Friday Five Focus on Investments – 5 Questions in 5 Minutes – 13 Sep 2024

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 2024/25, examinable by the CII until 31 August 2025.

1. In times of low economic activity, a fiscal measure the UK government can action to stimulate demand is
   1. decrease its spending.
   2. decrease taxation.
   3. increase taxation.
   4. increase interest rates.

2. Exon PLC has a beta of 1.2, the expected return of the market portfolio is 6% and the expected return on a Treasury bill is 3.3%. Using the Capital Asset Pricing Model, Exon’s expected return is
   1. 9.06%.
   2. 8.52%.
   3. 6.54%.
   4. 9.24%.

3. Milly has recently bought unlisted shares from her savings in a Save As You Earn scheme. How many days does she have to invest these in an ISA for them to be treated as an ‘eligible investment’?
   1. 14
   2. 21
   3. 28
   4. 90

4. What is regarded as having the most impact on the performance of a portfolio?
   1. A client’s age.
   2. Fund selection.
   3. Asset allocation.
   4. Fund manager selection.

5. Rebalancing a portfolio is an essential feature of asset allocation because
   1. a divergence from a client’s asset allocation could result in higher risk.
   2. research suggests rebalancing monthly provides significantly enhanced benefits.
   3. a client’s attitude to risk will always reduce the closer they get to retirement.
   4. the economic environment presents new opportunities in different asset classes over time.

Answers

1. B – See R02 Study Text, Chp 3
   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. C – See R02 Study Text, Chp 9
   Grab our taster mock exam paper for CII R02. Click here to download.

5. A – See R02 Study Text, Chp 9
   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.