Friday Five Focus on Investments – 11 December – 5 Questions in 5 Minutes

Friday Five Focus on Investments – 5 Questions in 5 Minutes Every Friday

What’s this all about?

Each week, we ask questions relating to one of these topics: Investments, Taxation, Pensions, Protection, or Regulation. This week, our Friday Five is relevant to Investments; this is useful as you prepare for the CII’s R02, AF4, or J10 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 2020/21, examinable by the CII until 31 August 2021.

1. Patrick has been advised by his financial adviser to use a tracker fund for his core holdings in order to:
   1. meet short-term tactical objectives.
   2. maintain the risk and return in line with market average.
   3. achieve superior performance through active selection.
   4. attempt to beat the benchmark.

2. Which of the main overseas equity indices is value-weighted? Tick all that apply.
   1. Dow Jones Industrial
   2. S & P 500
   3. Nikkei 225
   4. DAX 30

3. If a portfolio was worth £12,000 at the start of the period and £12,500 at the end of the period, with £1,500 being paid out during the period, it is true to say about the money-weighted rate of return (MWR) that: Tick all that apply.
   1. the MWR of the portfolio is 16.67%.
   2. the MWR allows comparisons to be made between fund managers.
   3. the MWR of the portfolio is 16.00%.
   4. the MWR is often used to refer to the internal rate of return.

4. Which element of the risk process is the following a description of? ‘The client’s personal opinion on the risks associated with making an investment, based on their prior knowledge and experience.’
   1. Risk tolerance
   2. Risk profile
   3. Risk capacity
   4. Risk perception

5. If a client is a charity and wishes a firm subject to MiFID II to act on their instructions and execute trades on their behalf, they will need to obtain a:
   1. legal entity identifier code.
   2. charity identifier statement.
   3. MiFID II identifier code.
   4. legal structure statement.

Answers

1. B – See R02 Study Text, Chp 10
   Grab our taster mock exam paper for CII R02. Click here to download.

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

3. AD – See R02 Study Text, Chp 11
   Grab our taster mock exam paper for CII R02. Click here to download.

4. D – See J10 Study Text, Chp 1
   Grab our taster mock exam paper for CII J10 Click here to download.

5. A – See J10 Study Text, Chp 6
   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?

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