Friday Five – 26 July – 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 2018/19, examinable by the CII until 31 August 2019.  They do not relate to tax year 2019/20 which is only examinable by the CII from 1 September 2019.

1. Which of the following statements regarding bonds is true?
   1. Interest earned on a bond is lower than that earned from a bank.
   2. Bonds allow private investors to borrow from a company in exchange for interest.
   3. Bonds are in the form of high-interest loans with no capital repayment.
   4. Bonds allow companies to raise money without having to borrow from a bank.

2. When considering investing in a Venture Capital Trust (VCT), investors should be aware that: Tick all that apply.
   1. income tax relief is withdrawn if the shares are disposed of within 5 years
   2. the company must not be a close company
   3. it can be listed on any EEA stock exchange
   4. the disposal of VCT shares are potentially liable to CGT at 10%

3. Which of the following would NOT be a valid reason for Toby’s scheme pension to be reduced whilst in payment?
   1. The result of a pension sharing order.
   2. The reduction in with profit bonus rates from the provider.
   3. The scheme’s pension was a “bridge” until State pension age.
   4. The result of a court order.

4. In relation to insuring against risk, it is most effective when addressing risks that are:
   1. High frequency and low impact
   2. Low frequency and low impact
   3. Low frequency and high impact
   4. High frequency and high impact

5. How do preference shareholders differ from ordinary shareholders?
   1. They are both entitled to share equally in the profits of the company
   2. They rank behind ordinary shareholders in the event of a liquidation
   3. There is never any right for dividends to be cumulative
   4. They are entitled to receive a fixed dividend each year if there are sufficient profits

Answers

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

2. ABC – See R03 Study Text, Chp 10
   Grab our taster mock exam paper for CII R03. Click here to download.

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

4. C – See R05 Study Text, Chp 1
   Grab our taster mock exam paper for CII R05. Click here to download.

5. D – See J12 Study Text, Chp 1
   Grab our taster mock exam paper for CII J12. 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?

If you found this quiz useful for your CII exam revision, please do share it with your colleagues.