TDQ: Test Your Knowledge – Questions
20 December 2018
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 January 2019 issue, relate to examinable Tax year 18/19, examinable by the CII until 31 August 2019.
1. Under the Enterprise Act 2002, how long does bankruptcy normally last?
A. 6 months
B. 12 months
C. 3 years
D. 5 years
2. Limetree has earnings per share of 18.24p and a dividend per share of 7.52p. What is their dividend cover?
A. 2.43 times
C. 4.12 times
3. Charlie sets up a discretionary trust in this tax year for his grandchildren for £425,000. He has already used his annual exemptions. How much inheritance tax (IHT) will be payable assuming Charlie pays it when he sets up the trust?
4. James, age 29, has been nominated by his uncle as the beneficiary of his occupational money purchase scheme following his death. Which of the following death benefit options will NOT be available to him?
A. Scheme pension.
B. Lifetime annuity.
C. Flexi-access drawdown.
D. Lump sum.
5. Marie has an onshore life assurance policy and Claire has an offshore life assurance policy. The difference in the tax treatment of their funds is:
A. Marie’s fund will be taxed at roughly the basic rate of income tax, while Claire’s fund will have gross roll-up
B. Marie’s fund will be taxed, but the tax is reclaimable while Claire’s fund will have a gross roll-up
C. Claire’s fund will be taxed at roughly the basic rate of income tax, while Marie’s fund will benefit from gross roll-up
D. Marie’s fund will be taxed and the tax is non-reclaimable, while Claire’s fund will be taxed but the tax is reclaimable
6. Kelsey, a fund manager with a medium-sized investment firm in the city, has decided to take a significant divergence from his fund’s benchmark and gone overweight in emerging markets. What could this mean?
A. It would suggest Kelsey is seeking out-performance and represents an opportunity for further investment into the fund
B. Kelsey is an effective fund manager and this is evidence the fund is actively managed
C. Kelsey is adopting a contrarian approach to fund selection
D. The divergence represents greater risk so greater short-term volatility would be expected in Kelsey’s fund
7. What does the price earnings ratio measure?
A. The profitability of the company
B. How highly investors value a company
C. Expected return on a share
D. The relationship between share price and book value
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. Fred aged 80 took out an equity release mortgage when his wife died 5 years ago. The house has increased in value and he now wishes to release more capital. This is likely to be by what method?
A. Potentially Exempt Transfer
B. Further advance
D. Will not be possible
10. Brian and June are re-mortgaging their £200,000 interest only mortgage which they will have for the next 15 years. They have been offered a 2 year fixed rate of 3.7% with no booking fee or 3.5% with a £1,000 booking fee. Which of the following is true?
A. The fee cannot normally be added to the loan
B. They will be better off accepting the 3.7% rate
C. They will be better off accepting the 3.5% rate with a booking fee
D. It is always better to pay a fee and a lower interest rate
At our Bristol Technical Insight Seminar, Rebecca Tuck, paraplanner with Magenta Financial Planning, presented on suitability reports, sharing some...
Dan Atkinson, chartered financial planner and head of technical at EQ Investors, gives his top three tips for paraplanners...
When writing suitability reports, presenting information in a clear and accessible format, making it as easy as possible for...