CeMAP1 Mock 1 Flashcards
When recommending a product to a client, it is reasonable for the adviser to: A. avoid details which fall outside the interests of the client. B. focus only on the features applicable to the client. C. only make direct comparisons with other product types which may interest the client. D. use industry recognized terminology at every opportunity.
A Unit 1; 4 4.1
Brian is reviewing a range of investment products before selecting the most appropriate solution for his client, Claire. Which factor is he least likely to take into account when selecting an appropriate solution? A. Claire’s desire to access her investments in five years to purchase a timeshare in Portugal. B. Claire’s existing portfolio of investment products. C. The fact that she has recently moved into a higher rate tax bracket. D. The possibility of Claire getting married in the future and having children.
D Unit 1; 4 3
What is the advantage of including benefit statements when making a product presentation to a client? A. It enables the adviser to focus on the sale rather than client queries. B. It enables the client to better understand how the product will meet his needs. C. It ensures that all point-of-sale FSA regulatory requirements are met. D. It ensures that the client understands the risks involved with the product.
B Unit 1; 4 4.1
Martin has set up a trust fund for the benefit of his three grandchildren and has appointed two trustees with discretion to exercise their powers. In these circumstances: A. both trustees must agree before exercising their discretionary powers. B. Martin is known as a testator and the grandchildren as beneficiaries. C. the Trustee Act 2000 requires the grandchildren to obtain advice when reviewing investments. D. the trustees have no legal interest in the trust property.
A Unit 1; 6 1.2
Where a person with a valid will dies, the insurer will determine the identity of the personal representatives by: A. obtaining a copy of the grant of letters of administration. B. obtaining a copy of the grant of probate. C. requesting a certified copy of the will. D. requesting a signed declaration from the solicitor.
B Unit 1; 6 1.1
The basis of ‘utmost good faith’ is that: A. all life assurance contracts are based on anticipated financial loss. B. companies base their underwriting on the information provided, rather than prejudice. C. the insurer is legally obliged to manage the client’s money in an ethically and legally sound manner. D. the proposer must declare all material facts to the insurer.
D Unit 1; 6 2
When acting as the agent of a principal, it is a fundamental rule that: A. an agent can conclude contracts on behalf of the principal. B. an agent must act within his apparent authority. C. a principal is always responsible for the acts of the agent. D. a principal must ratify the acts of his agent.
A Unit 1; 6 3
Walter and Winnie own their house on a joint tenants basis. If Walter dies: A. his share of the property will pass automatically to Winnie. B. his share will pass to whoever is nominated in his will. C. Winnie will need to purchase Walter’s share of the property. D. Winnie will own 50% of the property but retain an interest in the other 50%.
A Unit 1; 6 4.1
In relation to power of attorney arrangements, which statement is correct? A. an enduring power of attorney can be agreed on a verbal basis between donor and donee but ordinary power of attorney must be registered at the Public Trust Office. B. an enduring power of attorney can be revoked at any time by the donor whereas an ordinary power of attorney can only be revoked by the Court of Protection. C. an ordinary power of attorney becomes invalid if the donor becomes mentally incapable, whereas an enduring power of attorney remains effective. D. an ordinary power of attorney remains valid if the donor becomes mentally incapable whereas an enduring power of attorney becomes invalid.
C Unit 1; 6 5
When must the Financial Services Authority (FSA) report on its performance? A. Until May 2005. B. Until May 2006. C. Until May 2007. D. Until May 2008.
A Unit 1: 6 6
Tony, who is aged 79, has started to receive a small state pension. Which one of the following sources of income will result in him becoming a higher rate taxpayer? A. All earned income. B. An educational grant. C. Any earned income that exceeds his personal allowance. D. A settlement from his parents.
C Unit 1; 1 3.3.2
A 5% withdrawal from a with-profits bond which has grown by 7.5% in value would result in a net withdrawal of: A. £330.00. B. £333.33. C. £375.00. D. £387.00.
B Unit 1; 1 3,3.2
John has a tax liability for the 2004/05 fiscal year of £4,500 on an earned income of £18,000. What is the significance of this information? A. He has six months from the end of the fiscal year to settle his tax liability. B. He must settle his tax liability before 6 April following the end of the fiscal year. C. His liability to tax in that fiscal year is based on £18,000. D. His liability to tax in the following fiscal year is based on £18,000.
C Unit 1; 1 3,3.2
Fred and Doris both qualify for the age-related tax allowance. What is the key feature of Fred and Doris’ entitlement? A. Both also qualify for State disability benefits. B. Doris was born in 1936, and Fred two years earlier. C. Fred is a starting rate taxpayer, and Doris pays no tax. D. Their joint savings are below the £3,000 threshold.
B Unit 1; 1 3.3,2
A person is a UK domicile. Which of the following assets would be liable to UK inheritance tax on death? A. A piece of personal jewellery valued at £20,000. B. A Spanish property used for holiday visits. C. Euros held for use on foreign holidays. D. Shares purchased on the UK stock market.
C Unit 1; 1 3.3.4
Which one of the following factors directly affects the amount of taper relief that can be used to reduce a capital gains tax liability on the disposal of a chargeable asset? A. The annual exemption allowance. B. The number of years for which the asset has been held. C. The rate at which capital gains tax is payable. D. The Retail Prices Index.
B Unit 1; 1 3.3.4
In the calculation of capital gains tax liability, what are ‘allowable deductions’? A. Costs incurred in acquiring, enhancing and disposing of an asset. B. Government fixed allowances dependent on how long the asset is held. C. The annual exemption limit and the indexation allowance. D. The annual exemption limit and the taper relief.
A Unit 1; 1 3.3.4
When shares are purchased using a telephone share-dealing service, the: A. buyer pays the stamp duty reserve tax based on the market value. B. owner of the shares must be a stockbroker. C. share transfer can be registered before the documents are stamped. D. transaction has been completed orally so no stamp duty reserve tax is payable.
A Unit 1: 1 3.3.7
The profits of a sole trader are subject to which classes of National Insurance contributions? A. Classes 1 and 4. B. Classes 2 and 4. C. Classes 2 and 3. D. Classes 3 and 4.
B Unit 1; 1 3.3.3
Mandy is pregnant with her second baby. She has been a self-employed graphic designer since the birth of her child two years ago. What benefit may Mandy be able to claim before her baby is born? A. Child Benefit. B. Income Support. C. Maternity Allowance. D. Statutory Maternity Pay.
C Unit 1; 1 3.5.2 2
