UNIVERSITY OF LAW PSC FINANCIAL AND BUSINESS SKILLS
ACTUAL EXAM 2026/2027 COMPLETE ACCURATE EXAM REAL
QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONALES (100% CORRECT VERIFIED SOLUTIONS) LATEST
UPDATED VERSION |GUARANTEED PASS A+ (BRAND NEW!)
|APPROVED EXAM
UNIVERSITY OF LAW – PSC FINANCIAL & BUSINESS SKILLS
DISTINCTION LEVEL EXAM 2026
Time allowed: 90 minutes
Total marks: 150
Instructions:
1. Attempt all questions.
Question 1 (30 marks) – Regulated Activities and the Regulated Activities Order
(FSMA)
A law firm is advising a client on whether money received from a client for a real estate
investment should be held in client account. The client then expresses an interest in buying units
in an Investment Trust.
Part A (10 marks):
Explain whether the firm is carrying on a regulated activity when it advises the client on the
investment.
Model Answer
Correct answer: yes – the firm is carrying on a regulated activity (advising on investments)
because it is giving specific advice about a security or relevant investment (investment trust
units).
Rationale: Under FSMA (Financial Services and Markets Act) and the Regulated Activities
Order (RAO), advising on investments (Art. 53 RAO) is a specified activity when a firm gives
,tailored recommendations on securities/relevant investments. A law firm advising a client to buy
units in an investment trust involves specific investment advice.
Part B (20 marks):
Identify three specified investments and two unspecified investments the firm should consider
when applying FSMA and the RAO. For each, explain the reason for classification.
Model Answer
Correct answer: specified investments include shares in investment trusts,
bonds/debentures, and futures; unspecified investments include cash ISA and land.
Rationale:
1. shares in investment trusts – this is a security under the RAO.
2. bonds/debentures – also classed as securities because they represent tradable financial
instruments.
3. futures – categorized as a relevant investment because they are a derivative product
regulated under the RAO.
4. cash ISA – this is unspecified because it represents a simple savings instrument not
normally caught by FSMA regulation as a regulated investment.
5. land – land on its own is not defined as a specified investment under the RAO.
Question 2 (30 marks) – Specified Activities and Application
A solicitor’s practice is asked to complete paperwork to introduce a client to a stockbroker and to
arrange the purchase of gilts on behalf of the client.
Part A (10 marks):
Explain whether arranging such purchases constitutes a specified activity under the RAO.
Model Answer
Correct answer: yes – arranging deals in investments is a specified regulated activity under
the RAO because the firm facilitates the client’s purchase of securities.
Rationale: Article 25 of the RAO defines arranging deals in investments as making
arrangements that enable a client to buy or sell a security or other relevant investment.
Introducing a client to a broker and completing paperwork with a view to a purchase meets the
criteria.
, Part B (20 marks):
Assess whether acting as trustee for a discretionary trust with securities in the investment
portfolio is a regulated activity and justify your answer.
Model Answer
Correct answer: yes – managing/discretionary investment decisions for assets belonging to
someone else (trust) is a specified activity (managing investments).
Rationale: A firm that exercises discretion to manage securities for others (e.g., as trustee) falls
under managing investments (Art. 37 RAO) because it involves sole decision-making over
investment portfolios that are not owned by the client.
Question 3 (30 marks) – Financial Skills and Business Acumen
Part A (10 marks):
State which financial statement provides a snapshot of a company’s financial position at a
specific point in time.
Model Answer
Correct answer: balance sheet.
Rationale: The balance sheet reports a company’s assets, liabilities and equity at a particular
date, giving a snapshot of financial position.
Part B (10 marks):
Define the concept of opportunity cost in financial decision-making.
Model Answer
Correct answer: the value of the next best alternative foregone when a decision is made.
Rationale: Opportunity cost represents the benefit that could have been gained by choosing the
next best alternative.
Part C (10 marks):
Identify which of the following is considered a current liability on a balance sheet: long-term
debt, goodwill, accounts payable, or property. Explain your choice.
