Friday Five – 23 June – 5 Questions in 5 Minutes
Last updated on September 25th, 2019 at 4:30 am
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 2016/17, examinable by the CII until 31 August 2017. They do not relate to tax year 2017/18 which is only examinable by the CII from 1 September 2017.
- What is the difference between gilts and corporate bonds?
- Gilts are guaranteed as they are government backed, but corporate bonds offer no guarantee
- Gilts are always bought and sold at their nominal rate, whereas corporate bonds are traded on the bond market so could be bought or sold for less than £100
- Gilts are loans to the government, whilst corporate bonds are loans to companies
- Corporate bonds pay interest to the investor, whilst gilts pay no interest
- £1,500 is invested for 5 years at an annual rate of 3.5%. Approximately, how much will be accumulated at the end of 5 years?
- £6,720
- £1,781
- £3,282
- £1,843
- Phil and Marnie are a married couple with an Inheritance Tax (IHT) liability. They are taking out a joint life 2nd death life policy and writing it under a discretionary trust. Which of the following should they be aware of? Tick all that apply.
- If premiums are classed as transfers of value, the proceeds will not be free of IHT
- Inheritance tax works on the ‘loss to the estate’ principle.
- Discretionary trusts can suffer exit charges and periodic charges
- Premiums will be classed as transfers of value but can usually be claimed as exempt under the ‘normal expenditure’ exemption
- Sybil is considering investing directly in commercial property through her SIPP. You advise her of the following considerations for this type of investment. Tick all that apply.
- Property investment is useful for diversification purposes as this asset class often moves in a different direction to equities.
- Sybil would not be permitted to invest in commercial property investment for the benefit of her own business.
- Commercial property investment has the potential to produce a positive real return over the longer term.
- Sybil would still be able to draw an income from the investment as this could be taken from the rental payments.
- Sybil should be prepared for the investment to take a while to complete.
- Which type of care provision would be regarded as being most suitable for Anne, aged 67 who has low dependency needs and wants to live independently but with the reassurance that help is close at hand in case of emergency?
- Respite care
- Elderly mentally ill care
- Nursing care home
- Sheltered accommodation
Answers
- C – See R01 Study Text, Chp 2
Grab our taster mock exam paper for CII R01. Click here to download.
- B – See R02 Study Text, Chp 4
Grab our taster mock exam paper for CII R02. Click here to download.
- BCD – See R03 Study Text, Chp 10
Grab our taster mock exam paper for CII R03. Click here to download.
- ACDE – See R04 Study Text, Chp 8
Grab our taster mock exam paper for CII R04. Click here to download.
- D – See CF8 Study Text, Chp 1
Grab our taster mock exam paper for CII CF8. 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!)
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