CeMAP - Unit 1 - Mock Exams

1. Question

Money has three primary functions. Which one of the following is not a primary function of money?

serve as a Medium of Exchange

be used as a Unit of Account

be Portable

be used as a Store of Value

2. Question

What are the common characteristics between building societies, friendly societies and credit unions?

They are LTD companies.

They are owned by their members.

They are owned by shareholders.

They have regular shareholder meetings.

3. Question

The Bank of England (BOE) is the Central Bank of the UK.

A central bank:

Acts as a banker to the Government,

Supervises the economy

Regulates the supply of money

All of the above

4. Question

Ethan has spent time working abroad, and now on his return to the UK, he wishes to fill the gaps for National Insurance Contributions, which one of the classes of NICS will Ethan pay to fill in the gap?

Class 1

Class 2

Class 3

Class 4

5. Question

Which one of the following is not usually a Mutual Organisation?

Friendly Societies

Building Societies.

Credit Unions

Banks

6. Question

Which one of the following is not considered as ‘General Insurance’?

Private Motor Insurance

Critical Illness Cover

Buildings Insurance

Contents Insurance

7. Question

The Government sets the Bank of England an inflation target of:

1%

2%

3%

4%

8. Question

Under the government’s Macroeconomic/Economic Policy Key Objectives, when the UK imports goods or services into the UK, it is classed as a:

Credit

Debit

Disinflation

Deflation

9. Question

Which of the following statements is correct regarding a warrant?

A warrant is the right to either buy or sell shares at a certain price, quantity and future time.

Warrants are usually issued by a third party and not the company itself.

A warrant is an obligation to buy an underlying security at a certain price, quantity and future time.

A warrant is the right but not the obligation to buy an underlying security at a certain price, quantity and future time.

10. Question

A deficit budget is where:

The amount collected from tax is put back into spending and this has a neutral effect on the economy.

The government has taken more in taxes than put back into public spending. This can cause the economy to contract as more tax is taken than needed.

The public spending is greater than the tax collected. This can increase inflation as the government borrows more.

There are more imports into the country than exports.

11. Question

Which of the following is false in relation to a credit union?

The savers invest in units of £1 with each unit buying a share in the credit union.

The loan will not be paid on death unless there is a separate life assurance policy purchased.

The union lends out at a rate of 1-3% per month on the reducing balance.

Each purchased share pays a dividend annually. The dividend is usually 2-3 per cent.

12. Question

What is the maximum investment limit for an NS&I Direct Saver account?

£20,000

£50,000

£1,000,000

£2,000,000

13. Question

Josh decided to invest in preference shares as he wanted to ensure that he:

Receives future dividend payments ahead of other shareholders.

Is guaranteed voting rights.

Can convert them to ordinary (common) shares.

Receives a discount on the share price.

14. Question

Freya is a Higher-Rate Taxpayer and has an Equity-Based unit trust from which she receives an annual income of £5,000.

How much tax will she have to pay?

£225.00

£975.00

£1,143.00

£1,800.00

15. Question

Which of the following charges can apply to Open Ended Investment Companies?

Select all that apply:

Dilution Levy

Policy Fee.

An Annual Management Charge

An initial charge

16. Question

In respect of a unit trust, what does the cancellation price represent?

The price that managers buy back units.

The minimum permitted bid price, taking into account the full cost of buying and selling.

The maximum permitted bid price, taking into account the full cost of buying and selling.

The price which investors buy units from managers.

17. Question

What have UK authorities switched to in 2021 for the primary interest rate benchmark in sterling markets?

MAISIE

SONIA

LISA

MARY

18. Question

The principal difference between an interest-only mortgage and a repayment mortgage is which one of the following?

Life cover is automatically built-in with a repayment mortgage but not with an interest-only mortgage.

The loan is guaranteed to be repaid on a repayment mortgage at the end of the term whereas the loan is not repaid on an interest-only mortgage.

Interest rate fluctuations affect only interest-only mortgages and not repayment mortgages.

The interest rate charged is significantly lower on interest-only mortgages compared to repayment mortgages.

19. Question

What type of mortgage guarantees the interest rate to stay the same for a set period of time, usually 1 to 5 years?

Standard Variable Rate Mortgage

Discounted Rate Mortgage

Capped Rate Mortgage

Fixed-Rate Mortgage

20. Question

Which mortgage interest option offers a variable interest rate, but has a fixed upper and lower limit?

Capped Rate

Low-Start Mortgage

Base Rate Tracker

Capped and Collar

21. Question

What does Gift Inter Vivos cover provide cover for?

A potential Capital Gains Tax liability.

A potential Inheritance Tax Liability.

A potential income tax liability from savings interest.

A potential Stamp Duty liability.

22. Question

Which life insurance endowment policy is considered the most ‘flexible’?

Non-Profit Endowment

Low-Cost with Profit Endowment

Full With-Profit Endowment

Unit-Linked Endowment

23. Question

Which one of the following is not classed as “Earned Income”?

Dividends from an investment.

Commission from employment.

Profit from self-employment.

Salary from employment.

24. Question

On his death, Jimmy was a resident in the UK for 16 of the last 20 years. Inheritance tax would apply to all of his assets:

Worldwide.

In any country without a double taxation agreement with the UK.

In Europe.

In the UK only.

25. Question

Which one of the following would be classed as non-taxable income?

