Friday Five Focus on Investments – 23 July – 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. When making investment decisions, the main objectives of a client are concerned with:
   1. return requirements and risk tolerance.
   2. Benchmarks.
   3. understanding of risk.
   4. liability matching and maximising returns.

2. Which of the following products is usually the most tax-efficient and simple way for clients to hold equity-based investments?
   1. A personal pension
   2. A unit trust or OEIC
   3. An offshore bond
   4. An onshore bond

3. How do Commercial Bills differ from Treasury Bills?
   1. Commercial bills are issued at a discount to their maturity value.
   2. Commercial bills are short-term.
   3. Commercial bills typically have higher yields.
   4. The purpose of Treasury bills is to fund daily cash flows.

4. Sally is an investment manager at an international bank. The bank uses a ‘top-down approach’ to managing the investment portfolios of its private customers. When faced with deciding how to allocate a client’s portfolio, what will be the first stage in Sally’s investment management process?
   1. Asset allocation
   2. Sector selection
   3. Stock selection
   4. Economic changes

5. Business cycles occur around trends in a country’s overall economic activity. If the UK’s level of GDP has fallen compared to the previous quarter, the economy is said to be:
   1. reducing.
   2. contracting.
   3. recovering.
   4. in recession

Answers

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

2. B – See R02 Study Text, Chp 10
   Grab our taster mock exam paper for CII R02. Click here to download.

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

4. A – See J10 Study Text, Chp 6
   Grab our taster mock exam paper for CII J10 Click here to download.

5. B – See J10 Study Text, Chp 8
   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.