Friday Five Focus on Investments – 29 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 2023/24, examinable by the CII until 31 August 2024.

1. Brynwold Accounts at year end contain the following information
    
   Total assets £14,150
   Current liabilities £2,120
   Long-term debt £1,140
   Ordinary shares in issue 5,750
   Preference shares in issue 1,500
    
   What is Brynwold’s net asset value?
   1. £1.89
   2. £1.63
   3. £1.50
   4. £2.40

2. Disinflation typically occurs when
   1. prices are declining over time and the rate of inflation becomes negative.
   2. the supply of goods rises faster than the supply of money.
   3. there is a decrease in the rate of inflation.
   4. buying power of money is reduced.

3. Harriet has £10,000 and borrows £5,000 to buy shares. The purchase price of the shares is £3, and she goes on to sell them for £3.80. What percentage gain has she made on her original capital?
   1. 100%
   2. 40%
   3. 30%
   4. 10%

4. Madeline is buying futures; what does she expect the price of the underlying asset to do?
   1. Remain level.
   2. Fall.
   3. Price is not relevant.
   4. Rise.

5. The least volatile fixed interest investments are those with a
   1. long period to maturity and a high coupon.
   2. short period to maturity and a high coupon.
   3. long period to maturity and a low coupon.
   4. short period to maturity and a low coupon.

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. B – 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.