Friday Five Focus on Investments – 23 February – 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. Yellowstone’s accounts show that dividends paid to ordinary shareholders over the last 12 months was £315,000 whilst dividends paid to preference shareholders was £175,000. Their profit after taxation was £1,114,000. What is their dividend cover?
   1. 3.54 times.
   2. 2.98 times.
   3. 1.98 times.
   4. 6.37

2. If the annual rate of inflation falls from 0.3% to -0.2% this is an example of
   1. inflation.
   2. fiscal policy.
   3. deflation.
   4. disinflation.

3. Your client’s stockbroker has recommended to them that they borrow some money to take advantage of a potentially lucrative investment opportunity. What is this an example of?
   1. Diversification.
   2. Bail-in risk.
   3. Arbitrage.
   4. Gearing.

4. Ethan is aged 15 with a junior ISA. At what age does he take over the role from his parent as the ‘registered contact’?
   1. 21
   2. 18
   3. 17
   4. 16

5. Sarah is considering an investment in conventional gilts. She should be aware that the “dirty price” refers to the
   1. ‘clean price’ plus an additional amount for junk or high yielding bonds.
   2. ‘clean price’ of the stock plus or minus any interest adjustments.
   3. mid-market price quoted in major newspapers.
   4. value of stock over the period until maturity as it moves above or below par.

Answers

1. B – 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. D – 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. B – 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.