Cash and Fixed-Interest Securities Quiz

1. What are the four main asset classes for investment?

A) Cash, equities, property, and fixed-interest securities.
B) Bonds, stocks, real estate, and commodities.
C) Savings accounts, mutual funds, ETFs, and cryptocurrencies.
D) Gold, silver, equities, and oil.

2. What is the primary reason investors choose deposit-based investments?

A) High potential returns.
B) Security of capital and convenience.
C) Tax-free growth.
D) Exposure to global markets.

3. What is the main feature of a basic bank account?

A) It offers high-interest rates.
B) It provides overdraft facilities and cheque books.
C) It is designed for people who may not qualify for a standard current account.
D) It is only available to self-employed individuals.

4. What is the primary advantage of a fixed-term bond?

A) Immediate access to funds.
B) A fixed rate of return over a specified time period.
C) Tax-free interest payments.
D) The ability to withdraw funds without penalty.

5. What is the main purpose of NS&I (National Savings and Investments)?

A) To provide tax relief for business investment.
B) To offer government-backed savings and investment products.
C) To manage offshore investments for UK residents.
D) To provide loans to small businesses.

6. What is a key risk associated with offshore accounts?

A) Higher interest rates.
B) Exposure to unfavourable exchange rates.
C) High risk high reward returns.
D) Import tax for UK residents.

7. What is the primary characteristic of a gilt?

A) It is a zero risk investment.
B) It is a form of borrowing by the UK government.
C) It offers variable interest rates.
D) It is only available to institutional investors.

8. What is the main feature of an index-linked gilt?

A) It offers fixed interest payments unaffected by inflation.
B) Its interest payments and capital value move in line with inflation.
C) It historically outperforms stock market returns.
D) It has no redemption date.

9. What is the primary purpose of a packaged current account?

A) To provide basic banking services with no additional fees.
B) To offer ancillary benefits like insurance in return for a fee.
C) To provide high-interest rates on savings.
D) To offer offshore investment opportunities.

10. What is the main advantage of a notice account compared to an instant access account?

A) Higher interest rates due to restricted access.
B) Immediate access to funds without penalties.
C) Tax-free interest payments.
D) No minimum deposit requirement.

Other Direct Investments Quiz

1. What are the two main rights of ordinary shareholders?

A. To receive dividends and vote at shareholders' meetings.
B. To receive fixed interest payments and sell shares at any time.
C. To manage the company's operations and receive bonuses.
D. To receive tax-free income and fund business growth.

2. What is the primary purpose of the London Stock Exchange?

A. To provide buy and sell shares in private companies.
B. To facilitate the trading of shares, gilts, and corporate bonds.
C. To offer tax-free investment opportunities.
D. To manage offshore investments for UK residents.

3. What is the main difference between the main market and Alternative Investment Market (AIM)?

A. The main market is for large companies, while AIM is for smaller, growth-oriented companies.
B. The main market is for all companies, while AIM is for tech companies.
C. The main market is for international companies, while AIM is for UK-based companies.
D. The main market is for high-risk investments, while AIM is for low-risk investments.

4. What is the primary measure used to assess a company's profitability per share?

A. Dividend cover.
B. Price/earnings ratio.
C. Market capitalisation.
D. Earnings per share.

5. What is the purpose of a rights issue?

A. Ownership rights to share in dispute.
B. To issue new shares to the public without offering them to existing shareholders.
C. To convert preference shares into ordinary shares.
D. To offer existing shareholders the opportunity to buy additional shares at a discount.

6. What is the main characteristic of preference shares?

A. They offer voting rights to shareholders.
B. They pay dividends at a fixed rate and have priority over ordinary shares.
C. They are convertible into corporate bonds.
D. They are only available to institutional investors.

7. What is the primary purpose of a scrip issue?

A. To raise additional capital for the company.
B. To issue new shares to existing shareholders free of charge.
C. To convert ordinary shares into preference shares.
D. To pay dividends to shareholders.

8. What is the main risk for shareholders in a limited liability company?

A. They are liable for the company's debts.
B. Investment is always reliant on a fund manager.
C. They are required to pay taxes on the company's profits.
D. They may lose their investment if the company fails.

9. What is the primary purpose of the dividend cover ratio?

A. To measure the growth potential of a company.
B. To assess how much of a company's profits are paid out as dividends.
C. To calculate the price/earnings ratio of a company.
D. To determine the market capitalisation of a company.

10. What is the main advantage of convertible preference shares?

A. They offer fixed interest payments.
B. They can be converted into ordinary shares at a later date.
C. They provide voting rights to shareholders.
D. They are exempt from capital gains tax.

