Friday Five Focus on Investments – 30 December – 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. Yellowstone’s accounts show that dividends paid to ordinary shareholders over the last 12 months was £315,000 whilst dividends paid to preference shareholders was £175,000. Their profit after taxation was £1,114,000. What is their dividend cover?
   1. 3.54 times.
   2. 2.98 times.
   3. 1.98 times.
   4. 6.37 times.

2. If the stock market rises by 4%, which of the following shares is most likely to rise by more than 4%?
   

   Share	Beta
   A	0.8
   B	0.6
   C	1.2
   D	1

   1. Share A.
   2. Share B.
   3. Share C.
   4. Share D.

3. When trading financial futures, open positions are re-valued on a daily basis. This is known as
   1. making the market.
   2. trading the market.
   3. on the market.
   4. marking to market.

4. ‘The client’s personal opinion on the risks associated with making an investment, based on their prior knowledge and experience’ is describing risk
   1. tolerance.
   2. profile.
   3. capacity.
   4. perception.

5. Joanne is considering investing in the stock market via an exchange-traded fund (ETF). Each of the following statements relating to ETFs is true with the exception of which one?
   1. An ETF has an underlying legal structure of a company.
   2. ETFs value their portfolios daily.
   3. ETFs have no initial fees.
   4. ETFs are liable to Stamp Duty.

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

5. D – See J10 Study Text, Chp 7
   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.