Friday Five Focus on Investments – 25 November – 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. A client is considering investing in an offshore bank account. Which of the following is regarded as a common danger specific to investing in offshore accounts?
   1. Reduced compensation schemes.
   2. Interest rate risk.
   3. Higher taxation rates.
   4. Reinvestment risk.

2. Simon is a preference share holder with Hayden PLC. In the event of Hayden PLC going into liquidation, he would rank
   1. ahead of ordinary shareholders and other creditors.
   2. after ordinary shareholders but ahead of other creditors.
   3. ahead of ordinary shareholders but after other creditors.
   4. after ordinary shareholders and other creditors.

3. Lau is considering investing in a Lifetime ISA. She would like to know what the annual government bonus will be if she invests £200 each month for a year. You tell her it will be
   1. £4,000
   2. £1,000
   3. £750
   4. £600

4. A company’s return on equity can be worked out using figures from the company’s income statement. The best definition of return on equity is the
   1. amount of return paid to preference shareholders.
   2. earnings achieved compared to equity invested.
   3. amount of return paid to ordinary shareholders.
   4. earnings achieved compared to capital employed.

5. You have two new clients, Glenda and John. They have asked you to explain the investment management process in more detail. As you come to the end of your explanation, you tell them that the final stage of the process is
   1. stock (or fund) selection.
   2. performance measurement.
   3. formulating investment policy and strategies.
   4. determining client investment objective.

Answers

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

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

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

4. B – See J10 Study Text, Chp 14
   Grab our taster mock exam paper for CII J10 Click here to download.

5. B – See J10 Study Text, Chp 5
   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.