Friday Five – 15 September – 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 2017/18, examinable until 31 August 2018.

1. What is the purpose of the cooling-off period under consumer credit legislation?
   1. To allow the borrower sufficient time to change their mind and withdraw from a loan agreement if required
   2. To allow the lender sufficient time to consider all material facts before making an offer to the borrower
   3. To allow the intermediary sufficient time to complete their research before presenting their recommendations to the client
   4. To allow the borrower to gather all requested documentation and to complete all required paperwork

2. Alex is self-employed and has asked you to explain what is included in the balancing payment he has to make to HMRC in January of each year. You tell him the following is included:
   1. the balance of Income tax, class 4 national insurance and any capital gains tax
   2. class 4 national insurance and any capital gains tax
   3. class 2 national insurance and any outstanding income tax
   4. the balance of income tax, class 3 national insurance and any capital gains tax

3. Which of the following risks would apply to the drawdown pension option your client is entering into? Tick all that apply.
   1. The underlying annuity rate will increase during period of deferral in drawdown.
   2. Potentially high charges for administration/reviews.
   3. The value of the fund can go down as well as up.
   4. Depletion of fund through high-income withdrawals.

4. Beverly and Ian have limited disposable income. They want a life assurance policy as protection for their children but do not know how long they will need the protection for. Which of the following options would be the most suitable?
   1. A term assurance policy with a renewability option
   2. A term assurance policy with a convertible option
   3. A whole of life policy
   4. A family income benefit policy

5. A portfolio is worth £100,000 at the start of the year and £120,000 after 3 months when a further £10,000 was invested. At the end of the year the portfolio was worth £125,000. What is the Time Weighted Rate of Return (TWR) for the portfolio?
   1. 14.2%
   2. 9.3%
   3. 15.38%
   4. 21.28%

Answers

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

2. A – See R03 Study Text, Chp 6
   Grab our taster mock exam paper for CII R03. Click here to download.

3. BCD – See R04 Study Text, Chp 6:2
   Grab our taster mock exam paper for CII R04. Click here to download.

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

5. C – See J10 Study Text, Chp 9
   Grab our taster mock exam paper for CII J10. 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!)