Test

Question 1

Igor has enquired about the property income allowance. You advise him:

Select one:

a. 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.
b. where the income from his property is more than £1,000 per annum, he cannot use the property income allowance.
c. 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.
d. he can claim the property income allowance as well as rent-a-room relief.

Answer 1

a. 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.

chapter reference 2B6

Question 2

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 22.8 and a share price of 466p. Which company will give Thierry the highest dividend yield?

Select one:

a. Company D.
b. Company C.
c. Company B.
d. Company A.

Answer 2

c. Company B.

chapter reference 2A5B

Question 3

An investor would chose to invest in gold as part of a diversification strategy for their portfolio because:

Select one:

a. prices are not affected by supply and demand, and are therefore more stable.
b. it is seen as a useful hedge against inflation.
c. it always represents short-term value.
d. prices do not respond quickly to economic events, and are therefore less volatile than other commodities.

Answer 3

b. it is seen as a useful hedge against inflation.

chapter reference 2C2

Question 4

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:

Select one:

a. UK Government gilt against the FTSE 100 index.
b. Japanese shares against the Topix index.
c. UK company against the FTSE SmallCap index.
d. American shares against the Hang Seng index.

Answer 4

b. Japanese shares against the Topix index.

chapter reference 2A6D

Question 5

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?

Select one:

a. 10.
b. 2.
c. 12.
d. 4.

Answer 5

b. 2

chapter reference 2A5C

Question 6

Portfolio X consists of shares listed on the FTSE100 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?

Select one:

a. Inflation risk.
b. Liquidity risk.
c. Default risk.
d. Event risk.

Answer 6

b. Liquidity risk.

chapter reference 2A3D

Question 7

Chris, who is not a first time buyer, will shortly exchange contracts on the purchase of a flat for £290,000 which he intends to live in with his partner. This includes £20,000 for fixtures and fittings. How much stamp duty land tax will he pay on the purchase?

Select one:

a. £3,300.
b. £3,500.
c. £4,500.
d. None.

Answer 7

d. None.

chapter reference 2B3A

Question 8

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[n]:

Select one:

a. AIM listed share.
b. fixed term cash deposit.
c. FTSE100 listed share.
d. UK Government gilt.

Answer 8

c. FTSE100 listed share.

chapter reference 2A2A

Question 9

What is NOT a feature of cryptocurrencies?

Select one:

a. They are not regulated by the FCA.
b. There are less security risks than with traditional currencies.
c. They are not influenced by governments or central banks.
d. Transactions are anonymous.

Answer 9

b. There are less security risks than with traditional currencies.

chapter reference 2C3

Question 10

Joshua is buying his first home for £295,000. Pritesh is about to buy her first buy-to-let property, and she has agreed a price of £450,000. What is the total stamp duty land tax payable on these transactions?

Select one:

a. £30,750.
b. £26,000.
c. £13,500.
d. £17,250.

Answer 10

c. £13,500.

chapter reference 2B3A

Question 11

Sarah is interested in commodity investments but is confused by the terminology. She has understood correctly that:

You must select ALL the correct options to gain the mark:

a. both hard and soft commodities can suffer from supply and demand issues.
b. gold is a hard commodity which tends to keep pace with inflation.
c. hard commodities are usually mined not grown.
d. soft commodities are scarce resources like natural gas and crude oil.
e. crude oil is a soft commodity as is natural gas.

Answer 11

a. both hard and soft commodities can suffer from supply and demand issues.
b. gold is a hard commodity which tends to keep pace with inflation.
c. hard commodities are usually mined not grown.

chapter reference 2C2

Question 12

Paula is thinking of investing into a property based OEIC rather than buying a direct commercial property. The main advantages to this approach would include:

You must select ALL the correct options to gain the mark:

a. increased liquidity.
b. lower levels of taxation.
c. reduced costs associated with management.
d. reduced diversification.

Answer 12

a. increased liquidity.
c. reduced costs associated with management.

chapter reference 2B1

Question 13

Jim has calculated the net asset value of ABC plc. This is most useful to him since the:

Select one:

a. company has a valuable brand name and so the goodwill of this company is very high.
b. company is expecting significant growth following the successful trial of a new drug.
c. company is the subject of a takeover bid from a competitor.
d. earnings potential of this company has been greatly increased of late due to the launch of a new product.

Answer 13

c. company is the subject of a takeover bid from a competitor.

chapter reference 2A5E

Question 14

Mary wishes to rent out a spare room in her house to her friend Lilly. In respect of the rent-a-room scheme:

You must select ALL the correct options to gain the mark:

a. Mary can deduct expenses incurred from any rent received and then deduct £7,500 in order to calculate any tax due.
b. Mary is allowed to include charges for cooking and cleaning towards the £7,500 limit.
c. Mary will always have a choice as whether to claim the relief or not.
d. Lilly must agree to stay at the property for at least six months in order for Mary to be able to claim the relief.

Answer 14

b. Mary is allowed to include charges for cooking and cleaning towards the £7,500 limit.
c. Mary will always have a choice as whether to claim the relief or not.

chapter reference 2B6

Question 15

Akio has investments in Japanese companies. What would be the best indices to measure their performance against?

You must select ALL the correct options to gain the mark:

a. Nikkei 225.
b. Hang Seng.
c. Topix.
d. DAX 30.
e. NASDAQ.

Answer 15

a. Nikkei 225.
c. Topix.

chapter reference 2A6D

Question 16

If Derek is investing in a tracker fund which is not weighted according to market capitalisation, he is tracking the:

Select one:

a. FTSE AIM 100.
b. Nikkei 225.
c. FTSE 100.
d. Dax 30.

Answer 16

b. Nikkei 225.

Question 17

Erica has a buy-to-let property. The purchase price was £200,000 and associated costs of purchase were £30,000. The rental income is £800 per month with a 15% management fee. The headline gross yield is:

Select one:

a. 4.17%.
b. 3.55%.
c. 4.08%.
d. 4.8%.

Answer 17

d. 4.8%.

chapter reference 2B2

Question 18

Harry is looking at the latest set of accounts of FGH plc and comparing these to the accounts for the same period for XYZ plc. What must he bear in mind?