ACTUAL EXAM 2026/2027 COMPLETE ACCURATE EXAM REAL
QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONALES (100% CORRECT VERIFIED SOLUTIONS) LATEST
UPDATED VERSION |GUARANTEED PASS A+ (BRAND NEW!)
|APPROVED EXAM
UNIVERSITY OF LAW – PSC FINANCIAL & BUSINESS SKILLS
DISTINCTION LEVEL EXAM 2026
Time allowed: 90 minutes
Total marks: 150
Instructions:
1. Attempt all questions.
Question 1 (30 marks) – Regulated Activities and the Regulated Activities Order
(FSMA)
A law firm is advising a client on whether money received from a client for a real estate
investment should be held in client account. The client then expresses an interest in buying units
in an Investment Trust.
Part A (10 marks):
Explain whether the firm is carrying on a regulated activity when it advises the client on the
investment.
Model Answer
Correct answer: yes – the firm is carrying on a regulated activity (advising on investments)
because it is giving specific advice about a security or relevant investment (investment trust
units).
Rationale: Under FSMA (Financial Services and Markets Act) and the Regulated Activities
Order (RAO), advising on investments (Art. 53 RAO) is a specified activity when a firm gives
,tailored recommendations on securities/relevant investments. A law firm advising a client to buy
units in an investment trust involves specific investment advice.
Part B (20 marks):
Identify three specified investments and two unspecified investments the firm should consider
when applying FSMA and the RAO. For each, explain the reason for classification.
Model Answer
Correct answer: specified investments include shares in investment trusts,
bonds/debentures, and futures; unspecified investments include cash ISA and land.
Rationale:
1. shares in investment trusts – this is a security under the RAO.
2. bonds/debentures – also classed as securities because they represent tradable financial
instruments.
3. futures – categorized as a relevant investment because they are a derivative product
regulated under the RAO.
4. cash ISA – this is unspecified because it represents a simple savings instrument not
normally caught by FSMA regulation as a regulated investment.
5. land – land on its own is not defined as a specified investment under the RAO.
Question 2 (30 marks) – Specified Activities and Application
A solicitor’s practice is asked to complete paperwork to introduce a client to a stockbroker and to
arrange the purchase of gilts on behalf of the client.
Part A (10 marks):
Explain whether arranging such purchases constitutes a specified activity under the RAO.
Model Answer
Correct answer: yes – arranging deals in investments is a specified regulated activity under
the RAO because the firm facilitates the client’s purchase of securities.
Rationale: Article 25 of the RAO defines arranging deals in investments as making
arrangements that enable a client to buy or sell a security or other relevant investment.
Introducing a client to a broker and completing paperwork with a view to a purchase meets the
criteria.
, Part B (20 marks):
Assess whether acting as trustee for a discretionary trust with securities in the investment
portfolio is a regulated activity and justify your answer.
Model Answer
Correct answer: yes – managing/discretionary investment decisions for assets belonging to
someone else (trust) is a specified activity (managing investments).
Rationale: A firm that exercises discretion to manage securities for others (e.g., as trustee) falls
under managing investments (Art. 37 RAO) because it involves sole decision-making over
investment portfolios that are not owned by the client.
Question 3 (30 marks) – Financial Skills and Business Acumen
Part A (10 marks):
State which financial statement provides a snapshot of a company’s financial position at a
specific point in time.
Model Answer
Correct answer: balance sheet.
Rationale: The balance sheet reports a company’s assets, liabilities and equity at a particular
date, giving a snapshot of financial position.
Part B (10 marks):
Define the concept of opportunity cost in financial decision-making.
Model Answer
Correct answer: the value of the next best alternative foregone when a decision is made.
Rationale: Opportunity cost represents the benefit that could have been gained by choosing the
next best alternative.
Part C (10 marks):
Identify which of the following is considered a current liability on a balance sheet: long-term
debt, goodwill, accounts payable, or property. Explain your choice.
