Friday Five – 25 May – 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 2017/18, examinable by the CII until 31 August 2018.  They do not relate to tax year 2018/19 which is only examinable by the CII from 1 September 2018.

1. Which international organisation provides recommendations to the EU on money laundering?
   1. The Joint Money Laundering Steering Group
   2. The Financial Action Task Force
   3. The Fourth Money Laundering Directive
   4. The EU Money Laundering Organisation

2. If interest is payable at more frequent intervals (than annually), how would the effective rate of interest be different to the nominal rate of interest?
   1. The effective rate reduces
   2. The nominal rate would be higher
   3. The effective rate would be higher
   4. There would be no difference

3. Edward is a company director and is considering the best way of taking remuneration from his company. What might be a disadvantage for him of taking a low salary and high dividends?
   1. Dividends are not relevant earnings and so could restrict pension contributions
   2. Corporation tax would be payable at a higher rate as the salary is not being withdrawn from company profits
   3. A reduced salary would reduce any State pension entitlement in the future
   4. The dividend payment would be subject to a higher rate of National Insurance

4. When the administrators of a defined benefit scheme calculate an early leaver transfer value, the process of converting the lump sum value of pension benefits at retirement to a capital value in today’s terms is known as:
   1. discounting.
   2. revaluing.
   3. capitalising.
   4. securitising.

5. The usual limitation on the amount of benefit that can be paid from an individual income protection policy is that the total of all policies does not exceed:
   1. 50% of monthly gross earnings in the two years prior to incapacity
   2. 50% – 60% of average monthly gross earnings in the year prior to incapacity
   3. 75% – 80% of average monthly gross earnings in the year prior to incapacity
   4. 50% – 65% of monthly gross earnings in the six months prior to incapacity

Answers

1. B – See R01 Study Text, Chp 4
   Grab our taster mock exam paper for CII R01. Click here to download.

2. C – See R02 Study Text, Chp 4
   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. A – See R04 Study Text, Chp 4
   Grab our taster mock exam paper for CII R04. Click here to download.

5. B – See R05 Study Text, Chp 6
   Grab our taster mock exam paper for CII R05. 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!)