Friday Five – 24 August – 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 2018/19, examinable until 31 August 2019.

1. What is the purpose behind the Upper Tribunal (Tax and Chancery Chamber)?
   1. Where the FCA enforcement officers present their findings from an investigation
   2. It is the appeal body for those objecting to FCA disciplinary decisions
   3. Where the more serious criminal prosecutions decisions are heard
   4. To allow suspicious activity to be reported

2. When would a Capital Gains Tax (CGT) chargeable disposal be deemed to have taken place in the following scenarios?
   1. Sian, a beneficiary under a trust becomes absolutely entitled to the trust assets
   2. James makes a gain of £120,000 on selling his main residence
   3. A married couple change ownership of their investment bond when one becomes a basic rate taxpayer
   4. Peter dies and his antique car is passed to his son in accordance with his wishes

3. Following the death of her husband, Mary has been advised that she may commute the survivor’s pension from his defined benefit scheme for a lump sum. Mary however is considering forsaking it in favour of her niece. The rules relating to this specify that:
   1. there is a lump sum limit of £30,000 which is the maximum lump sum allowed from this scheme.
   2. there is a lump sum limit of £30,000 which is the maximum lump sum commutable across all of her late husband’s schemes.
   3. the lump sum payable is a UFPLS.
   4. the lump sum can be paid to Mary’s niece should she wish as there are no restrictions on who can receive it.

4. Where policies are written on a life of another basis in relation to share protection insurance, the main advantage is that:
   1. the policies will be cheaper
   2. there is no need for trusts
   3. there will be tax relief available on the premiums
   4. there is no underwriting involved

5. Modern portfolio theory (MPT) categorises risk as being one of two types. Between 1973 – 1974 the UK experienced the great bear market. Which of MPT’s two types of risk would this event be categorised as?
   1. Beta risk
   2. Non-systematic risk
   3. Systematic risk
   4. Investment-specific risk

Answers

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

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

3. A – See R04 Study Text, Chp 6:1
   Grab our taster mock exam paper for CII R04. Click here to download.

4. B – See R05 Study Text, Chp 10.2
   Grab our taster mock exam paper for CII R05. Click here to download.

5. C – See J10 Study Text, Chp 7
   Grab our taster mock exam paper for CII J10. 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!)