Friday Five – 8 December – 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 2017/18, examinable until 31 August 2018.

1. How would you define a sole trader?
   1. A self-employed person who is personally liable for the debts of their business
   2. An individual who works on their own and doesn’t employ any staff
   3. An individual who provides services through a contract of employment
   4. A small business with one person solely responsible for controlling the business

2. Sandy and Brian are carrying out Inheritance Tax mitigation and are keen to use the ‘normal expenditure out of income’ exemption. Which of the following is most likely to qualify?
   1. Paying net annual premiums of up to £2,880 into a personal pension for their son
   2. Paying a £45,000 deposit on a house purchase for their daughter
   3. Using the 5% withdrawal facility from an investment bond to pay the premiums on a joint life 2nd death life policy
   4. Transferring their income producing investment portfolio to both children

3. The Trustees of a defined benefit scheme have developed a Recovery Plan for the scheme. This would indicate that the scheme:
   1. is in deficit.
   2. was contracted out of S2P.
   3. has been taken over by the PPF.
   4. is changing the benefit structure.

4. Who, from the following list of applicants for an income protection policy, is likely to be charged the highest premium?
   1. Derek, aged 45, with a deferred period of 13 weeks
   2. Chloe, aged 52, with a deferred period of 26 weeks
   3. Arthur, aged 47, with a deferred period of 8 weeks
   4. Julia, aged 48, with a deferred period of 4 weeks

5. Although savings accounts are relatively simple products with low risk and no overt management charges, they are not completely free of risk. In relation to such investments, what does reinvestment risk refer to?
   1. A potential penalty suffered on the early encashment within a fixed rate notice period
   2. Fluctuating interest rates on variable savings accounts
   3. Inability to invest maturing money from a fixed rate account into accounts offering comparable rates
   4. The withdrawal of maturity investment options

Answers

1. A – See R01 Study Text, Chp 3
   Grab our taster mock exam paper for CII R01. Click here to download.

2. A – See R03 Study Text, Chp 11
   Grab our taster mock exam paper for CII R03. Click here to download.

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

4. D – See R05 Study Text, Chp 6
   Grab our taster mock exam paper for CII R05. Click here to download.

5. C – See J10 Study Text, Chp 2:1
   Grab our taster mock exam paper for CII J10. 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!)