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TDQ: Test Your Knowledge – Questions

28 August 2019

For Professional Paraplanner’s TDQ (Training, Development and Qualifications) series, we have teamed up with key support providers, such as Brand Financial Training, to provide our readers with the very best in training, development and exam support.
This series aims to provide you with valuable advice and guidance materials to help you achieve your training goals, perfect your exam techniques and test your knowledge of the financial services market.
The following 10 questions, which can also be found in our September 2019 issue, and relate to examinable Tax year 19/20, examinable by the CII until 31 August 2020.


1. What does the ‘general prohibition’ rule within s.19 of the FSMA refer to?
A. The fact that intermediaries are generally restricted to certain activities
B. It is an offence for someone to carry out a regulated activity unless the person is authorised or exempt
C. The FCA will seek to stop unauthorised individuals working within the financial services sector
D. The powers granted to the FCA by the FMSA in relation to authorising individuals

2. Why might a new company consider the Alternative Investment Market instead of the London Stock Exchange (LSE)? Tick all that apply.
A. If the company capitalisation was in excess of the LSE’s criteria
B. Fewer formalities required than the LSE
C. Lower costs than the LSE
D. To allow the company to describe their shares as being ‘listed’

3. A fund has an average return of 10% per year with a beta of 1.4. This compares to the return on the market of 6% and the risk-free rate of 1.5%. What is the fund’s alpha?
A. 2.06%
B. 1.8%
C. 2.43%
D. 2.2%

4. An increase in which of the following economic factors implies a greater ability for a country to repay debt?
A. Consumer Prices Index
B. Current account deficit
C. Per capita income
D. Retail Prices Index

5. Immediate need annuities are usually sold as a variation of?
A. Compulsory purchase annuities
B. All benefits are liable to income tax at her highest marginal rate
C. Short term annuities
D. Impaired life annuities

6. Individuals reaching State pension age on or after the 6th of April 2016 will receive which of the following State benefits?
A. The Basic State Pension
B. The New State Pension
C. The Second State Pension
D. The State Earnings Related Pension

7. Jon and Sam want to move to a new area and buy a house there but property prices are such they don’t want to sell their existing house. What sort of arrangement would suit them?
A. Let to buy
B. Rent and buy
C. Buy and rent
D. Buy to let

8. Which of the following rules apply to a member in capped drawdown on 5 April 2015? Tick all that apply.
A. Benefits can stay in capped drawdown for as long as the member wishes.
B. The maximum permitted income review frequencies of three /one years were re-set with effect from 6 April 2015.
C. Maximum income is 150% of the basis amount.
D. It is not possible to transfer an existing capped drawdown plan into a new capped drawdown plan with another provider.
E. It is possible to designate additional funds into an existing capped drawdown plan.

9. The trustees of a family trust have recently bought a house with trust funds and will allow the beneficiary to live in it as their main residence. For Capital Gains Tax (CGT) purposes HMRC will only allow them to claim the principal private residence exemption on a later sale of the property if:
A. the beneficiary has an interest in possession
B. holdover relief was claimed on the transfer of the property to the trust
C. the trust is held on a discretionary basis
D. the beneficiary has an absolute interest

10. Morag is considering a policy that would enable her to maintain her mortgage payments if she was made redundant. She should be aware that such policies:
A. will reduce the amount of cover available by the amount of any savings she has
B. will prevent her applying for any State benefits
C. can provide any amount of benefit she wants to have
D. will only provide benefits for a maximum of two years

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