1.

Which of the following is NOT one of the stages in assessing need prior to making
recommendations?

a. Explore
b. Discuss
c. Quantify
d. Review

2. Where a client has income from employment and self employment:

a. they must be covered by the same pension arrangements

b. they will be treated separately for pension purposes
c. the Inland Revenue must be contacted re pension provision
d. the DWP must be contacted re pension provision

3. The self employed can have:

a. basic state pension + S2P + personal pension plan

b. S2P + AVC's
c. basic state pension + personal pension plan
d. basic state pension + AVC's

4. A basic rate taxpayer wants to invest in gilts but is concerned about paying tax. Which
of the following would give them the lowest tax to pay?

a. A gilt offering 6% coupon

b. A gilt offering a 6% coupon and 6% capital gain per annum
c. A gilt offering 12% coupon per annum
d. A gilt offering a 12% capital gain per annum

5. Annuities which are paid until the death of the investor are called:

a. Purchased life annuities

b. Lifetime annuities
c. Temporary annuities
d. Capital protected annuity

6. Which of the following is subject to the lowest risk?

a. unit trust invested in a "managed fund"

b. building society account
c. with profit endowment assurance
d. Unit Linked Single Premium Bond invested in a "managed fund"

7. Which of the following attracts the greatest risk?

a. Equities
b. Gilts
c. national savings
d. with profits endowment assurance

8. National Savings:

a. are a means of indirect taxation

b. provide a variety of taxable and tax-free investments
c. provide tax-free investments only
d. provide taxable benefits only

9. A gilt has a 10% coupon. What would that mean?

a. 10% interest paid annually

b. 10% return when the gilt is redeemed (capital growth)
c. 10% return in the form of both interest and capital growth
d. paying 10% more than the face value of the gilt, due to the high interest rate

10. Where a stockbroker monitors a clients portfolio for favourable or unfavourable

trading circumstances, it is called:

a. an advisory service
b. A best execution service
c. an ISA service
d. a dealing service

11. An investment trust company is one which:

a. is controlled by a unit trust

b. invests in other companies
c. is owned by an insurance company
d. invests in overseas stocks only

12. In which circumstances may the State provide a lump sum benefit?

a. in a maternity claim
b. to a widow on death of her husband
c. to an employee on redundancy
d. Never

13. When an underwriter is considering the risk under a new proposal, which of the
following need be considered?
a. hobbies and pastimes
b. Occupation
c. current state of health
d. all of the above

14. In underwriting a proposal, occupation is particularly important in which of the

following?

a. endowment assurance
b. PHI / IPI
c. term assurance
d. ISA

15. Which of the following will provide an income in case of illness that will last until
retirement?

a. an annuity
b. PHI / IPI
c. Sickness and accident policy
d. Critical illness cover

16. Under a flexible whole life assurance, the assured has the option to:

a. Extend/reduce the policy term

b. Vary the level of cover depending on the circumstances
c. Switch to another form of policy without providing evidence of health
d. Purchase an annuity at the maturity date

17. A non-taxpayer with a large portfolio of unit trusts will pay tax on its dividend
distributions of:

a. 10%
b. 20%
c. 32.5%
d. 0%

18. Which of the following is guaranteed to repay an interest only mortgage at the end of
the mortgage term?

a. Whole life policy

b. Low cost endowment
c. Non profit endowment
d. Unit linked endowment

19. Who could put the most into their existing ISA?
a. Mark who already has £6,000 in stocks and shares and life assurance in a maxi ISA
b. Pam who already has £1,500 in a cash mini ISA
c. Paul who already has £1,000 in a stocks and shares in his mini ISA
d. Kathryn who already has £5,500 in cash and stocks and shares in her maxi ISA

20. An OEIC is like a Unit Trust in which way?

a. They both buy and sell shares to investors

b. Each uses bid/ offer prices
c. They are both designed to be marketed across the European Union
d. Income and Capital Gains tax for the investor is the same

21. Which of the following is NOT a feature of "exempt approval" in a company pension
scheme?

a. Employees' contributions receive tax relief at the highest rate payable

b. the investment funds are not subject to tax on gains
c. Pensions in payment are free from income tax
d. part of the benefit at retirement is payable tax free

22. John Brown is a member of the Body & Company Pension Plan. He joined the plan at
age 30 and his current salary is £16,000. What is the maximum lump sum death benefit
that can be provided for him?

a. £16,000
b. £24,000
c. £40,000
d. £64,000

23. Lizzie Borden, aged 30, contributes 5 per cent of her salary to the Axe Bros Pension
Plan. She wishes to pay the maximum AVC contribution, based on her salary of £13,333.
How much can she pay into the AVC?

a. £2,333.28
b. £1,999.95
c. £1,333.30
d. £1,666.62

24. What is the maximum pension that can be provided under an executive pension plan?

a. there is no maximum - benefits are related to a maximum contribution of salary

b. 50% of salary
c. 66.67% of salary
d. 150% of salary
25. Anne Anderson aged 34, wishes to pay the maximum Stakeholder contribution based
on earnings of £35,000. She can pay an annual contribution of

a. £3,500
b. £5,250
c. £6,125
d. £7,000

26. When considering a client's investment needs - which of the following should be
considered?

a. family circumstances
b. need for income/capital
c. term of the investment/liquidity
d. all of the above

27. What is a gilt?

a. An investment in the form of a loan to a local authority.

b. An equity-based investment guaranteed by the Government.
c. An investment in the Bank of England.
d. An investment in the form of a loan to the Government.

28. Amy invested £1,000 in Cash Mini ISA in June 2005. What is the maximum she
could invest in Stocks and Shares through ISAs in tax year 2005/06?

a. £3,000
b. £5,000
c. £6,000
d. £7,000

29. Which of the following carries the lower risk to the sum invested?

a. overseas equities
b. UK equities
c. managed funds
d. cash or money funds

30. Which of the following may be of particular interest to a higher rate taxpayer looking
for a medium risk investment?

a. Shares
b. higher rate building society account
c. Stocks and Shares ISA, invested in unit trusts
d. Cash ISA

31. An endowment assurance policy used in connection with a mortgage is often referred
to as:

a. collective security
b. collateral security
c. guaranteed repayment vehicle
d. security document

32. In a personal pension mortgage the amount of the retirement fund which can be used
to repay the loan cannot exceed which of the following percentages of the total?

a. 15%
b. 20%
c. 25%
d. 50%

33. In a repayment mortgage (ignoring changes in interest rates)

a. the amount of capital remains constant throughout the mortgage term

b. the amount of interest repaid each month remains the same
c. the amount of capital repaid each month remains constant
d. the amount of capital repaid each month increases as the term decreases

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Answers

1. d
2. b
3. c
4. d
5. b
6. b
7. a
8. b
9. a
10 a
11 b
12 b
13 d
14 b
15 b
16 b
17 a
18 c
19 c
20 d
21 c
22 d
23 c
24 c
25 c
26 d
27 d
28 a
29 d
30 c
31 b
32 c
33 d