Friday Five Focus on Investments – 5 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 2020/21, examinable by the CII until 31 August 2021.

1. The UK’s balance of payments is split into which two sections?
   1. Visible and invisible trade
   2. Receipts and payments
   3. Current account and capital account
   4. Exchange and conversion of sterling into foreign currency

2. £1,500 is invested for 5 years at an annual rate of 3.5%. Approximately, how much will be accumulated at the end of 5 years?
   1. £6,720
   2. £1,781
   3. £3,282
   4. £1,843

3. Which type of investment fund would invest in short-term money markets such as bank deposits and treasury bills?
   1. Building society fund
   2. Gilt or fixed interest fund
   3. Index-linked gilt fund
   4. Cash fund

4. Company X has a beta of 1.5. If the expected return on a Treasury bill is 3% and the expected return on the market portfolio is 7%, what is the expected return for Company X?
   1. -3%
   2. 7.5%
   3. 9%
   4. 15%

5. An investment portfolio has a standard deviation of 12% with an annualised return of 13%, this compares to an annual risk-free investment return of 4.1%. What is the Sharpe ratio?
   1. 0.74
   2. 0.25
   3. 1.23
   4. 0.42

Answers

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

2. B – See R02 Study Text, Chp 5
   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. C – See J10 Study Text, Chp 10
   Grab our taster mock exam paper for CII J10 Click here to download.

5. A – See J10 Study Text, Chp 11
   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.