Select one:

a. The management of both companies are under a duty not to change their accounting policies from year to year.
b. The figures are forward-looking so should be the most relevant information on which to base a decision.
c. That the accounting policies of these two firms may differ even though they are in the same sector.
d. Since the periods are the same and the companies are in the same sector this should be a fair comparison.

Answer 18

c. That the accounting policies of these two firms may differ even though they are in the same sector.

chapter reference 2A5F

Question 19

Petra wishes to calculate the earnings per share on an asset she holds. She could do this by having knowledge of the:

You must select ALL the correct options to gain the mark:

a. profit per preference share and current share price.
b. profit per share and the number of ordinary shares in issue.
c. net asset value and dividend cover.
d. price earnings ratio and current share price.
e. dividend yield and current share price.

Answer 19

b. profit per share and the number of ordinary shares in issue.
d. price earnings ratio and current share price.

chapter reference 2A5A

Question 20

Sam buys £20,000 worth of HSBC ordinary shares through a broker. Dave sells the same holding though another broker. Assuming commission rates are the same, this means that:

Select one:

a. Sam will pay the same amount to his broker as Dave receives back from his broker.
b. only Dave will pay stamp duty or stamp duty reserve tax.
c. only Sam will pay the Panel on Takeover and Mergers levy.
d. Sam will pay more to his broker than Dave receives back from his broker.

Answer 20

d. Sam will pay more to his broker than Dave receives back from his broker.

chapter reference 2A2A

Question 21

Fidel wants to understand how the FTSE 100 index works. He should be advised that the:

You must select ALL the correct options to gain the mark:

a. FTSE is weighted by market capitalisation.
b. larger the company, the bigger the weighting in the index.
c. price movement of a small company affects the index as much as that of a larger company.
d. weightings of companies with less than 75% of shares available for public trading are reduced to reflect limited availability.

Answer 21

a. FTSE is weighted by market capitalisation.
b. larger the company, the bigger the weighting in the index.
d. weightings of companies with less than 75% of shares available for public trading are reduced to reflect limited availability.

chapter reference 2A6B

Question 22

Rajesh owns cumulative preference shares in a major retail company which has issued a profit warning. The impact on Rajesh’s investment is that:

You must select ALL the correct options to gain the mark:

a. the company is obliged to pay a dividend half-yearly irrespective of its financial circumstances.
b. any missed dividend payments will have to be made up in future years.
c. payment of dividends on his shares has priority over payment of dividends on ordinary shares.
d. he will be able to use his shares to vote against the management team at the AGM.
e. his preference shares would rank below ordinary share capital in a liquidation.

Answer 22

b. any missed dividend payments will have to be made up in future years.
c. payment of dividends on his shares has priority over payment of dividends on ordinary shares.

chapter reference 2A3A

Question 23

Which investment ratio best allows an investor to compare the income return on a share with the income return from bonds or deposits?

Select one:

a. Earnings per share.
b. Price earnings ratio.
c. Dividend cover.
d. Dividend yield.

Answer 23

d. Dividend yield.

chapter reference 2A5B

Question 24

Andi is considering renting out a room in her house. She anticipates rental income of £150 per week and expects to incur £300 a year in allowable expenses. She should be aware that:

Select one:

a. there would be a taxable amount of rent under the rent-a-room scheme.
b. the amount of tax-exempt rent would be greater if the room was sublet.
c. charges for any related goods and services provided are not tax-exempt.
d. there would be no tax to pay under the rent-a-room scheme.

Answer 24

a. there would be a taxable amount of rent under the rent-a-room scheme.

chapter reference 2B6

Question 25

Juan is considering investing in Spanish fine wine as a long-term investment. What would be a valid reason for avoiding this choice of investment?

Select one:

a. He requires a regular income from his investments.
b. He does not have enough room in his own cellar to store it.
c. He wishes to use some of the investment for personal use.
d. Spanish wine has been a historic poor performer.

Answer 25

a. He requires a regular income from his investments.

chapter reference 2C1

Question 26

What is obtained by multiplying the number of a company’s shares in issue by their current market price?

Select one:

a. Earnings per share.
b. Credit rating.
c. Market weighting.
d. Market capitalisation.

Answer 26

d. Market capitalisation.

chapter reference 2A6B

Question 27

Lenny is considering investing directly into property alongside his existing share portfolio. What drawbacks of direct property investment would you bring to his attention?

You must select ALL the correct options to gain the mark:

a. Lack of liquidity.
b. Void periods will reduce yields.
c. Inflation risk.
d. High costs associated with initial purchase.
e. Property management costs can reduce yields.

Answer 27

a. Lack of liquidity.
b. Void periods will reduce yields.
d. High costs associated with initial purchase.
e. Property management costs can reduce yields.

chapter reference 2B1A

Question 28

When looking at a company’s dividend cover and what it represents, it is correct to say that:

You must select ALL the correct options to gain the mark:

a. dividend cover of less than 1 indicates that dividends have been paid out of reserves.
b. it is an indication of the riskiness of the investment.
c. a high dividend cover implies that the company is paying out most of its profits to shareholders.
d. the higher the dividend cover, the less likely it is that the company will be able to pay dividends in future if profits fall.
e. it measures how many times the dividend could be paid out of current earnings.

Answer 28

a. dividend cover of less than 1 indicates that dividends have been paid out of reserves.
b. it is an indication of the riskiness of the investment.
e. it measures how many times the dividend could be paid out of current earnings.

chapter reference 2A5C

Question 29

In the event of a company liquidation, which is ranked LOWEST in terms of rights to payment?

Select one:

a. Preference shares.
b. Ordinary shares.
c. Creditors.
d. Loan capital.

Answer 29

b. Ordinary shares.

chapter reference 2A3B

Question 30

A UK listed company ranked 300th by market capitalisation would be part of which FTSE indices?

You must select ALL the correct options to gain the mark:

a. SmallCap.
b. Fledgling.
c. 250.
d. 350.
e. All-Share.

Answer 30

c. 250.
d. 350.
e. All-Share.

chapter reference 2A6B

Question 31

Victoria is considering letting a room in her main residence. What issues should she be aware of regarding ‘rent-a-room’ relief?

You must select ALL the correct options to gain the mark:

a. The rent taken into account is the payment for the accommodation plus any payment for related goods and services.
b. The tenant may only occupy one room.
c. She must occupy the property at the same time as her tenant.
d. There is only one exempt amount per residence.
e. If she receives gross rent of £8,000 in a year, she must claim relief and will have a tax bill.

