Friday Five – 6 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 2017/18, examinable by the CII until 31 August 2018.  They do not relate to tax year 2018/19 which is only examinable by the CII from 1 September 2018.

1. What would be a positive indicator that a firm’s strategy was working?
   1. The firm has a clear vision that supports the fair treatment of customers
   2. Internal posters for staff highlighting key messages
   3. Evidence of target rewards in place for individuals achieving desired outcomes
   4. Evidence of frequent staff meetings where strategy has been discussed

2. Exon PLC has a beta of 1.2, the expected return of the market portfolio is 6% and the expected return on a Treasury bill is 3.3%. Using the CAPM formula, what is Exon’s expected return?
   1. 9.06%
   2. 8.52%
   3. 6.54%
   4. 9.24%

3. What is a difference between a local authority bond and a corporate bond?
   1. Only corporate bonds pay interest net of 20% tax.
   2. Only interest received from a local authority bond is fully taxable as savings income.
   3. In certain circumstances, losses may be allowable for corporate bonds.
   4. A corporate bond pays interest for a fixed term and repays the capital at maturity.

4. In what circumstances, might Fred’s conventional lifetime annuity amount fall from that paid in a previous year? Tick all that apply.
   1. Fred has just married.
   2. Fred chose a with profit annuity at outset.
   3. Fred chose an annuity linked to RPI.
   4. Fred has reached the end of the guarantee period.

5. An important measure of strength of a life office is its:
   1. guaranteed products
   2. with profit bonuses
   3. free asset ratio
   4. asset recovery statistics

Answers

1. A – See R01 Study Text, Chp 9
   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. C – See R03 Study Text, Chp 9
   Grab our taster mock exam paper for CII R03. Click here to download.

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

5. C – See R05 Study Text, Chp 10.1
   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?

Do let us know by leaving a comment below – we promise to read them all. (Humour particularly appreciated on a Friday!)