Friday Five Focus on Investments – 8 July – 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. They do not relate to tax year 2022/23 which is only examinable by the CII from 1 September 2022.

1. Your client has indicated a return objective of ‘capital appreciation’. What characteristic is typical for this type of client?
   1. Risk averse
   2. Short-term
   3. Growth usually achieved from capital gains 
   4. Income dependent 

2. Which of the main overseas equity indices are value weighted? Tick all that apply
   1. Dow Jones Industrial
   2. S & P 500 
   3. Nikkei 225 
   4. DAX 30

3. A Bond is trading below its par value, what might cause this? 
   1. Interest rates have reduced sharply
   2. The coupon is below current interest rates. 
   3. The coupon is above current interest rates. 
   4. The issuer has a strong credit rating. 

4. Clark will be providing discretionary management services to his new clients Beverly and Jim. Under FCA regulations, Clark’s firm must retain the couple’s client agreement: 
   1. for 3 years if this is longer than the relationship with the client. 
   2. for 5 years if this is longer than the relationship with the client. 
   3. for at least the duration of the relationship with the client. 
   4. indefinitely. 

5. What is the running yield on a gilt with a coupon of 4% with a price of £107.50? 
   1. 4.3% 
   2. 4.0% 
   3. 3.72% 
   4. 2.69% 

Answers

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

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

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

4. C – See J10 Study Text, Chp 6
   Grab our taster mock exam paper for CII J10 Click here to download.

5. 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?

If you found this quiz useful for your CII exam revision, please do share it with your colleagues.