Answer 31

a. The rent taken into account is the payment for the accommodation plus any payment for related goods and services.
c. She must occupy the property at the same time as her tenant.
d. There is only one exempt amount per residence.

chapter reference 2B6

Question 32

Sean and Megan are letting out one of the rooms in their house under the rent-a-room scheme. To do so:

You must select ALL the correct options to gain the mark:

a. they must occupy the property at the same time as the tenant.
b. the maximum exempt amount of rent will not exceed £4,250.
c. they can both claim the full tax-exempt amount of rent.
d. subject to their consent, the room may be sublet by the tenant.
e. they cannot include the charge for the laundry service they provide in the ‘rental’ amount.

Answer 32

a. they must occupy the property at the same time as the tenant.
d. subject to their consent, the room may be sublet by the tenant.

chapter reference 2B6

Question 33

Bertrand has a portfolio of shares invested in Germany, France and Hong Kong. Which indices could he use as benchmarks for the various parts of his portfolio?

You must select ALL the correct options to gain the mark:

a. Hang Seng.
b. NASDAQ.
c. Topix.
d. DAX 30.
e. CAC 40.

Answer 33

a. Hang Seng.
d. DAX 30.
e. CAC 40.

chapter reference 2A6D

Question 34

Company A has a dividend cover of 2.2. Company B has a dividend cover of 0.8. This indicates that:

Select one:

a. both companies must have made a profit to have paid a dividend.
b. the dividend of Company B is more secure.
c. the reserves of Company A will have increased and the reserves of Company B will have decreased.
d. company B is more likely to increase their dividend by a greater percentage next year than Company A.

Answer 34

c. the reserves of Company A will have increased and the reserves of Company B will have decreased.

chapter reference 2A5C

Question 35

Neil is aware that some shares he owns are non-voting ordinary shares. This means that:

You must select ALL the correct options to gain the mark:

a. they carry a higher level of risk than standard ordinary shares.
b. their market price will usually be higher than standard ordinary shares.
c. they never have voting rights.
d. they have restricted voting rights.
e. they receive the same dividend as other types of ordinary shares.

Answer 35

a. they carry a higher level of risk than standard ordinary shares.
d. they have restricted voting rights.
e. they receive the same dividend as other types of ordinary shares.

chapter reference 2A3B

Question 36

How do investments in private equity funds and private equity investment companies differ?

You must select ALL the correct options to gain the mark:

a. Listed private equity investment company shares cannot be held within an ISA.
b. Investment in private equity involves investing in high growth, unquoted companies.
c. Most UK private equity funds seek to raise money for investment from institutional investors.
d. Private equity funds tend to invest in companies for between three and seven years.

Answer 36

b. Investment in private equity involves investing in high growth, unquoted companies.
c. Most UK private equity funds seek to raise money for investment from institutional investors.
d. Private equity funds tend to invest in companies for between three and seven years.

chapter reference 2A4A

Question 37

How much stamp duty land tax will be payable on the purchase of a residential property for £300,000, exclusive of £10,000 for fixtures and fittings, if the purchaser is NOT a first time buyer?

Select one:

a. £15,000.
b. None.
c. £5,000.
d. £10,000.

Answer 37

b. None.

chapter reference 2B3A

Question 38

A limited company has 35 million ordinary shares in issue and a turnover of £5.6 million. The price earnings [P/E] ratio is 5 and the current share price is £15. What is the earnings per share?

Select one:

a. £2.68.
b. £3.
c. £6.25.
d. £2.33.

Answer 38

b. £3.

chapter reference 2A5D

Question 39

Kenneth is studying the accounts of two companies and he is getting confused by the investment ratios. It is correct to say that:

You must select ALL the correct options to gain the mark:

a. you can establish the dividend cover from the earnings per share and the dividend per share.
b. a low net asset value [NAV] per share indicates that the company is expensive.
c. the lower the dividend cover the better.
d. a high dividend cover will lead to an increased dividend next year.
e. a high price earnings [P/E] ratio is normally a positive sign of the way in which the market is rating the company.

Answer 39

a. you can establish the dividend cover from the earnings per share and the dividend per share.
e. a high price earnings [P/E] ratio is normally a positive sign of the way in which the market is rating the company.

chapter reference 2A5

Question 40

Dave is considering investing some money into hard commodities, which could include:

Select one:

a. gold, silver and coffee.
b. natural gas, crude oil and wheat.
c. gold, cocoa and silver.
d. gold, crude oil and natural gas.

Answer 40

d. gold, crude oil and natural gas.

chapter reference 2C2

Question 41

How much more stamp duty land tax will be paid by Dionne, who is buying a second holiday home for £375,000, than by Trevor, who is buying his first property for the same price?

Select one:

a. £20,000.
b. £11,250.
c. £16,250.
d. £6,000.

Answer 41

b. £11,250.

chapter reference 2B3A

Question 42

ZYX Ltd has recently gone into liquidation. Adam owns ordinary share capital in the company, Ben owns preference shares and Charlie owns a corporate bond issued by the company. Where do Ben’s shares rank following the liquidation?

Select one:

a. Ahead of Adam’s ordinary share capital but after Charlie’s loan capital.
b. After Charlie’s loan capital and Adam’s ordinary share capital.
c. Ahead of Adam’s ordinary share capital and Charlie’s loan capital.
d. Ahead of Charlie’s loan capital but after Adam’s ordinary share capital.

Answer 42

c. Ahead of Adam’s ordinary share capital and Charlie’s loan capital.

chapter reference 2A3A

Question 43

Max owns a number of cumulative preference shares. In terms of dividend payments and rights:

Select one:

a. he will never have voting rights.
b. his payment of dividends will rank behind ordinary share holders.
c. he will receive a fixed and guaranteed dividend.
d. he may receive a fixed dividend and may also have voting rights.

Answer 43

d. he may receive a fixed dividend and may also have voting rights.

chapter reference 2A3A

Question 44

What factors are taken into account when calculating the net present value of rent payable under a lease for stamp duty land tax purposes?

You must select ALL the correct options to gain the mark:

a. Property value.
b. Annual rent.
c. Inflation.
d. Term of lease.
e. Interest rates.

