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R02 > Answers > Flashcards

Answers Flashcards

1
Q

SDLT rates (not first time)

A 
£0 - £125k : 0%
£125k - £250k : 2%
£250k - £925k : 5%
£925k - £1,500k : 10%
£1,500k < : 12%
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2
Q

Net redemption yield

A

Gross redemption yield + taxation

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3
Q

SDLT rates (first time)

A

£0 - £300k : 0%
£300k - £500k : 5%
£500k < : nulled

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4
Q

PTM

A

Panel on Takeovers and Mergers - take £1

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5
Q

SD rate on share transfer

A

0.5%

After £1000 the whole transfer is charged and then rounded up to the next £5.

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6
Q

SDRT rate on share transfer

A

0.5%

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7
Q

Impact of rising inflation on gilt prices

A

Price drops so that interest yield is closer

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8
Q

Main impact of globalisation on the UK economy

A

Labour intensive industries are less competitive

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9
Q

MPT fails to properly consider …

A

Systematic risk (think no Beta)

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10
Q

Risk associated smaller unlisted shares

A

Liquidity risk

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11
Q

Income tax liability on dividends

A
  1. 5%
  2. 5%
  3. 1%
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12
Q

VCT advantages

A
  1. No CGT on disposal
  2. Dividends exempt
  3. 30% income tax relief
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13
Q

Onshore bond advantages

A
  1. Liability to basic rate income tax is redeemable as paid within the fund
  2. 5% p.a. rule
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14
Q

Reporting fund advantages

A
  1. Dividends and interest are treated the same way as UK based funds
  2. Subject to usual CGT rules & allowances
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15
Q

“Roll up fund” meaning

A

“All income is accumulated and no dividends are paid” like non-reporting funds

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16
Q

NAV & price for ITs, UTs, and OEICs

A

IT - different
UT - same
OEIC - same

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17
Q

Advantage of offshore bond for additional rate taxpayer

A

Gains can be offset until policy end when retired

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18
Q

PAIF main features

A

Property Authorised Investment Fund -

Authorised to buy property
Share price inseparable from underlying assets
Income tax reclaimable

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19
Q

Money Market funds (short vs. standard)

A

Short
WA maturity : 60 days
WA lifespan : 120 days

Standard
WA maturity : 6 months
WA lifespan : 12 months

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20
Q

Preference shares

A

Fixed interest style so pay even when no money for ordinary dividends
Bonds > Preference shares > Ordinary shares

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21
Q

Risk associated with futures contracts

A

Counterparty risk

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22
Q

SDRT on ETFs

A

0%

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23
Q

ETF tracking error

A

Low compared to benchmark

24
Q

Age child assumes responsibility over JISA

A

16

25
Q

1 - TWR =

in terms of MWR

A

(MWR)(MWR)(MWR)…

Money Weighted Return for each period

26
Q

Property Investment Funds features

A
  • No claiming income tax
  • Lots of commercial property investment
  • Regular professional valuations
27
Q

REIT payments (tax)

A

Dividend (allowance then 7.5%, 32.5%, 38.1%)

28
Q

Compare AMCs for ITs, UTs, and OEICs

A

Same as each other

29
Q

Normal yield curve

A

Longer time to maturity means higher interest rates

30
Q

How long can a trustee close registry for?

A

30 days p.a.

31
Q

Compare investment choices for ITs and UTs

A

IT has less investment choices

32
Q

Feature of OTC

A

Tailored to client

33
Q

Top-slicing with child benefits

A

None

34
Q

Dominant investment model

A

MPT by Harry Markowitz

35
Q

NAV restrictions for investor

A
  • NAV is an accounting value. On liquidation, the value will likely end up different
  • doesn’t consider goodwill
36
Q

Preference share features

A
  • No voting

- 6 month dividends

37
Q

MWR limitation

A

Can’t be used to compare two fund manager performances

38
Q

EIS features

A
  • income tax relief at 30% (can be carried back)
  • CGT exempt after 3 years
  • CGT can be deferred by reinvesting in EIS
39
Q

Two considerations when determining success/failure of a portfolio through evaluation

A
  1. Composition of portfolio compared to benchmark

2. Effects of asset allocation

40
Q

UT tax rates (dividends & interest)

A

Dividends: £2k allowance & normal income tax
Interest: £1k, £500, £0 & normal income tax

41
Q

Discretionary trust tax rates (dividends and interest)

A

Dividends: 7.5% < £1000 < 38.1%
Interest: 20% < £1000 < 45%

42
Q

A call option give the buyer of the option the right to …

A

Buy the underlying asset

43
Q

European style options have to…

A

wait until expiry to decide whether to call/put

44
Q

Onshore bond income tax

A

Cash, fixed interest, property : 20%

Equities : 0%

45
Q

Offshore bond tax on income

A

0%

46
Q

Value management style typical in …

A

Uk equity income funds

Looks for undervalued stocks

47
Q

Momentum management style typical in ….

A

Middle of the road fund managers

Invests with market momentum

48
Q

Distribution bond

A

Split capital & income so that income paid reflects income generated

49
Q

Insurance company property fund cannot

A

Borrow

50
Q

VCT relief

A

30% up to an investment of £200,000

51
Q

SEIS tax relief

A

50% up to £100,000

52
Q

EIS tax relief

A

30% up to £2,000,000

53
Q

SAYE must be invested in ISA within…

A

90 days

54
Q

PLA vs. Pension annuity tax

A

Pension annuity taxed in full

PLA tax free element

55
Q

Arbitrage uses which strategy?

A

Relative value

56
Q

FTSE Small Cap is reviewed

A

Quarterly

57
Q

Two non equity index trackers

A

FTSE Sterling Corporate Bond

FTSE UK Gilts

R02 (2 decks)

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