Friday Five – 8 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 behind a firm’s ethics code?
   1. Sets out the firm’s ethical commitment in high level terms, and often also includes more specific regulations for specific responsibilities
   2. Details the investment processes for clients wishing to consider ethical investment
   3. To specify the rules of conduct the firm expects from all advisers
   4. To visually demonstrate to all staff, the commitment via internal promotion e.g. intranet sites, staff room posters

2. An investment portfolio has a standard deviation of 12% with an annualised return of 13%, this compares to an annual risk-free investment return of 4.1%. What is the Sharpe ratio?
   1. 0.74%
   2. 0.25%
   3. 1.23%
   4. 0.42%

3. Which of the following individuals would be classed as a UK resident in this tax year? Tick all that apply
   1. George who has lived in the UK for an average of 40 days a year for the last 4 years
   2. Yvonne who will be in the UK for 185 days in this tax year
   3. Gordon who arrived in the UK on 01/12/14 to take up full time employment
   4. Graham who lives in Germany but visits his family in the UK for 2 weeks every 3 months
   5. Eleanor’s family home is in Brighton, but due to extensive work commitments this year will have spent 140 days this tax year in Florida

4. The Pension Protection Fund (PPF) was introduced in the 2004 Pension Act to provide default protection for whom?
   1. Employees who are members of defined benefit schemes.
   2. Pensioners retiring on an inadequate level of benefits.
   3. Anyone who has elected to opt out of earnings related state benefits.
   4. Anyone who has been mis-sold a pension product.

5. Why is the market price for “A” ordinary shares usually lower than ordinary shares?
   1. They rank behind ordinary shareholders in the event of liquidation
   2. They don’t qualify for dividends until the dividends on ordinary shares have reached a pre-determined level
   3. Shareholders of “A” ordinary shares are entitled to a smaller proportion of profits than ordinary shareholders
   4. The shareholders of “A” ordinary shares receive the same dividend although they have either restricted or no voting rights

Answers

1. A – See R01 Study Text, Chp 10, Section B2
   Grab our taster mock exam paper for CII R01. Click here to download.

2. A – See R02 Study Text, Chp 9, Section B2A
   Grab our taster mock exam paper for CII R02. Click here to download.

3. BCE – See R03 Study Text, Chp 5, Section A
   Grab our taster mock exam paper for CII R03. Click here to download.

4. A – See R04 Study Text, Chp 1, Section A1
   Grab our taster mock exam paper for CII R04. Click here to download.

5. D – See J12 Study Text, Chp 1, Section B2B
   Grab our taster mock exam paper for CII J12. 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!)