Answer 44

b. Annual rent.
c. Inflation.
d. Term of lease.

chapter reference 2B3B

Question 45

Richard is considering an investment into soft commodities. He should understand that:

Select one:

a. this asset class will be closely correlated to his diversified equity portfolio.
b. the price volatility of this asset class should be less than with his diversified equity portfolio.
c. he should not be exposed to supply and demand risk since stocks usually replenish annually.
d. there is a higher probability of a sudden and unfavourable price change in commodity prices than there is of a sudden collapse in share prices.

Answer 45

d. there is a higher probability of a sudden and unfavourable price change in commodity prices than there is of a sudden collapse in share prices.

chapter reference 2C2

Question 46

Edith has just purchased her first buy-to-let property. She is unsure as to the nature of the shorthold lease she should let the property under. You inform her that:

Select one:

a. there is no minimum period, but she should aim for as long a rental agreement as possible to enhance the property value.
b. there is no minimum period but she should avoid long rental agreements so as not to depress the property value.
c. the minimum period is six months but she should avoid long rental agreements so as not to depress the property value.
d. the minimum period is six months, but she should aim for as long a rental agreement as possible to enhance the property value.

Answer 46

b. there is no minimum period but she should avoid long rental agreements so as not to depress the property value.

chapter reference 2B1C

Question 47

What has been the main reason for the sharp rise in commodity prices in recent years?

Select one:

a. Increased demand for raw materials in developing countries.
b. Increased unionisation in the developing economies.
c. A series of natural disasters.
d. A rise in the number of cartels in producing countries.

Answer 47

a. Increased demand for raw materials in developing countries.

chapter reference 2C2

Question 48

Caleb is considering an investment into a listed private equity investment company. Which of these statements is INCORRECT?

Select one:

a. They are a form of investment trust that is eligible for inclusion in an ISA.
b. They can invest directly in unlisted companies and in funds that invest in unlisted companies.
c. They are closed-ended and traded on the London Stock Exchange.
d. They are closed-ended but not eligible for inclusion in an ISA.

Answer 48

d. They are closed-ended but not eligible for inclusion in an ISA.

chapter reference 2A4A

Question 49

Company A has a much higher price earnings ratio than company B. They are in the same sector. This indicates that:

Select one:

a. company A is more highly rated by the market.
b. company B is more highly rated by the market.
c. company A is a better buy than company B.
d. company B is better value.

Answer 49

a. company A is more highly rated by the market.

chapter reference 2A5D

Question 50

Joshua is using investment ratios as the basis for making his next stock selection. He should be advised that:

Select one:

a. all firms use standard accounting policies.
b. these work best when comparing similar companies.
c. this is always a good guide to future performance.
d. this is the only data he should use to make his selection.

Answer 50

b. these work best when comparing similar companies.

chapter reference 2A5F

Question 51

Alfred and Peter are having an argument about a company that is the 260th largest on the London Stock Exchange by market capitalisation. Alfred says it is in the FTSE 250 but Peter says it is not. They ask Frank to adjudicate who says the company is in the FTSE 350. Who is correct?

Select one:

a. Peter and Frank.
b. Alfred and Frank.
c. Frank only.
d. Alfred only.

Answer 51

b. Alfred and Frank.

chapter reference 2A6B

Question 52

What is most likely to cause the price of gold to fall?

Select one:

a. Concerns over inflation increasing.
b. The economy moving out of recession and into a growth phase.
c. An indefinite pay strike by staff working for all gold mining companies in Australia.
d. The economy entering into recession.

Answer 52

b. The economy moving out of recession and into a growth phase.

chapter reference 2C2

Question 53

Paula has made a purchase of £12,000 worth of shares via CREST. She will:

You must select ALL the correct options to gain the mark:

a. pay a Panel on Takeovers and Mergers levy of 0.5%.
b. pay stamp duty reserve tax on the subsequent sale of the shares.
c. pay a flat rate Panel on Takeovers and Mergers levy of £1.
d. not have to pay a Panel on Takeovers and Mergers levy.
e. pay stamp duty reserve tax of £60.

Answer 53

c. pay a flat rate Panel on Takeovers and Mergers levy of £1.
e. pay stamp duty reserve tax of £60.

chapter reference 2A2A

Question 54

The following information is extracted from the balance sheet of a company: issued share capital £50m, reserves £120m, current assets £70m, fixed assets £200m, current liabilities £40m, long-term debt £60m. The nominal value of the shares is £1 each. What is the net asset value [NAV] per share?

Select one:

a. £5.80.
b. £1.
c. £4.60.
d. £3.40.

Answer 54

d. £3.40.

chapter reference 2A5E

Question 55

Joyce has let one of the rooms in her house to Terry. Terry has sub-let the room to a friend, Colin. What is the maximum amount of tax-exempt income they can receive?

Select one:

a. £2,125 for Joyce and £2,125 for Terry.
b. £3,750 for Joyce and £3,750 for Terry.
c. £4,250 for Joyce and £0 for Terry.
d. £7,500 for Joyce and £0 for Terry.

Answer 55

b. £3,750 for Joyce and £3,750 for Terry.

chapter reference 2B6

Letting part of an individual’s main residence

Individuals who receive rent from letting rooms in their own homes are entitled to a special exemption from tax. This exemption, know as ‘rent-a-room’ relief, extends to owners and tenants who let furnished rooms in their only or main residence. The relief does not apply to a self-contained unit or unfurnished accommodation.

No tax is payable if the gross rent for a tax year, before deducting expenses, does not exceed £7,500.

If another individual is receiving rent from letting acommodation in the same property, the relief is £3,750 each. This could arise, for example, where an owner lets part of a property to a tenant, who sub-lets to a sub tenant. Both the owner and the tenant may each obtain a maximum exemption of £3,750.

Question 56

GreatInvest plc is an established business, the share price of which has dramatically risen. Which two factors are most likely to have caused this?

You must select ALL the correct options to gain the mark:

a. Reported takeover activity.
b. A change in the company’s management.
c. A relatively upbeat assessment of future inflation rates.
d. A relatively upbeat assessment of future trading conditions.
e. An incremental increase in the dividends paid by GreatInvest plc.

