Friday Five – 5 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. If a client said that all of their current investments were in emerging market funds, what might this indicate to the adviser?
   1. That the client was considering retiring abroad
   2. That the client has little confidence in the UK stock market
   3. That the client was reckless
   4. That the client has an adventurous attitude to risk

2. Julie has two investments correlated as follows:
   

   	Investment A	Investment B
   Investment A	1.0	-0.3
   Investment B	-0.3	1.0

   If investment A falls by 6% what is most likely to happen to investment B?
   1. It will fall by 3%.
   2. It will fall by 1.8%.
   3. It will rise by 1.8%.
   4. It will rise by 3%.

3. Adrian transferred assets worth £150,000 into a trust, in which he has no interest. If he had sold the assets he would have made a gain of £40,000. If holdover relief was claimed what effect would it have on the trust?
   1. Holdover relief is not available as the value of the gift is below the nil rate band.
   2. There is no CGT at the time of the transfer, but the acquisition cost of the trust is reduced to £110,000.
   3. Adrian has no immediate CGT liability, but he would be liable to CGT on the trust’s periodic review.
   4. The gain is liable to CGT by the trust at acquisition and not on Adrian at disposal.

4. Bill is eligible to receive an element of the State Graduated Pension Scheme at retirement, since he:
   1. was contracted out of SERPS/S2P.
   2. was self-employed throughout his working life.
   3. retired before 1961.
   4. was employed in 1971.

5. A life office is making a payment to a policyholder on the surrender of a life assurance policy that involved a chargeable gain. How will the life office pay the proceeds?
   1. After deduction of basic rate income tax only
   2. After deduction of any tax due
   3. Gross but with a tax invoice for the amount due
   4. Without deduction of any tax due

Answers

1. D – See R01 Study Text, Chp 8
   Grab our taster mock exam paper for CII R01. Click here to download.

2. C – See R02 Study Text, Chp 3
   Grab our taster mock exam paper for CII R02. Click here to download.

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

4. D – See R04 Study Text, Chp 1
   Grab our taster mock exam paper for CII R04. Click here to download.

5. D – See R05 Study Text, Chp 5
   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?

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