Umit 4 Topic 9&10 Flashcards
Under the new mortgage affordability rules introduced in April 2014, which of
the following is likely to be considered a committed expense:
A council tax
B personal loan
C childcare
D electricity
B personal loan
Harry provides an advised sales service to his customers. Which one of the
following would indicate that he is following the principles of ethical advice?
A Presenting a range of products that might be suitable, allowing the customer
to choose the most appropriate.
B Recommending the lowest cost product.
C Recommending the product that best meets the needs of the advisor and the
customer.
D Using plain customer friendly language when explaining recommendations.
D Using plain customer friendly language when explaining recommendations
In order to be seen to give ethical advice, the adviser’s fundamental approach
should be to:
A always provide an ‘advised’ sale.
B focus on completing the fact find.
C gather all relevant facts and attitudes from the consumer.
D provide information on a range of products.
C gather all relevant facts and attitudes from the consumer.
In offering mortgage finance, it is ILLEGAL to discriminate on grounds of: A type of property. B age of applicant. C occupation of applicant. D nationality of applicant.
D nationality of applicant
When determining borrowing limits, a lender is LEAST likely to be influenced by whether a person's income: A includes overtime. B fluctuates on a seasonal basis. C is paid weekly or monthly. D is fixed or related to performance.
C is paid weekly or monthly.
A lender considering the credit risk of making a loan to a limited company in
2021 will usually review the company’s performance at LEAST over the period
since:
A 2018
B 2016
C 2020
D 2017
A 2018
For what principal reason would a mortgage lender collect the details of all the
likely occupants of a property that a consumer is intending to purchase?
A To ascertain whether they are likely to default.
B Because, in case of default, the property will be difficult to sell if it has sitting
tenants.
C To ensure that an overriding interest is not created.
D To establish that the property will be used only for residential purposes.
C To ensure that an overriding interest is not created.
What figure will lenders normally use for affordability calculation purposes,
when assessing the income of a self-employed prospective borrower?
A Turnover
B Personal drawings from the business
C Net profits after tax
D Net profits before tax
D Net profits before tax
Marion is regarded as a non-UK resident, as she has worked in France for
several years. She expects to return to the UK permanently within the next two
years but wishes to buy a property in England now, ready for her return. How
might a lender deal with this?
A The loan might be considered but only if Marion can provide some additional
security
B If a loan is approved, it is likely to have specific conditions attached
C In the same way as for a UK resident
D Her application can only be accepted when she resumes UK residency
B If a loan is approved, it is likely to have specific conditions attached
To assess the underlying profitability and structure of a business, a lender will
normally want to examine several items of financial information. Which of the
following will provide a clear picture of a company’s assets at the end of its
trading year?
A The balance sheet
B The statement of drawings
C The profit and loss account
D The cash flow statement
A The balance sheet
Graham is self-employed and has been asked to provide various pieces of
information in support of his application for a mortgage. In which of the
following documents would a figure for his personal drawings be found?
A Balance sheet
B Business taxation computation
C Cash flow statement
D Profit and loss account
A Balance sheet
Marion, a self-employed consultant, has applied for a re-mortgage. Which one of
the following is her new lender LEAST likely to ask to see when verifying
information on her application form?
A Several recent profit and loss accounts
B A business plan
C A self-assessment tax calculation
D Existing mortgage account statements.
B A business plan
Sam is hoping to secure a five-year fixed rate mortgage at 4%. In relation to
stress testing, the latest Financial Policy Committee recommendation was to use
an increase of 3%, and independent market analysis suggested a maximum
increase of 2%. What is the minimum interest rate the lender must use when
applying the interest rate ‘stress test’ to Sam’s application?
A 4%
B 5%
C 6%
D 7%
A 4%
Which of the following is not one of the FCA’s Fair Treatment of Customers
(FToC) outcomes?
A Consumers are provided with clear information and are kept appropriately
informed before, during and after the point of sale.
B Consumers are provided with products that are guaranteed to perform as the
firm indicated.
C Consumers can be confident that they are dealing with firms where the fair
treatment of customers is central to the corporate culture.
D Where consumers receive advice, the advice is suitable and takes account of
their circumstances.
B Consumers are provided with products that are guaranteed to perform as the
firm indicated.
John is a sole trader. His accounts show the following figures:
Turnover £70,000
Basic materials for carrying out his day to day work £20,000
Routine business expenses £10,000
Personal drawings £30,000
Based on these figures his net profit would be:
A £10,000
B £40,000
C £50,000
D £60,000
B £40,000
