CISI IAD Investment Risk and Taxation 2

Question 1

What is the current Inheritance Tax (IHT) nil-rate band in the UK?

Accepted Answer

£325,000

Answer

£250,000

Answer

£500,000

Answer

£1,000,000

Question 2

A client has a portfolio with a beta of 1.5. If the FTSE 100 falls by 10%, what is the expected portfolio decline based on beta alone?

Accepted Answer

15%

Answer

5%

Answer

10%

Answer

20%

Question 3

What is the annual allowance for pension contributions that receive tax relief for most individuals in 2025/26?

Accepted Answer

£60,000

Answer

£40,000

Answer

£50,000

Answer

£80,000

Question 4

Which risk measurement statistic indicates the degree to which a portfolio's returns deviate from its mean return?

Accepted Answer

Standard deviation

Answer

Beta

Answer

Alpha

Answer

Sharpe ratio

Question 5

For UK tax purposes, how are offshore funds that do not have 'reporting fund' status taxed on disposal?

Accepted Answer

Gains are taxed as income at the investor's marginal income tax rate

Answer

Gains are taxed as capital gains at CGT rates

Answer

Gains are completely tax-exempt

Answer

Gains are taxed at a flat rate of 15%

Question 6

What does the Sharpe ratio measure?

Accepted Answer

The risk-adjusted return of a portfolio relative to the risk-free rate

Answer

The absolute return of a portfolio

Answer

The correlation between two assets

Answer

The tax efficiency of an investment