Friday Five Focus on Investments – 7 June – 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 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. First-time buyers Sarah and Ian are purchasing their new home for £360,000; what rate of stamp duty land tax is payable?
   1. 0%
   2. 1%
   3. 2%
   4. 5%

2. Standard deviation is an important statistical measurement in finance and is a measurement of
   1. how widely the actual return of an investment varies around its average or expected return.
   2. covariance between the returns on investments within the portfolio.
   3. the relationship between the return that can be expected from a portfolio and the risk of the portfolio.
   4. the risk premium of an investment.

3. Anthony holds various corporate bond funds and is seeking clarification of the taxation of the income. You can tell him that a corporate bond fund pays interest distributions
   1. net of 20% income tax.
   2. net of 10% income tax.
   3. net of 10% savings tax.
   4. without a tax deduction.

4. 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.

5. Pauline requires £21,000 in four years’ time. If the interest rate is 8.78% per annum, how much will she have to invest now?
   1. £10,000
   2. £15,000
   3. £16,000
   4. £18,000

Answers

1. A – See R02 Study Text, Chp 2
   Grab our taster mock exam paper for CII R02. Click here to download.

2. A – 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 7
   Grab our taster mock exam paper for CII R02. Click here to download.

4. D – See R02 Study Text, Chp 8
   Grab our taster mock exam paper for CII R02. Click here to download.

5. B – See R02 Study Text, Chp 5
   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.