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TDQ: Test Your Knowledge – Questions

18 December 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 relate to examinable Tax year 19/20, examinable by the CII until 31 August 2020.


1. Which of the following is a definition of a debt management plan?
A. Individual repayments are agreed with each creditor and handled by the client or through a debt charity
B. Negotiating a new loan to repay existing loans with a lower interest rate and lower monthly repayments
C. Debt advice offered via organisations such as the Citizens Advice Bureau and National Debtline
D. An adviser negotiating with a client’s creditors to consolidate the debt into one affordable payment which is distributed to creditors via the adviser, (these advisers must be licensed under the Consumer Credit Act)

2. What is a limitation of using company investment ratios?
A. In a take-over, ratios can’t help shareholders assess if assets are being given away too cheaply
B. Ratios can’t provide meaningful comparisons with similar same sector companies
C. They can’t highlight any areas of a company that may require further scrutiny
D. Accounting policies could change over time, making historical comparisons misleading

3. Sam is self-employed and in his VAT return has reported output VAT of £10,000 and input VAT of £6,000. How much VAT will Sam either owe HMRC or be able to re-claim?
A. He will owe £1,000
B. He will owe £800
C. He can reclaim £1,000
D. He can reclaim £800

4. Under his capped drawdown arrangement Terry is now considering the purchase of a short-term annuity. He should be aware that: Tick all that apply.
A. they will only be available from the provider of his capped drawdown fund.
B. the annuity must be paid at least annually.
C. the annuity cannot have a term longer than five years.
D. the annuity can be guaranteed during its term.

5. George, a key person of Romulus Ltd is currently off work after an accident and receiving an income from an income protection plan taken out by his employer. How are the benefits from the policy treated in relation to the company’s taxation?
A. They are taxable only if they exceed £1,000 per month
B. They are free from any liability for tax
C. They are paid as a regular income and therefore taxable
D. Any excess over £1,000 per month is taxable

6. A property was bought at £117,000 and had tenants paying £525 per month, with general management costs of 25% and £1,100 worth of purchase costs. What is the rental yield?
A. 4.08%
B. 4.04%
C. 4.00%
D. 5.38%

7. Which of the following is true regarding an index-linked bond?
A. Only the coupon is uplifted by inflation
B. Only the maturity payment is uplifted by inflation
C. The coupon and maturity payment are uplifted by inflation
D. The price of the bond is uplifted by inflation

8. What benefits will a Hospital Cash Plan primarily provide?
A. An income during time spent in hospital due to an existing condition
B. A monetary amount for each night spent in a hospital or nursing home for an acute or chronic condition contracted while the plan is in force
C. Treatment classified as care for the elderly
D. An unlimited lump sum to meet the cost of treatment by a private health care provider

9. Phil and Jean have a joint lifetime mortgage. Phil now needs full time care and is moving into a residential home, while Jean will stay in their home with some domiciliary care. What effect will this have on the lifetime mortgage?
A. The balance will need to be repaid as soon as possible
B. Half of the balance will need to be repaid
C. It will not be affected
D. The local authority will start to pay the interest on the mortgage

10. When is gazundering more likely to take place?
A. In a depressed market
B. In a buoyant market
C. When interest rates are low
D. When inflation is high

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