Friday Five Focus on Investments – 15 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 any of 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 2023/24, examinable by the CII until 31 August 2024.

1. The process where central banks draw money out of their economies by selling bonds previously acquired is known as
   1. financial regression.
   2. quantitative easing.
   3. disinflation.
   4. quantitative tightening.

2. If the stock market rises by 4%, which of the following shares is most likely to rise by more than 4%?
   

   Share	Beta
   A	0.8
   B	0.6
   C	1.2
   D	1

   1. Share A.
   2. Share B.
   3. Share C.
   4. Share D.

3. Which of the following is a type of credit risk?
   1. Event.
   2. Downgrade.
   3. Solvency.
   4. Liquidity.

4. Jonah has a significant proportion of his investment portfolio invested in gilts and corporate bonds. He is concerned about the impact of changing interest rates on his portfolio. You can tell him that
   1. if interest rates fall, the capital value of his portfolio will rise.
   2. if interest rates fall, the capital value of his portfolio will fall.
   3. a change in interest rates will only affect the coupon paid.
   4. a change in interest rates will only affect the interest yield.

5. Which of the following rates of return allows for comparisons to be made between the performance of one fund manager and that of another?
   1. Money-weighted rate of return.
   2. Relative return.
   3. Time-weighted rate of return.
   4. Holding period return.

Answers

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

2. C – See R02 Study Text, Chp 4
   Grab our taster mock exam paper for CII R02. Click here to download.

3. B – See R02 Study Text, Chp 6
   Grab our taster mock exam paper for CII R02. Click here to download.

4. A – See J10 Study Text, Chp 9
   Grab our taster mock exam paper for CII J10 Click here to download.

5. C – See J10 Study Text, Chp 11
   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.