Answer 56

a. Reported takeover activity.
b. A change in the company’s management.

chapter reference 2A1

Question 57

How much stamp duty, if any, would be payable on the purchase of £1,400 of UK-registered shares using a stock transfer form?

Select one:

a. £10.
b. £5.
c. Nil.
d. £7.

Answer 57

a. £10.

Question 58

Amy is considering an investment into collectables. It would be INCORRECT to say that:

Select one:

a. this form of investment does not usually produce any income.
b. the price can be negatively affected by the discovery of reproductions.
c. historically, the price of collectibles has consistently tracked the rate of inflation.
d. the difference in the purchase price and resale value can be much greater than for conventional investments.

Answer 58

c. historically, the price of collectibles has consistently tracked the rate of inflation.

chapter reference 2C1A

Question 59

Charlie is purchasing £15,000 worth of shares electronically. The potential costs involved with his purchase will include:

You must select ALL the correct options to gain the mark:

a. UK Listing Authority levy.
b. stamp duty reserve tax.
c. commission, which is always paid as a percentage of the purchase price.
d. stamp duty.
e. Panel on Takeovers and Mergers levy.

Answer 59

b. stamp duty reserve tax.
e. Panel on Takeovers and Mergers levy.

chapter reference 2A2A

Question 60

Julie has received a dividend recently from her preference shares. It is likely that:

You must select ALL the correct options to gain the mark:

a. future dividends will increase in value.
b. any future dividends will be guaranteed.
c. she will not have voting rights in the company.
d. the yield will usually be higher than from a corporate bond from the same company.

Answer 60

c. she will not have voting rights in the company.
d. the yield will usually be higher than from a corporate bond from the same company.

chapter reference 2A3A

Question 61

Mary is about to become an ordinary shareholder in her employer’s company which, as a part-owner of the company, will give her certain rights, APART from the right to:

Select one:

a. a fixed rate of dividend half yearly.
b. one vote for each share in the company she owns.
c. share the company’s residual value on liquidation, after all debts and rights of shareholders with a prior claim.
d. vote at general meetings of the company and to elect the directors.

Answer 61

a. a fixed rate of dividend half yearly.

chapter reference 2A3B

Question 62

An estate agent sold three non-residential properties for £130,000, £400,000 and £1,200,000 during the last week. How much stamp duty land tax will be payable in total on these transactions, assuming that none of them were sold to first-time buyers or commercial enterprises and none were second properties?

Select one:

a. £73,300.
b. £72,000.
c. £59,000.
d. £61,300.

Answer 62

c. £59,000.

chapter reference 2B3A

Question 63

Sean is an experienced investor whose portfolio comprises wholly of UK-based shares. He now wishes to diversify and is looking for an investment that will show the least possible correlation to his existing portfolio, whilst still offering him the opportunity for reasonable long-term returns. What is the investment class that will best achieve this?

Select one:

a. Property.
b. Overseas equities.
c. Fixed Interest.
d. Cash.

Answer 63

a. Property.

chapter reference 2B7A

Question 64

A company has an earnings per share of 12p and a dividend cover of 2.4. If its share price is £1.25 per share, what is the dividend yield?

Select one:

a. 2%.
b. 23%.
c. 9.6%.
d. 4%.

Answer 64

d. 4%.

chapter reference 2A5B

Question 65

Nigel and Emma are higher and additional-rate taxpayers, respectively, and they have both received a dividend of £1,800 from ordinary shares. Assuming that both of them have already used their dividend allowance, how much more income tax will Emma pay than Nigel?

Select one:

a. £90.
b. £135.50.
c. £100.80.
d. £180.

Answer 65

c. £100.80.

chapter reference 2A3C

Question 66

Cumulative preference shares in ZYX plc have been in existence for ten years and no dividends have been paid for the last four. What is the situation regarding this year’s potential dividend payments on ordinary shares?

Select one:

a. No preference share arrears need be paid before a dividend can be declared on the ordinary shares.
b. All preference share arrears must be paid before a dividend can be declared on the ordinary shares.
c. No dividends can ever be declared on ordinary shares when cumulative preference shares exist.
d. Only the previous accounting year’s preference share arrears needs to be paid before a dividend can be declared on the ordinary shares.

Answer 66

b. All preference share arrears must be paid before a dividend can be declared on the ordinary shares.

chapter reference 2A3A

Question 67

Which of these indices are value weighted?

You must select ALL the correct options to gain the mark:

a. Dow Jones.
b. Hang Seng.
c. Nikkei 225.
d. DAX 30.
e. CAC 40.

Answer 67

b. Hang Seng.
d. DAX 30.
e. CAC 40.

chapter reference 2A6D

Question 68

When deciding whether to purchase shares in company X and shares in company Y, Tania notices that although their share prices and the dividends they are currently paying are similar, Company X has a much higher dividend cover. This would suggest that company:

You must select ALL the correct options to gain the mark:

a. Y is the safer investment of the two.
b. Y offers the greater opportunity for growth in the share value.
c. X is retaining more of its earnings for re-investment in the company.
d. Y must have drawn on its reserves to pay its dividend.
e. X is more likely to be able to maintain the current level of dividend if profits fall next year.

Answer 68

c. X is retaining more of its earnings for re-investment in the company.
e. X is more likely to be able to maintain the current level of dividend if profits fall next year.

chapter reference 2A5C

Question 69

David has a share portfolio including both ordinary and preference shares. He should be aware that:

You must select ALL the correct options to gain the mark:

a. non-cumulative preference shares do not normally have voting rights.
b. ordinary shares rank above preference shares in a liquidation.
c. preference shares generally have no voting rights.
d. the payment of dividends on ordinary shares has priority over payment of dividends on preference shares.
e. preference shares usually pay a fixed dividend whereas ordinary shares pay a variable dividend.

Answer 69

a. non-cumulative preference shares do not normally have voting rights.
c. preference shares generally have no voting rights.
e. preference shares usually pay a fixed dividend whereas ordinary shares pay a variable dividend.

chapter reference 2A3A/2A3B

Question 70

James lives in a two bedroom flat and is considering letting his spare bedroom to a friend for a fixed amount per week inclusive of all expenses. In order to qualify for ‘rent-a-room’ relief he must:

You must select ALL the correct options to gain the mark:

a. not charge for any additional services.
b. occupy the property at the same time as his tenant.
c. rent the room out on a furnished basis.
d. ensure the net rent he receives does not exceed £7,500 per tax year.
e. provide his tenant with a written tenancy agreement and a rent book.

