Friday Five Focus on Investments – 29 January – 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.

1. Which of the following would be justifiable reasons to switch an investment? Tick all that apply
   1. Higher fee achievable on alternative product
   2. Clear change in client objective or circumstances
   3. Client gives clear instructions to effect a switch
   4. A fund has fallen to 3rd quartile over the last month

2. Ryan and Mary have £117,000 held joint in a savings account. In the event of the institution becoming insolvent, how much could they expect to recover under the Financial Services Compensation Scheme?
   1. £58,500
   2. £85,000
   3. £117,000
   4. £150,000

3. Which of the following purchases of property in November 2020 would NOT be liable for stamp duty land tax?
   

   Name		Scenario	Purchase Price
   	Yvonne	First-Time Buyer	£575,000
   	Simone	Buying a second 'buy-to-let' property	£125,000
   	Andrea	Non-residential property	£140,000
   	Elizabeth	Commercial property	£160,000

   1. Yvonne
   2. Simone
   3. Andrea
   4. Elizabeth

4. Jamie is considering the investment approach to take for his clients Wendy and Dan. They both have a medium attitude to risk and are looking to invest around £80,000. Why might Jamie decide to use a tracker fund for their core holdings?
   1. In order to meet short-term tactical objectives
   2. To maintain the risk and return in line with market average
   3. To achieve superior performance through active selection
   4. In an attempt to beat the benchmark index

5. Interest rate risk is particularly important for fixed income or floating/variable rate securities. Which of the following factors would tend to have the effect of reducing short-term interest rates?
   1. Quantitative easing
   2. Government plans to issue gilts to fund a deficit
   3. Expectations of rising inflation
   4. Strong economic activity

Answers

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

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

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

4. B – See J10 Study Text, Chp 7
   Grab our taster mock exam paper for CII J10 Click here to download.

5. A – See J10 Study Text, Chp 9
   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.