2024 test knowledge 15-16-17-18-19 Flashcards
There are no negative aspects to consolidating a credit card debt into a mortgage.
a) True
b) False
b) False. The debt will be secured as part of an increased mortgage, which means there is more chance of repossession if the borrower defaults on the mortgage.
What percentage of national average earnings does the state pension provide?
a) 25%.
b) 33%.
c) 50%.
d) 66%.
b) 33%
Which of the following would be of least concern in later life planning?
a) Income protection.
b) Long‑term care insurance.
c) Power of attorney.
d) Estate planning.
a) Income protection.
Shareholder protection is appropriate for:
a) public limited companies and large corporations.
b) private limited companies and large corporations.
c) private limited companies.
d) limited liability partnerships.
c) private limited companies.
Which of the following statements is incorrect in relation to the effect of the main earner’s death on their family?
a) There may be a need for the survivor to fund childcare.
b) The survivor may struggle to maintain mortgage payments.
c) State benefits are designed to ensure a good standard of living for the surviving family.
d) The surviving partner may need to work to maintain the family.
c) State benefits are designed to ensure a good standard of living for the surviving family.
What is the purpose of the mortgage stress test?
a) To ensure the mortgage will be affordable if interest rates increase.
b) To assess the strength and service standards of the lender.
c) To confirm the borrower’s income and expenditure.
d) To ensure the mortgage is suitable in view of the borrower’s circumstances.
a) To ensure the mortgage will be affordable if interest rates increase.
Which calculation is used to determine the ‘real’ rate of return on a savings account?
a) Rate of inflation divided by the nominal interest rate.
b) Nominal interest rate minus the rate of inflation.
c) Nominal interest rate divided by the rate of inflation.
d) Rate of inflation plus the nominal interest rate.
b) Nominal interest rate minus the rate of inflation.
An investment product’s tax treatment is the most important factor when deciding suitability.
a) True
b) False
b) False
Which of the following is not a usual method of setting up a partnership agreement?
a) Automatic aggregation agreement.
b) Automatic accrual.
c) Buy-and-sell agreement.
d) Cross-option agreement.
a) Automatic aggregation agreement.
Bland Plc has taken out a key employee assurance policy on Jim, the sales director. In order to qualify as a business expense for corporation tax purposes, the policy would need to be:
a) a whole-of-life policy.
b) a term assurance policy with a term of at least ten years.
c) a non-qualifying life assurance policy.
d) a term assurance policy with a term of five years or less.
d) a term assurance policy with a term of five years or less.
On receipt of a policy claim, an insurer suspects inaccurate information was provided on the original application form. Under the Consumer Insurance (Disclosure and Representations) Act 2012, the insurer:
a) must pay the full claim if the consumer had just been careless when completing the application form.
b) cannot refuse the claim in any circumstance.
c) can apply a compensatory remedy if the applicant took reasonable care and any misrepresentation was honest and reasonable.
d) can refuse the claim if there was deliberate misrepresentation when completing the application form.
d) can refuse the claim if there was deliberate misrepresentation when completing the application form.
Bartholomew has debts he cannot service and has applied for an individual voluntary arrangement (IVA). He owes £15,000 to his credit card company, £2,000 to a local builder, £1,500 to his bank and £1,500 to a local furniture shop. Which of the following is true?
a) Bartholomew can insist on the IVA being approved.
b) The IVA application can be approved if the builder, bank and furniture shop agree.
c) The credit card company can veto the IVA application.
d) All four creditors must agree for the IVA application to be approved.
c) The credit card company can veto the IVA application.
Which of the following is a reason a contract could be deemed invalid?
a) The buyer promised to pay the full purchase price.
b) It was a contract for land performed by deed.
c) The contract was to buy 200 litres of smuggled rum.
d) The buyer was aged 18.
c) The contract was to buy 200 litres of smuggled rum.
Graham is a 2% shareholder in a small limited company. What is his liability if the company becomes insolvent?
a) His liability is limited to the amount he has invested in the company.
b) He is jointly and severally liable for all of the company’s debt with other shareholders.
c) He is fully liable for 2% of the company’s worldwide debts.
d) He is fully liable for 2% of the company’s UK debts.
a) His liability is limited to the amount he has invested in the company.
A property owned on a joint-tenancy basis will allow each owner to leave their share to their chosen beneficiaries.
a) True
b) False
b) False. A joint tenancy means both owners technically own 100% of the property, and on one death legal ownership of the property automatically passes to the survivor, regardless of any will or the laws of intestacy.
To register a lasting power of attorney, application should be made to the:
a) County Registrar.
b) County Court.
c) Office of the Public Guardian.
d) Court of Protection.
c) Office of the Public Guardian.
Under agency law, ratification is where:
a) Although the agent acted outside the terms of the agency agreement, the principal agreed to the actions after the event.
b) The other party to a contract agrees that it should remain in place, despite the agent acting outside their authority.
c) The contract is deemed to be valid by a court.
d) The principal did or said something that could be seen as giving the agent powers outside the agency agreement.
a) Although the agent acted outside the terms of the agency agreement, the principal agreed to the actions after the event.
Gary is a 50% partner in a limited liability partnership with his friend Mike. Gary has invested £30,000 and has provided a personal guarantee on a £50,000 bank loan the partnership took out. The business has become insolvent with debt of £1,000,000 and Mike cannot be found. What is Gary’s liability?
a) 50% of the partnership’s debts.
b) The £30,000 he initially invested.
c) The £30,000 he initially invested and the £50,000 bank loan.
d) All the debts of the partnership.
c) The £30,000 he initially invested and the £50,000 bank loan.
Novak died without a valid will, leaving an estate of £500,000. He had not made a will because he assumed that his estate would automatically pass to his civil partner, and then to their two adult children. How will Novak’s estate be distributed?
a) His wife will inherit £411,000 and the children will inherit £44,500 each.
b) His wife will inherit £322,000 and the children will inherit £89,000 each.
c) His wife will receive £500,000, and on her death the children will inherit whatever is left.
d) The courts will decide on a fair distribution of the estate.
a) His wife will inherit £411,000 and the children will inherit £44,500 each.
Which one of the following is not a legal requirement for a will to be valid?
a) The will must be properly executed.
b) The testator must be aged 18 or over.
c) The will must be dated.
d) The will must be in writing.
c) The will must be dated.
