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TDQ: Test Your Knowledge – Questions

14 July 2019



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


1. If the FCA has suspicions about a firm, can an enforcement officer enter premises and remove original documents from a firm without permission?
A. Only if the enforcement officer has a warrant to enter premises and take documents by force if necessary
B. The enforcement officer can only take copies of any documents
C. The enforcement officer needs a warrant to take documents and would require permission from the firm
D. The enforcement officer can access documents at the firm’s office but cannot take them away

2. Gemma is buying a property and has been told by her solicitor that she will not be able to run a business from it. This is known as a:
A. restrictive covenant
B. negative covenant
C. positive easement
D. restrictive easement

3. Julie is considering diversifying her portfolio by investing in gilts. She has asked you to explain the income tax and capital gains tax (CGT) position to her. You tell her that:
A. interest is paid net of 20% tax and losses for CGT are allowable
B. interest is usually paid gross but is taxable and any gains are CGT exempt
C. interest is paid gross but is taxable and only qualifying gilts are CGT free
D. interest is paid net of 20% tax and disposal of a gilt is a chargeable event

4. Which of the following lump-sum death benefits is only payable from a scheme pension (i.e. crystallised funds) that arises from a defined benefit scheme?
A. A defined benefits lump-sum death benefit.
B. A pension protection lump sum death benefit.
C. An annuity protection lump sum.
D. An uncrystallised lump sum.

5. A mortgage payment protection insurance provider can cancel the policy at a minimum of how many days’ notice?
A. 30
B. 90
C. 21
D. 14

6. Modern portfolio theory (MPT) categorises risk as being one of two types. Between 1973 – 1974 the UK experienced the great bear market. Which of MPT’s two types of risk would this event be categorised as?
A. Beta risk
B. Non-systematic risk
C. Systematic risk
D. Investment-specific risk

7. A comprehensive Private Medical Insurance policy will sometimes provide cover for which of the following in the context of long term care provision?
A. Home Nursing
B. The cost of treatment for long term incurable conditions
C. Osteoarthritis
D. Dementia

8.  If an investor buys futures, what do they expect the price of the underlying asset to do?
A. Remain level
B. Fall
C. Price is not relevant
D. Rise

9. Foreign currency mortgages are most suitable for which class of borrowers?
A. High Net Worth customers
B. All customers
C. Expatriates with a home in the UK but with wealth in other currencies
D. Customer with a cautious attitude to risk

10. Your client has indicated a return objective of ‘capital appreciation’. What characteristic is typical for this type of client?
A. Risk averse
B. Short-term
C. Growth usually achieved from capital gains
D. Income dependent

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