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TDQ: Test Your Knowledge – Questions

28 February 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 March 2019 issue, relate to examinable Tax year 18/19, examinable by the CII until 31 August 2019.

1. In estate planning, outright gifts must be irrevocable. What does this mean?
A. The donor can still retain a benefit from the gift
B. The gift can be returned after 7 years
C. The donor cannot retain any benefit from the gift
D. The donor’s spouse can retain a benefit from the gift

2. If the value of the pound fell, what effect (if any) would this have on the share price of major exporters?
A. Share prices would fall
B. Share prices would be marked down
C. There would be no effect
D. Share prices would rise

3. Kim is an additional rate taxpayer and has recently created a trust for her 10-year-old daughter Amelia. This produces £150 in gross interest. What is the income tax liability, if any?
A. Nil
B. £30
C. £60
D. £67.50

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. Jane was recently made redundant and is currently receiving Jobseeker’s Allowance (JSA). If she receives support for mortgage interest loan payments, they will be:
A. Paid after 39 weeks for a maximum of 2 years
B. Paid after 39 weeks and paid until she finds new employment
C. Paid after 26 weeks for interest on mortgages up to £100,000
D. Paid after 13 weeks for a maximum of 2 years

6. Paula invested £500 at the end of every year for 5 years at an interest rate of 6%. What is her accumulated value at the end of the period?
A. £2,833.33
B. £3,400.00
C. £2,818.55
D. £2,500.00

7. The price of a warrant is 10p, the underlying share price is 110p and the exercise price is 132p. What is the conversion premium?
A. 13.20%
B. 17.86%
C. 29.09%
D. 75.75%

8. How do the powers under a Deputyship differ from the powers under a Lasting Power?
A. They are broadly the same
B. They are less restrictive as deputies are normally legally qualified persons
C. They are more restrictive in that the approval of the court is required for some decisions
D. They are more restrictive in that the approval of the court is needed for every decision

9. How is a borrower’s entitlement to Income Support potentially affected by taking out a lifetime mortgage?
A. By the income generated
B. Not affected
C. By both the income and capital generated
D. By the capital generated

10. Why is it important for clients to speak to a financial adviser on the full implications of the early surrender of an investment vehicle?
A. Investments can often provide life cover which would be lost on surrender
B. The proceeds of most investments are taxable at the higher rate of income tax
C. Any tax relief on the premiums will need to be clawed back by HMRC
D. Any surrender could impact on their ability to re-mortgage

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