Friday Five – 25 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

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.

1. What criminal offences were created in the Proceeds of Crime Act 2002 as part of the UK’s fight against money laundering? Tick all that apply.
   1. Disguising criminal property
   2. Removing criminal property from the UK
   3. Allowing policyholders to surrender investment bonds within 30 days
   4. Failing to disclose suspected cases of money laundering in the regulated sector
   5. Allowing individuals to transfer their pension fund proceeds to an overseas bank

2. If a bond has duration of 4 and interest rates fall by 1% what would happen to the fixed rate bond?
   1. Bond would increase by 4%
   2. Bond would increase by 0.25%
   3. Bond would decrease by 4%
   4. Bond would decrease by 0.25%

3. Sandy and Brian are carrying out Inheritance Tax mitigation and are keen to use the ‘normal expenditure out of income’ exemption. Which of the following is most likely to qualify?
   1. Paying net annual premiums of up to £2,880 into a personal pension for their son
   2. Paying a £45,000 deposit on a house purchase for their daughter
   3. Using the 5% withdrawal facility from an investment bond to pay the premiums on a joint life 2nd death life policy
   4. Transferring their income producing investment portfolio to both children

4. Don is aged 75 and owns a cottage in a rural village, he would like to live there for the rest of his days if possible but is short of funds to pay for a new roof. His son Carl, aged 50, is working in the Middle East and has accumulated a lot of wealth, he hopes that he can one day inherit the cottage from his father and live there when he returns to the UK. What course of action would you suggest Don and Carl look at first?
   1. Home Reversion Plan
   2. Lifetime Mortgage with drawdown
   3. Home Income Plan
   4. Carl loaning Don the money for the roof

5. Moira, age 63, will have built up a higher State pension under the pre-6 April 2016 rules than would otherwise be the case if the single-tier State pension had been in place at the start of her working life. This extra pension she will receive is known as the:
   1. single-tier pension
   2. foundation amount
   3. protected payment
   4. additional pension

Answers

1. ABD – See R01 Study Text, Chp 6
   Grab our taster mock exam paper for CII R01. Click here to download.

2. A – See R02 Study Text, Chp 5
   Grab our taster mock exam paper for CII R02. Click here to download.

3. A – See R03 Study Text, Chp 11
   Grab our taster mock exam paper for CII R03. Click here to download.

4. D – See ER1 Study Text, Chp 6
   Grab our taster mock exam paper for CII ER1. Click here to download.

5. C – See R08 Study Text, Chp 5
   Grab our taster mock exam paper for CII R08. 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!)