 5
   Grab our taster mock exam paper for CII R03. Click here to download.

4. D – See R04 Study Text, Chp 2.2
   Grab our taster mock exam paper for CII R04. Click here to download.

5. C – See R05 Study Text, Chp 9
   Grab our taster mock exam paper for CII R05. 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!)