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Friday Five – 9 February – 5 Questions in 5 Minutes

Friday Five – 9 February – 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. What is the difference between an Enduring Power of Attorney and a Lasting Power of Attorney?
    1. A lasting power of attorney cannot be used to make gifts
    2. A lasting power of attorney allows the attorney to make decisions regarding the donor’s welfare as well as financial matters
    3. Under an Enduring power of attorney, power is only given in respect of the donor’s health and welfare
    4. Under an Enduring power of attorney, the attorney has to be over 18
  1. Yellowstone’s accounts show that dividends paid to ordinary shareholders over the last 12 months was £315,000 whilst dividends paid to preference shareholders was £175,000. Their profit after taxation was £1,114,000. What is their dividend cover?
    1. 3.54 times
    2. 2.98 times
    3. 1.98 times
    4. 6.37 times
  1. Paul is a beneficiary under the family Interest in Possession trust. He has a personal income of £173,000 and has recently also received £2,000 income generated from the trust’s corporate bond holding. What is Paul’s Income tax liability on this income?
    1. His liability is 40% of the gross income of £2,500
    2. He has no liability as the trustees are responsible for any income tax
    3. His liability is 45% of £2,500 less the 20% tax deducted at source
    4. He has no liability as 20% income tax has been deducted at source
  1. In 2017/18, Paul receives a salary of £116,000. He has savings interest of £1,000 and dividend income of £40,000. Paul is a member of his employer’s occupational defined contribution pension scheme and contributions are paid via the net pay arrangement. In 2017/18 Paul pays £20,000 gross to the scheme and his employer pays £10,000. Paul also pays £2,000 in fees to a professional body.
    Calculate Paul’s tapered annual allowance.

    1. £32,500.
    2. £30,000.
    3. £28,000.
    4. £25,000.
  1. If an investor buys futures, what do they expect the price of the underlying asset to do?
    1. Remain level
    2. Fall
    3. Price is not relevant
    4. Rise

 

Answers

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

 

  1. B – See R02 Study Text, Chp 1:2
    Grab our taster mock exam paper for CII R02. Click here to download.

 

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

 

  1. A – See R04 Study Text, Chp 2:1
    Grab our taster mock exam paper for CII R04. Click here to download.

 

  1. B – See J12 Study Text, Chp 11
    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!)

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