Friday Five – 3 April – 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.
IMPORTANT! These questions relate to examinable tax year 2019/20, examinable by the CII until 31 August 2020. They do not relate to tax year 2020/21 which is only examinable by the CII from 1 September 2020.
- What is the purpose of the cooling-off period under consumer credit legislation?
- To allow the borrower sufficient time to change their mind and withdraw from a loan agreement if required
- To allow the lender sufficient time to consider all material facts before making an offer to the borrower
- To allow the intermediary sufficient time to complete their research before presenting their recommendations to the client
- To allow the borrower to gather all requested documentation and to complete all required paperwork
- A fund has an average return of 10% per year and a beta of 1.4. This compares to the return on the market of 6% and the risk-free rate of 1.5% Tick all that apply.
- The fund’s alpha is 2.2%.
- The fund’s Sharpe ratio is 0.60.
- Alpha is the part of the return which cannot be explained by movements in the overall market.
- A positive alpha indicates that the security has performed better than would be predicted given its information ratio.
- With regard to taxation, trustees of an interest in possession trust where the asset is a rental property should be aware that:
- they will only ever be charged to basic rate tax on the rental income.
- a higher rate taxpaying beneficiary will not owe any extra tax on rental income.
- they are entitled to tax relief for the expenses they incur in managing the trust.
- as trustees, they will be entitled to a personal allowance.
- Simon has decided to make his own investment decisions and has implemented a Self-Invested Personal Pension (SIPP). This will allow him to use the plan as: Tick all that apply.
- a route to invest in commercial property.
- a way of making loans to his limited company.
- a platform to operate income withdrawals through drawdown.
- funding for his buy-to-let properties.
- Shona has been advised to take out an increasing term assurance as protection for her dependants. The reason for this would be:
- to ensure that the sum assured keeps pace with inflation.
- to ensure that the premium increases are in line with salary increases each year.
- to ensure that the original sum assured can be maintained over the term of the policy.
- to ensure that the premiums and the sum assured rise in line with interest rates.
- A – See R01 Study Text, Chp 5:2
Grab our taster mock exam paper for CII R01. Click here to download.
- AC – See R02 Study Text, Chp 9
Grab our taster mock exam paper for CII R02. Click here to download.
- A – See R03 Study Text, Chp 1
Grab our taster mock exam paper for CII R03. Click here to download.
- AC – See R04 Study Text, Chp 8
Grab our taster mock exam paper for CII R04 Click here to download.
- A – See R05 Study Text, Chp 4
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?
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