Friday Five Focus on Investments – 21 October – 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 2022/23, examinable by the CII until 31 August 2023.

1. The writer of an option receives a premium from the buyer but what payments does the writer have to pay? (Tick all that apply)
   1. Commission.
   2. Premium.
   3. An additional commission.
   4. Margin payments.

2. Max is considering investing in NS&I Savings Certificates. He should be aware that
   1. interest is paid gross but is taxable.
   2. they are currently available by online application only.
   3. interest is paid net of income tax on a monthly basis.
   4. they are currently only available to those with maturing certificates.

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

4. The average return from a fund is 10% per year. The fund has a beta of 2, the return on the market is 7% and the risk-free rate is 3%. From this information we can say that the alpha of the fund is
   1. 3
   2. 1
   3. -3
   4. -1

5. Elouise is considering whether to increase her exposure to the retail property sector, possibly with a buy-to-let property. You explain to her that one of the advantages property investment has over some other asset classes is it
   1. performs better over the long term than all other asset classes.
   2. is an asset-backed investment and can protect against inflation.
   3. can add diversification and is always readily realisable.
   4. is a more secure investment than any of the other asset classes.

Answers

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

2. D – See R02 Study Text, Chp 1
   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. D – See J10 Study Text, Chp 11
   Grab our taster mock exam paper for CII J10 Click here to download.

5. B – See J10 Study Text, Chp 2
   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.