Friday Five – 23 February – 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 FCA Complaints Commissioner’s role?
   1. To determine whether to make any ex-gratia payments to FCA claimants
   2. To investigate suspicious activity by regulated firms
   3. To investigate complaints made against the FCA
   4. To listen to appeals against the FCA disciplinary decisions

2. What is the underlying assumption central to Modern Portfolio Theory (MPT)?
   1. That investors are irrational
   2. Investors are risk averse and would choose a less risky investment if offered 2 investments with the same return
   3. That investors have persistent biases which are motivated by psychological factors
   4. That security prices fully reflect all available information and prices rapidly adjust to new information

3. A company pays a basic rate taxpaying director a dividend. What is the tax liability for both the company and the director?
   1. There is no tax implication for the company and the director receives the income with a 10% tax credit which satisfies his liability
   2. The company is liable to corporation tax on the dividend payment and the director is liable to income tax at 7.5% if it is in excess of their dividend allowance
   3. There is no tax implication for the company, the director receives the income gross and is liable to tax at 7.5% if it is in excess of their dividend allowance
   4. The company claims the dividend payment as an expense and the dividend is taxed at 7.5%

4. Before a complaint can be sent to the Financial Ombudsman Service, the provider must first investigate and respond to the complainant within how many weeks?
   1. 8
   2. 6
   3. 4
   4. 2

5. Each of the following statements regarding a hybrid lifetime mortgage is true with the exception of which one?
   1. The borrower must ensure that the new arrangement is suitable for their needs
   2. There is no need to check affordability, as repayments will no longer be made
   3. There must be sufficient equity remaining in the property
   4. Roll up will start from the date the mortgage is converted

Answers

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

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

3. C – See R03 Study Text, Chp 8
   Grab our taster mock exam paper for CII R03. Click here to download.

4. A – See R04 Study Text, Chp 3
   Grab our taster mock exam paper for CII R04. Click here to download.

5. A – See ER1 Study Text, Chp 5
   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!)