Answer 70

b. occupy the property at the same time as his tenant.
c. rent the room out on a furnished basis.

chapter reference 2B6

Question 71

A company has a dividend cover figure of 0.6. This indicates that the:

Select one:

a. company is clearly able to maintain the existing dividend if profits fall in the future.
b. company is drawing on reserves to pay its dividends.
c. company is retaining the majority of its earnings for reinvestment in the business.
d. market is pessimistic about the company’s future growth in earnings.

Answer 71

b. company is drawing on reserves to pay its dividends.

chapter reference 2A5C

Question 72

Ivan and Cyril are discussing a company which is the 370th largest listed on the London Stock Exchange by market capitalisation. Ivan thinks it is in the FTSE All-Share index but Cyril disagrees, saying it is in the FTSE SmallCap index. Who is correct?

Select one:

a. Cyril only.
b. Ivan only.
c. Both Ivan and Cyril.
d. Neither Ivan nor Cyril.

Answer 72

c. Both Ivan and Cyril.

chapter reference 2A6B

Question 73

Erin has purchased £8,500 of UK-registered shares through CREST. How much stamp duty reserve tax would be payable?

Select one:

a. £42.50.
b. £85.
c. £45.
d. £106.25.

Answer 73

a. £42.50.

chapter reference 2A2A

Question 74

When investing in the FTSE 350 index, an investor should be aware that it is:

Select one:

a. the smallest 350 companies in the UK.
b. the most profitable 350 companies in the UK.
c. the next largest 350 companies after the constituents of the FTSE 100 and FTSE 250 indices.
d. a combination of the FTSE 100 and FTSE 250 indices.

Answer 74

d. a combination of the FTSE 100 and FTSE 250 indices.

chapter reference 2A6B

Question 75

Malik is about to invest in his first buy-to-let property. His main concern should be that:

Select one:

a. he may be unable to sell the property quickly in order to realise liquid cash.
b. he may be unable to reclaim any tax paid at source.
c. his investment is unlikely to provide a ‘real return’ over the long-term.
d. the smaller the property, the smaller the yield.

Answer 75

a. he may be unable to sell the property quickly in order to realise liquid cash.

chapter reference 2B1A

Question 76

The average price earnings [P/E] ratio for a sector is 7.5. Within this sector, share A has a P/E ratio of 8.1 and share B has a P/E ratio of 6.2. This indicates that:

Select one:

a. share B will provide better value than share A.
b. share B has higher growth prospects that share A.
c. share A is more favoured by investors than share B.
d. share A is significantly overpriced.

Answer 76

c. share A is more favoured by investors than share B.

chapter reference 2A5D

Question 77

David is purchasing a residential and a commercial property for £1.5 million each. He is not a first-time buyer and these are his only properties. David should be aware that:

You must select ALL the correct options to gain the mark:

a. he will not need to pay stamp duty on the subsequent sale of either property.
b. the total stamp duty will be £143,250.
c. any stamp duty is due immediately after completion.
d. there will be estate agent fees to pay in addition to any stamp duty.

Answer 77

a. he will not need to pay stamp duty on the subsequent sale of either property.
b. the total stamp duty will be £143,250.

chapter reference 2B3A

Question 78

Suni is interested in investing in tangible investments, such as works of art, antiques and other rare items. This type of investment would be UNSUITABLE for her if she:

You must select ALL the correct options to gain the mark:

a. is looking for capital growth over the long term.
b. has a significant amount of money to invest.
c. does not have the means to protect her investments from damage or theft.
d. is looking for income or a regular return.
e. has a low to medium attitude to risk.

Answer 78

c. does not have the means to protect her investments from damage or theft.
d. is looking for income or a regular return.
e. has a low to medium attitude to risk.

chapter reference 2C1

Question 79

An investment manager is conducting an analysis of a share which she is potentially interested investing in. She has the following information: the amount available for dividends is £320,000; the number of shares is 20,000; the share price is 220 pence. The dividend yield is:

Select one:

a. 10%.
b. 16%.
c. 14.54%.
d. 7.27%.

Answer 79

d. 7.27%.

chapter reference 2A5B

Question 80

Ally is buying her first UK residential property for £535,000. What expenses will she incur?

You must select ALL the correct options to gain the mark:

a. Stamp duty land tax.
b. Estate agent fees.
c. Solicitor fees.
d. Cost of survey.
e. Capital gains tax.

Answer 80

a. Stamp duty land tax.
c. Solicitor fees.
d. Cost of survey.

chapter reference 2B2/2B3

Question 81

Jon would like to calculate the stamp duty land tax on a commercial property he is planning to lease. The factors that he will take into account in the calculation include:

You must select ALL the correct options to gain the mark:

a. the location of the property on a trading estate.
b. the annual rent amount of £15,000.
c. the property value of £250,000.
d. a relevant inflation rate.
e. the 10 year term of the lease.

Answer 81

b. the annual rent amount of £15,000.
d. a relevant inflation rate.
e. the 10 year term of the lease.

chapter reference 2B3B

Question 82

Gemma is selling £12,000 of shares through CREST. It is likely that she will incur costs such as:

You must select ALL the correct options to gain the mark:

a. commission.
b. stamp duty.
c. the Panel on Takeovers and Mergers levy.
d. auditors’ fees.
e. the Financial Services Compensation Scheme levy.

Answer 82

a. commission.
c. the Panel on Takeovers and Mergers levy.

chapter reference 2A2A

Question 83

Imelda is interested in art as an investment. What is most likely to be her reason for this?

Select one:

a. She is an additional-rate taxpayer and wants to avoid further income tax liabilities.
b. When she disposes of the item it will be subject to capital gains tax at 10%.
c. She is a non-taxpayer and wants to avoid income tax liabilities.
d. The low costs involved of purchase and sale.

Answer 83

a. She is an additional-rate taxpayer and wants to avoid further income tax liabilities.

chapter reference 2C1

Question 84

Maggie wishes to let a room in her main residence. Assuming the room isn’t sub-let, Maggie should be aware that:

Select one:

a. she will be able to claim £4,250 rent-a-room relief.
b. the rent-a-room relief is only available if Maggie does not occupy the house herself.
c. she will be able to claim £7,500 rent-a-room relief.
d. the rooms do not need to be furnished.

