Whether you are preparing for your exams, or simply want to keep your knowledge up-to-date, Professional Paraplanner’s Development Zone can help.
Every month, in conjunction with Brand Financial Training, we provide a series of questions from across the syllabus which aim to test your knowledge of the financial services market, as part of your overall self development training goals and exam techniques.
The following questions relate to examinable Tax year 22/23, examinable by the CII until 31 August 2023.
You will find the answers separately under the Development Zone tab on the Professional Paraplanner website.
1. The rule regarding a firm taking out insurance indemnity for Financial Conduct Authority (FCA) penalties or enforcement costs is that a firm
A. cannot indemnify itself against any FCA penalties, costs, or enforcement action.
B. can only indemnify itself against a financial penalty imposed by the FCA.
C. cannot indemnify itself against an FCA penalty, but it can against the cost of defending enforcement action or costs it may be ordered to pay.
D. can only indemnify itself against any FCA costs it may be ordered to pay.
2. Callum is using investment ratios to decide whether he should invest in the shares of a particular company. What are the main restrictions of him using the company’s net asset value (NAV)? (Tick all that apply)
A. NAV produces an accounting value, but in the event of liquidation, it is unlikely the assets would realise their balance sheet value.
B. In the event of a takeover bid, NAV provides no real compensation when considering the bid price being offered.
C. NAV does not provide a useful guide for share price of companies with readily realisable assets.
D. For companies valued on earnings potential, NAV does not take into account goodwill inherent in the business.
3. On Aaron’s death he left an estate valued at £900,000. This included a main residence worth £550,000. In his will, Aaron left £60,000 to the Dogs Trust. The remainder of his estate was divided equally between his two sons. Aaron was divorced at the time of his death and had made no lifetime gifts. What is the amount of IHT payable on Aaron’s estate?
4. Which of the following was introduced for occupational defined contribution pension schemes using master trusts as part of the Pension Schemes Act 2017?
A. Authorised schemes must submit monthly accounts to The Pensions Regulator.
B. Schemes must submit monthly supervisory returns.
C. Financial Conduct Authority powers to withdraw authorisation from a failing scheme.
D. To be authorised those involved in the scheme must be ‘fit and proper’.
5. Ben has a budget private medical insurance policy and Claire has a comprehensive plan. Which of the following statements is TRUE?
A. Ben’s policy has limited extra benefits.
B. Claire’s policy will have lower limits on the costs of treatments covered in any one year.
C. If there is an excess on the policy, it will be higher on Ben’s.
D. There will be no exclusions on Claire’s policy.
6. For which of the following investors would inflation levels be most significant?
A. Annabelle, whose sole source of income is her fixed-interest securities.
B. Sarah, whose equity portfolio is very concentrated in the banking sector.
C. Stephanie, who has delayed investment and is holding her money as cash.
D. Amy, whose investments comprise only of buy-to-let properties.
7. When considering the taxation position of an investor in a Real Estate Investment Trust, income is taxable at
A. the investor’s marginal rate and capital gains are tax free.
B. the investor’s marginal rate and capital gains can be deferred.
C. a flat rate of 10% and capital gains are potentially taxable.
D. the investor’s marginal rate and capital gains are potentially taxable.
8. Which of the following is funded based on assessed need only and disregards the level of a person’s income and capital?
A. Personal care.
B. Accommodation costs.
C. Continuous health care.
D. Domiciliary care.
9. David took out a Home Reversion Plan some years ago, under which he is a tenant in his home. The home is now owned by the plan provider. He has not maintained the property, and it is now in a serious state of disrepair. What action could the plan provider take?
A. Sell the property with David as a sitting tenant.
B. Force entry to the property to carry out the repairs.
C. Regard David’s neglect as a qualifying termination event and end the lease.
D. No action possible as David has rights as occupier.
10. Paul has total taxable income of £60,000. This consists of £50,000 employment income and £10,000 rental income. He has recently sold his buy-to-let property, making a gain of £90,600, incurring costs of £7,400. How much capital gains tax can Paul expect to pay?