Friday Five Focus on Investments – 5 Questions in 5 Minutes – 9 Aug 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 2023/24, examinable by the CII until 31 August 2024. They do not relate to tax year 2024/25 which is only examinable by the CII from 1 September 2024.

1. The process where central banks draw money out of their economies by selling bonds previously acquired is known as
   1. financial regression.
   2. quantitative easing.
   3. disinflation.
   4. quantitative tightening.

2. The efficient frontier concept represents the
   1. optimal investment portfolio with the lowest level of risk.
   2. set of portfolios that offer the highest return for a given level of risk.
   3. optimal portfolio to produce the highest level of return.
   4. set of investment portfolios representing the minimum risk that can be achieved.

3. A retail client wishes to understand the features of an insurance company property fund. You can tell them that one of the features is that
   1. the fund does not suffer corporation tax.
   2. units can always be encashed easily.
   3. the fund cannot borrow money.
   4. the unit value is linked to the UK housing index.

4. Through the fact-finding process with Mr Smith, it becomes clear his goals are unachievable. How should this be overcome?
   1. Ask Mr Smith to prioritise as soon as possible.
   2. Scale back each goal proportionately.
   3. Make him aware and help to identify needs, priorities and re-negotiate goals.
   4. The role of prioritising lies with the adviser and he should do this as soon as possible.

5. Priti is investing in a Seed Enterprise Investment Scheme. After how long of holding the investment will she receive 100% relief from inheritance tax?
   1. 1 year.
   2. 18 months.
   3. 2 years.
   4. 3 years.

Answers

1. D – 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 4
   Grab our taster mock exam paper for CII R02. Click here to download.

3. C – 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. C – See R02 Study Text, Chp 8
   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.