Friday Five – 24 July 2015 – 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.

1, 2, 3, Go…

Questions
These questions relate to examinable tax year 2014/15, examinable until 31 August 2015.

1. What is the general rule requirement under capital adequacy?
   1. Depending on the size of the firm they must hold a prescribed level of capital
   2. Depending on the firm’s activities and assumed levels of risk a prescribed level of capital must be held
   3. All authorised firms must undertake detailed risk assessments to determine the level of capital they are required to hold
   4. All businesses must be able to meet their financial obligations as and when they fall due

2. What is the least complex method of producing a portfolio based on asset allocation? (Assuming a formal risk profile is not being used)
   1. Adjusted historic
   2. Stochastic
   3. Historic
   4. Optimised portfolio

3. Dominic sold his house to an interest in possession trust, with the purchase price outstanding. He then set up a separate trust for his children into which he placed the debt and continued to live in the house. What is the most likely charge that Dominic will face from HMRC?
   1. Income tax under the pre-owned assets tax (POAT)
   2. Capital gains tax under CGT legislation
   3. Stamp duty land tax on a reduced valuation of the debt
   4. Income tax under the gift with reservation rules

4. To be a lifetime annuity HMRC requires that the annuity must be:
   1. Payable for the member’s life.
   2. Purchased from a list of HMRC approved annuity providers.
   3. Be paid at least once a year in advance.
   4. Capable of assignment and surrender in any circumstances.

5. The interest rate that banks charge each other is known as the:
   1. London Inter-bank Offered Rate
   2. Inter-bank Swap Rate
   3. London Banks Swap Rate
   4. The London Banks Offered Rate

Answers

1. D – See R01 Study Text, Chp 5.2 Section G1
   Grab our taster mock exam paper for CII R01. Click here to download.

2. C – See R02 Study Text, Chp 8 Section D
   Grab out taster mock exam paper for CII R02. Click here to download.

3. A – See R03 Study Text, Chp 4 Section D5
   Grab our taster mock exam paper for CII R03. Click here to download.

4. A – See R04 Study Text, Chp 6:1 Section C3C
   Grab our taster mock exam paper for CII R04. Click here to download.

5. A – See R07 Study Text, Chp 1 Section F
   Grab our taster mock exam paper for CII R07. 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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