Friday Five Focus on Investments – 18 June – 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 2020/21, examinable by the CII until 31 August 2021. They do not relate to tax year 2021/22 which is only examinable by the CII from 1 September 2021.

1. Which of the following is used generically to describe ethical investment?
   1. Globally responsible investment
   2. Negative screening
   3. Socially responsible investment
   4. Environmental lending

2. The discussion of risk in a finance theory framework is considered limited in its use mainly because:
   1. people’s attitude to risk will always change over longer periods of time.
   2. clients do not always want to disclose all relevant information to advisers.
   3. risk is a psychological/subjective issue which frameworks don’t take account of
   4. the framework is a very difficult and complex concept for most clients to grasp.

3. Cynthia is considering investment in a Venture Capital Trust; which of the following are tax advantages of her doing so? Tick all that apply.
   1. She will receive income tax relief of 30%.
   2. She can use reinvestment relief for capital gains tax purposes
   3. There is a dividend exemption from income tax in respect of shares bought within the permitted maximum.
   4. She will receive 100% Inheritance Tax relief after 2 years.

4. Caren has savings in her local building society of £100,000. She feels that cash is the only safe place for her money and is fearful of the stock market. You explain to her that, in fact, her savings are exposed to each of the following risks with the exception of:
   1. inflation risk.
   2. investment risk.
   3. default risk.
   4. interest rate risk.

5. Kelvin, a broker, has executed a deal for his client Thomas. Kelvin’s firm must issue a contract note to Thomas following the execution of the trade no later than:
   1. 1 business day.
   2. 2 business days.
   3. 3 business days.
   4. 5 business days.

Answers

1. C – See R02 Study Text, Chp 9
   Grab our taster mock exam paper for CII R02. Click here to download.

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

3. AC – See R02 Study Text, Chp 8
   Grab our taster mock exam paper for CII R02. Click here to download.

4. B – See J10 Study Text, Chp 2
   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.