Friday Five Focus on Investments – 3 February – 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. David is keen to reduce the risk within his investment portfolio; he could achieve this
   1. by hedging and diversification of his holdings.
   2. by using correlation and standard deviation techniques.
   3. through systematic and non-systematic risk applications.
   4. by utilising efficient frontier theory and risk ratios.

2. The COVID-19 pandemic can be regarded as what type of risk?
   1. Beta risk.
   2. Non-systematic risk.
   3. Systematic risk.
   4. Specific risk.

3. Ella’s risk profile has been established as ‘cautious growth’. Ella sells some of her equity holdings rather than some of her bond investments to pay for her daughter’s university fees. This is likely to be because
   1. Ella was overweight in equities.
   2. the market has been volatile of late.
   3. Ella needed the money quickly.
   4. interest rates are rising.

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, the first stage in Sally’s investment management process is
   1. asset allocation.
   2. sector selection.
   3. stock selection.
   4. economic changes.

5. Since mid-1997, the control of inflation in the UK has solely been the responsibility of the Bank of England’s Monetary Policy Committee. The Bank of England must write to the Chancellor of the Exchequer if inflation falls below
   1. 4%.
   2. 3%.
   3. 2%.
   4. 1%.

Answers

1. A – See R02 Study Text, Chp 4
   Grab our taster mock exam paper for CII R02. Click here to download.

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

3. A – See R02 Study Text, Chp 9
   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. D – 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.