Answer 84

c. she will be able to claim £7,500 rent-a-room relief.

chapter reference 2B6

Question 85

An investment property is purchased for £210,000 with transaction costs of £4,000. If the rental income is £850 per month with 15% of the rent set aside to cover general expenses, the net rental yield will be:

Select one:

a. 4.13%.
b. 4.77%.
c. 4.85%.
d. 4.05%.

Answer 85

d. 4.05%.

chapter reference 2B2

Question 86

Marta purchases shares for £19,000 using a stock transfer form. Marta should be aware that:

You must select ALL the correct options to gain the mark:

a. if the shares are quoted on the AIM market, there will be no transfer tax to pay.
b. she will pay stamp duty reserve tax.
c. the tax she pays will be rounded to the nearest penny.
d. she will pay stamp duty.
e. the tax she pays will be rounded down to the nearest £5.

Answer 86

a. if the shares are quoted on the AIM market, there will be no transfer tax to pay.
d. she will pay stamp duty.

chapter reference 2A2A

Question 87

In recent years, what factor may have reduced the benefits of international diversification within an equity portfolio?

Select one:

a. Globalisation.
b. Low interest rates.
c. Inflation.
d. Industrialisation of emerging economies.

Answer 87

a. Globalisation.

chapter reference 2A3E

Question 88

When calculating the price earnings ratio for a company, it is necessary to take into account the:

You must select ALL the correct options to gain the mark:

a. current share price.
b. earnings per share.
c. dividend yield.
d. dividend cover.
e. net dividend.

Answer 88

a. current share price.
b. earnings per share.

chapter reference 2A5D

Question 89

A limited company has 20,000 ordinary shares in issue and £4,000 available for distribution as net dividends. The current share price is 110p. What is the dividend yield?

Select one:

a. 4%.
b. 18.18%.
c. 20%.
d. 36.36%.

Answer 89

b. 18.18%.

chapter reference 2A5B

Question 90

A company has £440,000 available for dividends to ordinary shareholders, and has 220,000 shares issued. If the company’s current share price is 570p, what is the price earnings [P/E] ratio?

Select one:

a. 2.
b. 2.85.
c. 0.35.
d. 28.50.

Answer 90

b. 2.85.

chapter reference 2A5D

Question 91

Company X has a share price of £2.20 and a net asset value of £1.80. This is most likely to indicate that:

Select one:

a. a takeover bid has been made for the company.
b. the company is in danger of going into liquidation.
c. demand for the shares is lower than the sector average.
d. investors are willing to pay a premium for the goodwill inherent in the business.

Answer 91

d. investors are willing to pay a premium for the goodwill inherent in the business.

chapter reference 2A5E

Question 92

Adam has purchased shares for £12,000, while Bill has sold shares for £12,000. The total amount paid to the Panel on Takeovers and Mergers as a result of these transactions is:

Select one:

a. £2.
b. £60.
c. £120.
d. £1.

Answer 92

a. £2. chapter reference 2A2A

Question 93

Nigel has just purchased the lease on a premises for £300,000. The lease was for 15 years with an annual ground rent of £10,000 and the net present value is £115,000. How much stamp duty land tax, if any, will he pay?

Select one:

a. Nil.
b. £1,500.
c. £50.
d. £9,000.

Answer 93

a. Nil.

chapter reference 2B3B

Question 94

Terri and Shirley are both higher-rate taxpayers. Terri owns participating preference shares whereas Shirley owns ordinary shares, which means that only Terri will:

Select one:

a. receive a fixed dividend.
b. have voting rights attached to her shares.
c. have to pay additional tax on dividends received.
d. receive a dividend based on the profits of the company.

Answer 94

a. receive a fixed dividend.

chapter reference 2A3A

Question 95

Nico is deciding whether to purchase preference shares. He should be aware that:

You must select ALL the correct options to gain the mark:

a. they will provide him with voting rights.
b. in liquidation they rank ahead of all other creditors.
c. the dividend payment has priority over the payment of dividends on ordinary shares.
d. the yields are typically higher than those of bonds.
e. a dividend will only be paid if the company has sufficient after-tax profits.

Answer 95

c. the dividend payment has priority over the payment of dividends on ordinary shares.
d. the yields are typically higher than those of bonds.
e. a dividend will only be paid if the company has sufficient after-tax profits.

chapter reference 2A3A

Question 96

When analysing a company using the price earnings [P/E] ratio, a potential investor should be aware that:

You must select ALL the correct options to gain the mark:

a. a higher than average P/E ratio would indicate a low demand for the shares.
b. the P/E ratio is based on the relationship between the profits and the earnings per share.
c. P/E ratios should only be used to compare companies in the same sector.
d. the higher the earnings per share, the lower the P/E ratio, assuming a constant share price.
e. a high P/E ratio is an indication of good growth prospects.

Answer 96

c. P/E ratios should only be used to compare companies in the same sector.
d. the higher the earnings per share, the lower the P/E ratio, assuming a constant share price.
e. a high P/E ratio is an indication of good growth prospects.

chapter reference 2A5D

Question 97

What would be the main factors a potential investor would consider before buying a property with the intention of letting it?

You must select ALL the correct options to gain the mark:

a. The quality of the tenant expected as that could impact the yield.
b. Location within a town is not important, it’s the location of the town that matters.
c. Newer properties are usually more attractive for renting.
d. If more than one property is purchased in the same area, this could result in concentration risk.

Answer 97

a. The quality of the tenant expected as that could impact the yield.
c. Newer properties are usually more attractive for renting.
d. If more than one property is purchased in the same area, this could result in concentration risk.

chapter reference 2B1

Question 98

Jan is considering purchasing a property to let. The purchase price will be £190,000 and she anticipates additional expenses of £5,000. The property has a potential rental return of £1,000 per month and Jan expects management expenses to be 15% of the rent. What is Jan’s anticipated net rental yield?

Select one:

a. 5.23%.
b. 7.07%.
c. 5.51%.
d. 6.32%.

