Chapter 2 - CII Self Test Questions Flashcards
Thierry has four shares in his portfolio: Company A has a dividend of 8.1p and a share price of 120p;
Company B has a dividend of 4.1p and a share price of 57p;
Company C has a dividend of 12.7p and a share price of 320p; and
Company D has a dividend of 22.8p and a share price of 466p.
Which company will give Thierry the highest dividend yield?
B. Company B
Gold can be used as part of a diversification strategy within an investment portfolio because:
a.
prices are not affected by supply and demand, and are therefore more stable.
b.
it always represents short-term value.
c.
prices do not respond quickly to economic events, and are therefore less volatile than other commodities.
d.
it is seen as a useful hedge against inflation.
D. it is seen as a useful hedge against inflation
Portfolio X consists of shares listed on the FTSE 100 and portfolio Y consists of unlisted shares. What type of risk is likely to be significantly higher for portfolio Y when compared to portfolio X?
a.
Liquidity risk.
b.
Event risk.
c.
Inflation risk.
d.
Currency risk.
A. Liquidity risk.
Jorge has enquired about the property income allowance. You advise him:
a.
where the income from his property is more than £1,000 per annum, he cannot use the property income allowance.
b.
if the property income is less than £1,000 per annum before expenses have been deducted, it will be exempt from income tax and will not have to be declared on his tax return.
c.
he can claim the property income allowance as well as rent-a-room relief.
d.
if the property income is less than £1,000 per annum after expenses have been deducted, it will be exempt from income tax and will not have to be declared on his tax return.
B. if the property income is less than £1,000 per annum before expenses have been deducted, it will be exempt from income tax and will not have to be declared on his tax return.
What is a feature of cryptocurrencies?
a.
They are influenced by governments and central banks.
b.
There are fewer security risks than with traditional currencies.
c.
Transactions are anonymous.
d.
They are regulated under the Financial Services and Markets Act 2000.
C. Transactions are anonymous.
Joshua is buying his first home for £295,000. Pritesh is about to buy her first buy-to-let property for £450,000. What is the total stamp duty land tax payable on these transactions, which are both in England?
a.
£30,750.
b.
£26,000.
c.
£25,750.
d.
£23,500.
D. £23,500
Maleek is looking to purchase a range of investments via her online platform. She should be aware that she will need to pay stamp duty reserve tax when she buys a
a.
FTSE 100 listed share.
b.
UK Government gilt.
c.
fixed term cash deposit.
d.
AIM listed share.
A. FTSE 100 listed share
Jilly has the following holdings within her portfolio: shares in a top UK listed company; a collective investment in American shares; a collective investment in a wide range of Japanese shares; and a holding in a UK Government gilt. When looking at their respective performance, she would benchmark the:
a.
American shares against the Hang Seng index.
b.
UK Government gilt against the FTSE 100 index.
c.
Japanese shares against the Topix index.
d.
UK company against the FTSE SmallCap index.
C. Japanese shares against the Topix index
Chris, who is not a first time buyer, will shortly exchange contracts on the purchase of a flat in England for £270,000, which he intends to live in with his partner. How much stamp duty land tax, if any, will he pay on the purchase?
a.
£1,000.
b.
£3,500.
c.
Nil.
d.
£4,500.
A. £1,000
XYZ Ltd has earnings per share of 20p, a current share price of £2 and pays a dividend of 5%. What is the dividend cover for XYZ?
a.
2.
b.
10.
c.
4.
d.
12.
A. 2
