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The Technical Quiz- June 28

To help you to keep up with the fundamentals of tax, retirement and financial planning, try answering these questions


How does an investment trust differ from a unit trust?

A: An investment trust cannot be sold to retail investors

B: An investment trust is managed by trustees

C)An investment trust is a company

D) An investment trust is exempt from corporation tax


Esme bought 3,000 units in a fund in 1985, which she still holds to this day. She is considering selling the units. When calculating the capital gain, which of the following will be allowed against the sale proceeds?

A: The original cost plus indexation to 1998 and taper relief

B: The original cost plus indexation to 1998

C: The original cost plus taper relief

D: The original cost only


With regard to investment trusts, what is meant by “gearing”?

A: The managers buying more shares when they are cheap

B: The managers borrowing money to invest

C: The managers buying when the markets rise and selling when the markets fall

D: The managers investing in derivatives to increase returns


What is the name given to the price at which a unit trust holder sells his units?

A: The open price

B: The offer price

C: The bid price

D: The closed price


If an investor holds accumulation units, how is the income that is accumulated treated for capital gains tax purposes?

A: The accumulated net income is added treated as part of the base cost

B: The accumulated net income is charged to CGT when the units are sold

C: The accumulated net income is deducted from the base cost when calculating the capital gain

D: The accumulated income is ignored for CGT purposes because it is income

Questions are set by Technical Connection

Answers: C, D, B, C, A


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