Friday Five Focus on Investments – 25 March – 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 2021/22, examinable by the CII until 31 August 2022.

1. If a bank is on the brink of failure and, as a consequence, the depositors suffer a loss on their holdings, this is known as:
   1. downgrade risk.
   2. bail-in risk.
   3. currency risk.
   4. systematic risk.

2. 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

3. A buy-to-let investor should be aware that liquidity is a drawback of property investment because property: Tick all that apply.
   1. is difficult to value.
   2. is only available across a narrow type range.
   3. is expensive to trade.
   4. can be difficult to sell.

4. Gerard, a newly authorised financial adviser, has met with clients Ann-Marie and Janie for the first time. As his supervisor, which of the following would you advise him is the most important aspect of a sound client-adviser relationship?
   1. Trust
   2. Technical skill
   3. Length of time in industry
   4. Experience

5. Lydia and Marnie are both named as beneficiaries under a trust. Lydia is the life tenant, and Marnie will be entitled to the capital from the trust once Lydia’s interest has ended. What type of beneficiary is Marnie?
   1. Contingent beneficiary
   2. Default beneficiary
   3. Remainderman
   4. Reversionary tenant

Answers

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

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

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

4. A – See J10 Study Text, Chp 1
   Grab our taster mock exam paper for CII J10 Click here to download.

5. C – 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.