Friday Five – 26 February – 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 2015/16, examinable until 31 August 2016.

1. If a firm passes mortgage leads to an authorised person for a fee, does that firm require FCA authorisation?
   1. No authorisation is required as the introducer is not advising the client
   2. Yes if they receive payment for leads they must have FCA authorisation
   3. Yes the principle at the introducing firm must hold FCA authorisation
   4. No as long as the introducer is paid for leads no authorisation is required

2. What is the most commonly used method to quantify risk?
   1. Standard deviation
   2. Sharpe ratio
   3. Alpha
   4. CAPM

3. Paul is a beneficiary under the family Interest in Possession trust. He has a personal income of £153,000 and has recently also received £2,000 income generated from one of the trust’s building society investments. What is Paul’s Income tax liability on this income?
   1. His liability is 40% of the gross income of £2,500
   2. He has no liability as the trustees are responsible for any Income tax
   3. His liability is 45% of £2,500 less the 20% tax deducted at source
   4. He has no liability as 20% income tax has been deducted at source

4. What are the current options for someone commencing to take an income from their money purchase pension fund for the first time? Tick all that apply.
   1. Flexible annuity.
   2. Capped drawdown pension.
   3. Scheme pension.
   4. Flexi-access drawdown.
   5. UFPLS.

5. If the flexibility to be able to move house in the future is important to someone taking out an equity release plan, what sort of plan should they avoid?
   1. Lifetime mortgage with interest roll up
   2. Drawdown mortgage
   3. Full Home Reversion Plan
   4. Capital and Interest Mortgage

Answers

1. A – See R01 Study Text, Chp 5:2, Section H3A
   Grab our taster mock exam paper for CII R01. Click here to download.

2. A – See J10 Study Text, Chp 7, Section C1
   Grab our taster mock exam paper for CII R01. Click here to download.

3. C – See R03 Study Text, Chp 1 Section K4B
   Grab our taster mock exam paper for CII R03. Click here to download.

4. ACD – See R04 Study Text, Chp 6:1 Section A1A
   Grab our taster mock exam paper for CII R04. Click here to download.

5. C – See ER1 Study Text, Chp 9 Section C1
   Grab our taster mock exam paper for CII ER1. 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!)