Friday Five – 18 December – 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 2015/16, examinable until 31 August 2016.

1. What is the definition of money laundering?
   1. Where criminals convert illegally obtained money into apparently legitimate funds
   2. The process of withdrawing regular amounts of cash from an investment bond
   3. A series of transactions through financial products
   4. Investing money under a false identity

2. What is a limitation of using company investment ratios?
   1. In the event of a take-over bid ratios are unable to assist shareholders in assessing if assets are being given away too cheaply
   2. Ratios are company specific and so unable to provide a meaningful comparison with similar companies in the same sector
   3. They are unable to highlight any areas of a company that may require further scrutiny
   4. Accounting policies could be changed over time, thus making historical comparisons misleading

3. Martin is considering investing in gilt-edged securities. He should be aware that: Tick all that apply
   1. interest is usually paid twice a year
   2. interest is taxed on a current year basis as earned income
   3. he can sell them at any point on the stock exchange
   4. he can claim any losses against future capital gains

4. Where a member of a DB scheme is offered the option of giving up future guaranteed increases to their pension in return for a higher initial pension with no future increases, this is known as pension:
   1. inflation.
   2. increase exchange.
   3. exchange.
   4. inflation exchange.

5. How long does the FCA specify that a firm should retain records of customer information and the rationale for recommendations given?
   1. One year
   2. Six years
   3. Three years
   4. Indefinitely

Answers

1. A – See R01 Study Text, Chp 6 Section E1
   Grab our taster mock exam paper for CII R01. Click here to download.

2. D – See R02 Study Text, Chp 1:2 Section C5F
   Grab our taster mock exam paper for CII R02. Click here to download.

3. AC – See R03 Study Text, Chp 9 Section A4A
   Grab our taster mock exam paper for CII R03. Click here to download.

4. B – See R04 Study Text, Chp 4:1 Section C1B
   Grab our taster mock exam paper for CII R04. Click here to download.

5. C – See ER1 Study Text, Chp 2 Section C4
   Grab our taster mock exam paper for CII ER1. 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!)