Collective Investment Schemes Quiz

1. What is the primary advantage of collective investments for individual investors?

A. Risk free returns on investment.
B. Access to skilled investment managers and diversification.
C. Capital gains paid by the provider.
D. Very high risk and high reward.

2. What is the main characteristic of an open-ended investment fund?

A. It has a fixed number of shares that cannot be increased.
B. It invests exclusively in fixed-income securities.
C. It is only available to institutional investors.
D. It can create or cancel units based on investor demand.

3. What is the primary purpose of a unit trust?

A. To provide loans to small businesses.
B. To offer tax relief on gains.
C. To pool investors' money and invest in a diversified portfolio.
D. To manage offshore investments for UK residents.

4. What is the difference between accumulation units and distribution units in a unit trust?

A. Accumulation units pay income to investors, while distribution units reinvest income.
B. Accumulation units reinvest income, while distribution units pay income to investors.
C. Accumulation units are only available to institutional investors.
D. Distribution units are only available for fixed-income funds.

5. What is the bid-offer spread in the context of unit trusts?

A. The difference between the price at which units are bought and sold.
B. The annual management fee charged by the fund manager.
C. The tax applied to dividend income from unit trusts.
D. The initial charge for purchasing units in a unit trust.

6. What is the role of the trustee in a unit trust?

A. To manage the day-to-day investments of the fund.
B. To ensure the fund manager complies with the trust deed and protects investors.
C. To set the unit prices for buying and selling.
D. To distribute income to unit holders.

7. How are unit trust prices typically determined?

A. By the fund manager based on market conditions.
B. By the trustees based on the trust deed.
C. By the Financial Conduct Authority.
D. By the stock exchange where the units are traded.

8. What is the tax treatment of income from an equity-based unit trust?

A. It is taxed as interest income.
B. It is treated as dividend income and subject to the dividend allowance.
C. It is exempt from income tax.
D. It is taxed at a fixed rate of 20%.

9. What is the primary purpose of a single-price system in unit trusts?

A. To allow units to be traded on the stock exchange.
B. To increase the bid-offer spread.
C. To reduce the annual management charge.
D. To simplify the pricing structure for investors.

10. What is the main responsibility of the unit trust manager?

A. To act as the trustee and protect investors' interests.
B. To issue unit certificates to investors.
C. To manage the fund's investments in line with the trust deed.
D. To collect and distribute income from the trust's assets.

Pension Products Quiz

1. What is the primary purpose of tax reliefs on pension contributions?

A. To reduce the overall tax burden on employers.
B. To encourage people to save for retirement.
C. To increase the state pension fund.
D. To provide immediate income to pensioners.

2. Which of the following is a characteristic of a defined-benefit pension scheme?

A. The benefits depend on investment performance.
B. The pension amount is managed by the employer.
C. Contributions are made only by the employee.
D. The employer guarantees a specific pension amount.

3. What is the current minimum pension age for accessing retirement benefits in the UK?

A. 50
B. 55
C. 60
D. 67

4. Which of the following is true about auto-enrolment into workplace pensions?

A. Employees must be aged 22 or over and earn more than £10,000.
B. It applies only to employees earning over £50,000.
C. It is a legal requirement for all full time employees.
D. Employees can opt out before being enrolled.

5. What is the maximum tax-free lump sum someone can take from their pension under the Lump Sum Allowance?

A. £100,000
B. £268,275
C. £500,000
D. £1,073,100

6. Which of the following is a feature of a stakeholder pension?

A. Charges can exceed 2% of the fund value.
B. Entry and exit charges are permitted.
C. The minimum contribution cannot be more than £20.
D. It is only available to higher-rate taxpayers.

7. What happens to the annual allowance if an individual starts accessing their pension via flexi-access drawdown?

A. It increases to £100,000.
B. It remains unchanged.
C. It is replaced by the Money Purchase Annual Allowance.
D. It is recalculated annually.

8. Which of the following is a key difference between AVCs and FSAVCs?

A. AVCs are made from taxed income, while FSAVCs are made from gross income.
B. AVCs are deducted from gross income, while FSAVCs are made from taxed income.
C. AVCs are only available to self-employed individuals.
D. FSAVCs are managed by the employer.

9. What is the main advantage of an annuity purchase?

A. It provides flexibility in accessing pension funds.
B. It is tax-free.
C. It allows for continued investment growth.
D. It offers a guaranteed income for life.

10. Which of the following is a feature of a Self-Invested Personal Pension?

A. It restricts investment options to conventional pension funds.
B. It allows access to a wider range of investments, such as direct shareholdings.
C. It is only available to employees of large corporations.
D. Premiums are charged similar to the insurance industry.