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TDQ: Test Your Knowledge – Questions

30 January 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 January 2019 issue, relate to examinable Tax year 18/19, examinable by the CII until 31 August 2019.

These questions relate to examinable Tax year 18/19, examinable by the CII until 31 August 2019.

Questions
1.         Which of the following can be directly attributed to the impact of taxation?
A.         The difference in growth rates between property and cash
B.         The individual consumer’s ability to make investment
C.         The cost of providing state benefits to those in financial difficulty
D.         The use of quantitative easing following the financial crisis

2.         If a company’s share price rose from 175p to 225p, what effect would this have on its Price Earnings Ratio?
A.         It would increase
B.         It would decrease
C.         It would remain the same
D.         It would have no affect

3.         Rhiannon and Vera exchanged their houses with no cash payment as both houses were worth £250,000.  What, if any, Stamp Duty Land Tax (SDLT) is payable?
A.         Neither is liable for SDLT as no money has changed hands
B.         Both would be liable for SDLT of £2,500 each
C.         Neither is liable for SDLT as it is not a commercial transaction
D.         They would have a joint liability to SDLT of £2,500

4.         At retirement, Bernice decides to buy a With Profit annuity. She selects an anticipated bonus rate of 5%. The same year, the provider declares a bonus rate less than this figure. The effect this has on the level of annuity payment she receives is that it will:
A.         Increase after 12 months.
B.         Decrease immediately.
C.         Decrease the following year.
D.         Have no effect.

5.         Which of the following is not an argument in favour of taking out private medical insurance?
A.         It is more suitable for a patient with a chronic medical condition
B.         Avoids long waiting lists for NHS treatment
C.         Patient is normally able to choose their own hospital and surgeon
D.         Likely to have a private room rather than be on a general ward

6.         John purchased 6% Treasury Stock 2021 at a clean price of £118.55. If there are 5 years to redemption, what is the interest yield and the gross redemption yield of the stock?
A.         Interest yield 5.06%, Gross redemption yield 6.00%
B.         Interest yield 5.06%, Gross redemption yield 1.93%
C.         Interest yield 6%, Gross redemption yield 3.71%
D.         Interest yield 6%, Gross redemption yield 3.13%

7.         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

8.         If a local authority regards unpaid care costs as a debt and looks to recover them through the courts, what is the maximum debt recovery period?
A.         Two years
B.         Three years
C.         Four years
D.         Six years

9.         Jerome has recently died aged 103. He took out a lifetime mortgage with rolled up interest many years ago and his executors have received a demand from the lender for a considerable payment from Jerome’s estate – why is this likely to be?
A.         The property is worth less than the loan outstanding and there is not a ‘no negative equity’ guarantee in place
B.         The lender has imposed redemption penalties
C.         There is a longevity clause in the contract which came into force on Jerome living to over 100
D.         To recoup the cost of maintaining the property over the years

10.       Ben is talking to his lender about a second mortgage on his property.  Ben should be aware that:
A.         He may have to sign a deed of postponement on the first mortgage
B.         Second charge mortgages are covered by the consumer credit regulation
C.         The mortgage term must be longer than 10 years
D.         Second charge mortgages are covered by the FCA’s mortgage regime