Friday Five – 29 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 2015/16, examinable by the CII until 31 August 2016. They do not relate to tax year 2016/17 which is only examinable by the CII from 1 September 2016.

1. What is the purpose of a home reversion plan?
   1. A shorter term loan for older homeowners, where the ownership of the home reverts back to the client at the end of the loan period
   2. Enables older home-owners to release equity in the home without having to move out
   3. To enable first time buyers to get onto the property ladder
   4. To allow the older homeowner a method of transferring ownership of the house to family members to avoid/reduce the impact of IHT

2. What are the most common performance ratios used in evaluating fund performance? Tick all that apply
   1. Gearing ratio
   2. Information ratio
   3. Alpha
   4. Sharpe ratio

3. Charlie sets up a discretionary trust in this tax year for his grandchildren for £425,000. He has already used his annual exemptions. How much inheritance tax (IHT) will be payable assuming Charlie pays it when he sets up the trust?
   1. £40,000
   2. £25,000
   3. £20,000
   4. £10,000

4. Someone that was in unsecured pension on 5 April 2011 is still able to take 120% of 2006 GAD table rates until the earlier of the: Tick all that apply
   1. end of their current 5-year reference period.
   2. member requesting a change to their reference period.
   3. start of the pension year after they reach their 75th birthday.
   4. end of the current 3-year reference period.
   5. start of the pension year after they reach their 80th birthday.

5. What is normally required by a lender before they offer a customer a “borrow back” facility on a lifetime mortgage?
   1. The customer moving permanently to a residential home
   2. The loan to value being less than 25%
   3. The customer having a history of overpaying on a consistent basis
   4. The mortgage being on a fixed rate

Answers

1. B – See R01 Study Text, Chp 5:2, Section H3B
   Grab our taster mock exam paper for CII R01. Click here to download.

2. BCD – See R02 Study Text, Chp 9, Section B2
   Grab our taster mock exam paper for CII R02. Click here to download.

3. B – See R03 Study Text, Chp 4, Section H5C
   Grab our taster mock exam paper for CII R03. Click here to download.

4. ABC – See R04 Study Text, Chp 6:2, Section E1E
   Grab our taster mock exam paper for CII R04. Click here to download.

5. C – See ER1 Study Text, Chp 5, Section H2
   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!)