Gross Salary

Income from ISAs

Dividends

Rental Income

26. Question

UK residents who are domiciled in the UK will be required to pay Capital Gains Tax on profit/gains made on assets:

In the UK only.

In the EU only.

Worldwide.

Worldwide only if the asset value was over £50,000.

27. Question

If Adam gifted his daughter £500,000 in September 2020, How long would Adam need to live for until the gift becomes fully exempt from Capital Gains Tax?

Until September 2026

Until September 2024

Until September 2026

Until September 2027

28. Question

In a Fact Find the adviser needs to gather both soft facts and hard facts from the client.

Which of the following are considered ‘hard facts’?

Select any answers that apply

The client's attitude towards risk.

The client's income.

The client's expenditure.

The client's plans.

29. Question

Roman has ‘died intestate’, what does this mean?

Roman died with a partial will in place.

Romain died with a full will in place.

Roman died without a valid will in place.

Roman's will was changed before his death.

30. Question

Roman died intestate leaving a spouse, two children and an estate valued at £270,000. Which one of the following would apply:

The surviving spouse and children share the estate equally – £90,000 each.

The spouse receives 50% of the estate (£135,000) and the remaining 50% is split between the children (£67,500 each).

The spouse receives the entire £270,000 estate.

As Roman died intestate the entire estate goes to the Crown.

31. Question

Vikram died intestate leaving behind an estate valued at £300,000. Vikram did not have a spouse, children or any other living relatives. Who will receive Vikrams estate?

The Crown (The government)

The local authority.

His friends

A local charity

32. Question

Tobi died intestate leaving behind a spouse, 3 children and an estate valued at £400,000. Which one of the following would apply:

The surviving spouse and children share the estate equally – £100,000 each.

The spouse receives 50% of the estate (£200,000) and the remaining 50% is split between the children (£66,666 each).

The spouse receives the entire £400,000 estate.

The spouse receives the first £270,000 and 50% of the remaining estate (£65,000), the children receive the remaining estate.

33. Question

When a person becomes bankrupt, how long is the person referred to as an undischarged bankrupt?

12 months.

3 years.

6 years.

Until the debt is repaid.

34. Question

Caveat Emptor (Let the buyer beware) essentially means that:

Neither party is required to disclose information to the other party unless asked to do so.

The proposer is required to sign a contract that all material facts have been disclosed.

Only the proposer is not required to disclose information to the other party unless asked to do so.

Both parties must disclose the information even if not asked otherwise the contract is void.

35. Question

Ratification is when:

The agent acts outside of the set terms, and the principal does not agree afterwards that the action was acceptable.

The agent carries out actions that are outside of their remit, but the principal is aware of this.

The agent acts outside of the set terms, but the principal agrees afterwards that the action was acceptable.

The agent acts within their remit.

36. Question

What is charged by a mortgage lender when the amount borrowed exceeds a given percentage of the value of the property?

An Arrangement Fee

A Higher Lending Charge

A Staircasing Fee

A Conveyancing Fee

37. Question

An institution that serves as a middleman for various parties to facilitate a transaction is called:

An Attorney

A Trustee

A Financial Intermediary

A Testator

38. Question

Amy is an undischarged bankrupt which means she:

can take out a mortgage providing it's a residential mortgage.

can take out a mortgage providing LTV is below 75%.

may not be able to take out a mortgage.

cannot take out a mortgage for at least 10 years.

39. Question

Which type of ‘Power of Attorney’ covers decisions about financial affairs and is valid while the donor has mental capacity?

General Power of Attorney.

Lasting Power of Attorney.

Enduring Power of Attorney.

All of the above.

40. Question

James is a first-time buyer and is purchasing a residential home for £290,000. How much Stamp Duty Land Tax will James need to pay?

£0

£4,500

£5,800

£14,500

41. Question

Under the ‘Residential Bulk Buying’ rules, how is Stamp Duty Land Tax calculated?

SDLT is calculated on the total value of the properties.

SDLT is calculated based on the least expensive property purchased.

SDLT is calculated based on the most expensive property purchased.

SDLT is calculated on the average price of the properties.

42. Question

Simone is a first-time buyer purchasing a residential property for £490,000. How much Stamp Duty Land Tax will she pay?

£0

£9,500

£24,500

£14,500

43. Question

What is the Stamp Duty Land Tax additional surcharge for buy to lets and second properties?

2%

3%

4%

5%

44. Question

Which one of the following is not exempt from Capital Gains Tax?

Ordinary Private Motor Vehicles.

ISAs.

Jewellery valued below £6,000.

Stocks and Shares.

45. Question

In relation to Income Protection Insurance (IPI) the occupation of the life insured plays a crucial part in premiums.

Which profession would be classed as Class 4 (Highest Risk) for insurers?

Machine Operator.

Customer Service Agent (Call Centre).

Pharmacist.

Electrician.

46. Question

What type of mortgage is linked to the borrower’s savings account where the customer will not receive interest on their savings but will save interest on the mortgage?

a Cashback Mortgage

an Offset Mortgage

A Flexible Rate Mortgage

A Discounted Rate Mortgage

47. Question

Samantha is a Higher-Rate Taxpayer and she receives £4,000 per annum in interest from her savings. How much tax will Samantha need to pay on the interest?

£0

£1,200

£1,400

£1,600

48. Question

Ash is a higher-rate taxpayer and receives a dividend income of £6,000 per annum. How much tax will Ash have to pay?

£1,300

£1,524