Friday Five – 17 June – 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 2015/16, examinable by the CII until 31 August 2016. They do not relate to tax year 2016/17 which is only examinable by the CII from 1 September 2016.

1. Which of the following statements regarding bonds is true?
   1. Interest earned on a bond is lower than that earned from a bank
   2. Bonds allow private investors to borrow from a company in exchange for interest
   3. Bonds are in the form of high interest loans with no capital repayment
   4. Bonds allow companies to raise money without having to borrow from a bank

2. 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%

3. The James Family Discretionary trust accumulates its income and has no expenses. The trust‘s only income is gross interest of £2,000. How is the trustees’ total tax liability calculated, assuming this is the only trust created by the settlor?
   1. £2,000 taxed at 20%
   2. £1,000 taxed at 20% and £1,000 taxed at 45%
   3. £2,000 taxed at 45%
   4. £1,000 taxed at 10% and £1,000 taxed at 35%

4. Looking forward to imminent retirement, it is typical (though not always) that a client’s expenditure will: Tick all that apply.
   1. continue for National Insurance contributions.
   2. cease for on-going pension contributions.
   3. cease for income protection insurance.
   4. be directed more towards savings.
   5. cease for mortgage payments.

5. Miranda is planning on buying a holiday home. She should be aware that any losses she incurs:
   1. can be offset against other property income
   2. cannot be offset against other income
   3. can be offset against any foreign property income
   4. can be offset against any dividend income

Answers

1. D – See R01 Study Text, Chp 1, Section A4
   Grab our taster mock exam paper for CII R01. Click here to download.

2. C – See R02 Study Text, Chp 9, Section B1B
   Grab our taster mock exam paper for CII R02. Click here to download.

3. B – See R03 Study Text, Chp 1, Section K5
   Grab our taster mock exam paper for CII R03. Click here to download.

4. BCE – See R04 Study Text, Chp 8, Section A4A
   Grab our taster mock exam paper for CII R04. Click here to download.

5. B – See R07 Study Text, Chp 6, Section B2A
   Grab our taster mock exam paper for CII R07. 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!)