Answer 98

a. 5.23%.

chapter reference 2B2

Question 99

Changes to the constituent companies of the FTSE 100 index can be prompted by:

You must select ALL the correct options to gain the mark:

a. increases in market capitalisation.
b. mergers and acquisitions.
c. European directives.
d. intervention by the Bank of England.
e. new listings on the exchange.

Answer 99

a. increases in market capitalisation.
b. mergers and acquisitions.
e. new listings on the exchange.

chapter reference 2A6B

Question 100

An investment manager recently completed three UK-registered share purchases on the same day using the following methods: Stock transfer form for £5,450; CREST for £4,350; Stock transfer form for £3,875. What is the total combined amount of stamp duty and stamp duty reserve tax payable on these transactions?

Select one:

a. £60.
b. £68.38.
c. £71.75.
d. £71.63.

Answer 100

c. £71.75.

chapter reference 2A2A

Question 101

Charles intends to build up a portfolio of buy-to-let properties. What potential DISADVANTAGES of this type of investment would you make Charles aware of?

You must select ALL the correct options to gain the mark:

a. Void periods will cause yields to decrease.
b. Sale and purchase can be expensive.
c. A higher rate of capital gains tax applies than for other investment types.
d. On sale the annual capital gains tax [CGT] exemption cannot be used to reduce CGT.
e. Values will fluctuate according to inflation.

Answer 101

a. Void periods will cause yields to decrease.
b. Sale and purchase can be expensive.
c. A higher rate of capital gains tax applies than for other investment types.

chapter reference 2B1A

Question 102

Jacob is looking for a suitable stock index to benchmark his portfolio of American shares. Which of these would be LEAST appropriate?

Select one:

a. S&P All Ordinaries.
b. S&P500.
c. Dow Jones Industrial Average.
d. NASDAQ Composite.

Answer 102

a. S&P All Ordinaries.

chapter reference 2A6D

Question 103

Lucy has recently completed the purchase of her first property, a flat, for £200,000 that she intends to live in. She will also shortly complete on the purchase of a non-residential property for £150,000 from which she intends to run her business. How much stamp duty land tax will be due in respect of both of these transactions?

Select one:

a. Nil.
b. £1,500.
c. £2,000.
d. £4,500.

Answer 103

a. Nil.

chapter reference 2B3A

Question 104

A convertible preference share was issued many years ago. Since then, the ordinary share price has gone up to such an extent that it is expected the conversion rights will be taken up. It is likely that the price of the preference share will:

Select one:

a. be inversely related to the price of the ordinary share.
b. be very sensitive to changes in interest rates.
c. be inversely related to interest rates and not correlated at all to the ordinary share price.
d. track the price of the ordinary share.

Answer 104

d. track the price of the ordinary share.

chapter reference 2A3A

Question 105

Lizzie is considering purchasing her first residential buy-to-let property. What factors would she be advised to take into account?

You must select ALL the correct options to gain the mark:

a. The location of the property.
b. The type of tenant she is planning to attract.
c. The age of the property, since older properties are more attractive for renting.
d. The availability of tenants.
e. Void periods, as they will cause yields to increase.

Answer 105

a. The location of the property.
b. The type of tenant she is planning to attract.
d. The availability of tenants.

chapter reference 1B1B

Question 106

BWL Limited has 10 million ordinary shares in issue and a turnover of £3.5 million. The net profit for the financial year is £2.2 million and it pays £200,000 to preference shareholders. The earnings per share is:

Select one:

a. £1.59.
b. £0.22.
c. £0.20.
d. £0.35.

Answer 106

c. £0.20.

chapter reference 2A5A

Question 107

Out of all of the shares in Mitchell’s portfolio, the only types where he can be sure he will have voting rights are:

You must select ALL the correct options to gain the mark:

a. participating preference shares.
b. ordinary shares.
c. deferred ordinary shares.
d. cumulative preference shares when dividend payments are in arrears.
e. ‘A’ ordinary shares.

Answer 107

b. ordinary shares.
c. deferred ordinary shares.
d. cumulative preference shares when dividend payments are in arrears.

chapter reference 2A3A/2A3B

Question 108

Joan has just purchased her first buy-to-let property and is negotiating a 5 year rental agreement with the existing tenant. She should be aware that this length of agreement:

Select one:

a. must always include rent reviews.
b. may help increase the property’s value.
c. may help depress the property’s value.
d. is not allowed under UK law.

Answer 108

c. may help depress the property’s value.

chapter reference 2B1C

Question 109

Marion is interested in investing in coffee. Assuming that she does not wish to invest directly, there are a number of alternative ways in which she could invest, which include to:

You must select ALL the correct options to gain the mark:

a. invest in funds that specialise in commodities.
b. invest in exchange traded commodities.
c. invest in Enterprise Investment Schemes.
d. buy shares in companies that produce coffee.
e. buy government securities from coffee-producing countries.

Answer 109

a. invest in funds that specialise in commodities.
b. invest in exchange traded commodities.
d. buy shares in companies that produce coffee.

chapter reference 2C2

Question 110

Amir is an investor planning to invest in works of art and collectables. He should be aware that:

You must select ALL the correct options to gain the mark:

a. they usually do not generate any form of income or financial return.
b. the difference between buying and selling prices is usually less than for conventional investments.
c. their value is dependent on limited supply and fluctuating demand.
d. specialist knowledge may be needed to buy successfully.
e. prices are generally relatively stable and rise in line with inflation.
f. some markets are dominated by a small number of buyers and sellers.

Answer 110

a. they usually do not generate any form of income or financial return.
c. their value is dependent on limited supply and fluctuating demand.
d. specialist knowledge may be needed to buy successfully.
f. some markets are dominated by a small number of buyers and sellers.

chapter reference 2C1

Question 111

Horatio is an ethical investor and he is looking for an appropriate benchmark for his share portfolio. The most suitable would be the:

Select one:

a. FTSE All-Share.
b. FTSE Fledgling.
c. FTSE SmallCap.
d. FTSE4Good.

Answer 111

d. FTSE4Good.

chapter reference 2A6B

Question 112

When investing in property, void periods will tend to:

You must select ALL the correct options to gain the mark:

a. increase the expenses.
b. decrease the rental yield.
c. decrease the property value.
d. have a detrimental effect on overall income.
e. outweigh occupied periods.

Answer 112

b. decrease the rental yield.
d. have a detrimental effect on overall income.

chapter reference 2B2