Friday Five – 20 January – 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 do you calculate a client’s net worth?
   1. Deduct the client’s total liabilities from their total assets
   2. Value of house less mortgage
   3. Total expenditure deducted from total income
   4. Value of non-essential expenditure

2. Dan runs a hedge fund and relies on arbitrage to produce his returns. This suggests that he is using which of the following strategies?
   1. Event driven
   2. Relative value
   3. Tactical trading
   4. Long/short

3. Lisa has recently made a £100,000 gain on selling her buy to let home. She is now considering whether to reinvest this in an Enterprise Investment Scheme (EIS). Which of the following would be a benefit to Lisa of doing this?
   1. She can defer the original gain until she disposes of the EIS shares
   2. 50% of the original gain will be exempt from tax
   3. Any subsequent gain would be taxed at a lower rate on disposal
   4. This will reduce the base cost of the EIS shares by the original gain

4. John has a defined contribution AVC whereas Tom’s AVC is on an “added years” basis. In which area will Tom’s arrangement differ from John’s?
   1. Tax relief on contributions.
   2. Some of the benefit can be in the form of tax free cash.
   3. Minimum pension age.
   4. Inability to draw the benefit independent of the main scheme.

5. How is the cover provided under a whole of life policy affected if premiums cease at a stated age?
   1. It remains in force for a maximum period of 10 years
   2. It reduces to 50% when premiums cease
   3. It reduces by a stated percentage in each future year
   4. It is not affected – the cover continues until death

Answers

1. A – See R01 Study Text, Chp 8
   Grab our taster mock exam paper for CII R01. Click here to download.

2. B – See R02 Study Text, Chp 6:2
   Grab our taster mock exam paper for CII R02. Click here to download.

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

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

5. D – See R05 Study Text, Chp 4
   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!)