Friday Five Focus on Investments – 19 January – 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. Billy has been offered non-voting ordinary shares in a UK company. He should be aware that
   1. he will rank behind ordinary shareholders in the event of liquidation.
   2. he will not qualify for a dividend until the dividend on the ordinary shares has reached a pre-determined level.
   3. he will be entitled to a smaller proportion of profits than ordinary shareholders.
   4. the market price will usually be lower than that of the ordinary shares.

2. If the public sector net cash requirement is growing, this indicates that
   1. the economy is expanding.
   2. spending on unemployment is falling.
   3. the economy is in recession.
   4. tax revenues are rising.

3. What is it called when instead of a government stepping in to help a financial institution in trouble the help comes from the institution’s shareholders?
   1. Bail-in risk.
   2. Currency risk.
   3. Event risk.
   4. Bail-out risk.

4. Paul and Mary are married with two children, aged 16 and 18. How much can they invest in total in ISAs in this tax year?
   1. £60,000
   2. £80,000
   3. £84,368
   4. £89,000

5. When interpreting returns from Treasury bills, a financial adviser should be aware that
   1. they pay an interest amount on a daily basis.
   2. interest earned is dependent on market conditions and is paid monthly.
   3. interest earned is the difference in the purchase price and maturity value.
   4. they pay a lump sum interest payment at the end of the maturity period.

Answers

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

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

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

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

5. C – See R02 Study Text, Chp 1
   Grab our taster mock exam paper for CII R02. 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.