Friday Five – 28 October – 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 2016/17, examinable until 31 August 2017.

1. Who would be regarded as an ‘eligible complainant’ and therefore would qualify for compensation? Tick all that apply.
   1. A local authority
   2. A personal representative of a deceased person
   3. A charity with a £2m annual income
   4. A trustee on behalf of a small family trust

2. What are the potential drawbacks of structured products? Tick all that apply.
   1. Capital protection could be lost in the event of significant falls to the index
   2. Caps on participation rates limit returns
   3. No exposure to a manager’s ability
   4. The degree of upside participation is explicitly stated

3. Tom is a trustee of the Davies family Interest in Possession trust. What rate of income tax will he be liable for, as trustee, on savings income?
   1. 20%
   2. 37.5%
   3. 40%
   4. 45%

4. John’s pension investments are in a With Profit Fund. John should be aware that: Tick all that apply.
   1. a terminal bonus is guaranteed to be paid on crystallisation or earlier death.
   2. once added, reversionary bonuses cannot be taken away.
   3. the fund will only invest in cautious/low risk investment areas.
   4. annual bonuses are aimed at “smoothing” returns over the term.

5. Olivia has taken out a mortgage secured against her property. It has been set up so she does not need to make any capital repayments and when the property is eventually sold, the loan will be repaid together with a payment based on the percentage increase in the property value. What type of plan does Olivia have?
   1. Equity Share Mortgage
   2. Home Reversion Plan
   3. Shared Appreciation Mortgage
   4. Home Income Plan

Answers

1. BD – See R01 Study Text, Chp 6, Section G1
   Grab our taster mock exam paper for CII R01. Click here to download.

2. AB – See R02 Study Text, Chp 6:2, Section R3
   Grab our taster mock exam paper for CII R02. Click here to download.

3. A – See R03 Study Text, Chp 1, Section K4A
   Grab our taster mock exam paper for CII R03. Click here to download.

4. BD – See R04 Study Text, Chp 8, Section B4A
   Grab our taster mock exam paper for CII R04. Click here to download.

5. C – See ER1 Study Text, Chp 5, Section G
   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!)