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Friday Five Focus on Investments – 5 November – 5 Questions in 5 Minutes

Friday Five Focus on Investments – 5 November – 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 2021/22, examinable by the CII until 31 August 2022.

  1. A Future is an exchange traded forward contract. What contract specifications does the exchange standardise? Tick all that apply.
    1. Charges relating to non-delivery of commodity and financial asset
    2. Negotiation terms for the forward contract
    3. Delivery date of commodity and financial asset
    4. Delivery price of commodity and financial asset
  1. Stefan bought £1,000 nominal value of Treasury 7% 2026. What interest payment can he expect to receive?
    1. £70 every year
    2. £5.80 every month
    3. £35 every 6 months
    4. £23.33 quarterly
  1. If interest is payable at more frequent intervals (than annually), how would the effective rate of interest be different to the nominal rate of interest?
    1. The effective rate reduces.
    2. The nominal rate would be higher.
    3. The effective rate would be higher.
    4. There would be no difference.
  1. The Efficient Market Hypothesis (EMH) was developed by Eugene Fama in the 1960s. He believed that:
    1. security price movements are random and therefore predictable.
    2. it should be impossible to achieve returns in excess of average market returns consistently through stock selection or market timing.
    3. security prices reflect some available information in the market and prices slowly adjust to new information.
    4. an investor can only obtain higher than average returns through the skill and expertise of buying low risk investments.
  1. The Standard & Poor’s Composite is an index of companies listed on the New York Stock Exchange. How many companies are listed?
    1. 100
    2. 250
    3. 500
    4. 750

 

Answers

  1. CD – See R02 Study Text, Chp 8
    Grab our taster mock exam paper for CII R02. Click here to download.
  1. C – See R02 Study Text, Chp 1
    Grab our taster mock exam paper for CII R02. Click here to download.
  1. C – See R02 Study Text, Chp 5
    Grab our taster mock exam paper for CII R02. Click here to download.
  1. B – See J10 Study Text, Chp 10
    Grab our taster mock exam paper for CII J10 Click here to download.
  1. C – 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?

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