Personal Finance
Question Bank
Course Introduction
Personal Finance provides students with essential knowledge and practical skills to effectively manage their personal economic resources throughout life. This course covers fundamental topics such as budgeting, saving, credit management, investing, insurance, retirement planning, and tax basics. Emphasis is placed on developing informed decision-making skills to achieve financial goals, avoid common pitfalls such as excessive debt, and build a secure financial future. Through real-life case studies and hands-on activities, students learn to create personal financial plans and adapt them to evolving life situations, empowering them for lifelong financial well-being.
Recommended Textbook
Personal Finance 4th Canadian Edition by Jeff Madura
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15 Chapters
1325 Verified Questions
1325 Flashcards
Source URL: https://quizplus.com/study-set/496
Page 2
Chapter 1: Tools for Financial Planning - Applying Time
Value Concepts
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86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/9163
Sample Questions
Q1) If you borrow money,you will receive interest.
A)True
B)False
Answer: False
Q2) What is the future value of $200 deposited today at eight percent interest compounded annually for three years?
A)$252
B)$250
C)$248
D)$249
Answer: A
Q3) You will receive $100 at the end of year one,$200 at the end of year two,and $300 at the end of year three.What is the present value of these cash flows today if the discount rate is 13 percent annually?
A)$553
B)$453
C)$423
D)$383
Answer: B
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Chapter 1: Tools for Financial Planning - Planning with
Personal Financial Statements
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101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/9164
Sample Questions
Q1) What is a practical way to make sure you stay within your budget and achieve your savings goals?
A)Use the pay yourself first method.
B)Use a credit card for all expenses.
C)Reduce your spending.
D)Get a second job.
Answer: A
Q2) Assets valued at $400 000 with liabilities of $300 000 means a liquidity ratio of 3 to 1.
A)True
B)False
Answer: False
Q3) Getting financial help from family and friends should be your first options in case of emergencies.
A)True
B)False
Answer: False
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Chapter 1: Tools for Financial Planning - Using Tax Concepts for Planning
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89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/9165
Sample Questions
Q1) The Canada Eduction Savings grant is taxable to the beneficiary when paid from a Registered Education Savings Plan (RESP).
A)True
B)False
Answer: True
Q2) If a stock was purchased for $3000 in January 2003 and is sold in June 2003 for $4000,what is the taxable result?
A)Capital gain of $1000 and taxable income of $500
B)Business income of $1000 and taxable amount of $1000
C)Capital gain of $1000 and taxable income of $1000
D)Taxable capital gain of $1000
Answer: A
Q3) Samantha filed her tax return on August 1st and paid her $4000 balance owing.If the prescribed interest rate is 5%,how much did she owe in total?
A)$4050
B)$4320
C)$4000
D)$4370
Answer: D
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Chapter 2: Managing Your Financial Resources - Banking
Services and Managing Your Money
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86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/9170
Sample Questions
Q1) Investments with a higher risk of default pay higher rates of interest than those that are less risky.
A)True
B)False
Q2) You have $5000 saved which you may need for home repairs at any time in the next few years.If you did need the funds,you would have a weeks' notice to access the funds.Which of the following would likely give you the best return for your $5000?
A)A three-year cashable GIC outside a TFSA
B)A three-year cashable GIC in a TFSA account
C)A savings account
D)A three-year term deposit in a TFSA account
Q3) Mortgage companies
A)take deposits,savings,and term deposits and lend the money to home buyers.
B)act as intermediaries to provide mortgages for home buyers.
C)facilitate the purchase and sale of mortgages.
D)allow individual investors to achieve higher returns by direct investment in mortgages.
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Chapter 2: Managing Your Financial Resources -
Assessing,Managing and Securing Your Credit
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98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/9171
Sample Questions
Q1) Which of the following statements is true regarding a review of your credit agency report?
A)You will not have authority to make corrections,as the information must come from a financial institution.
B)It will help determine if there are credit cards you should apply for to improve your credit standing.
C)It will reveal if you have sufficient income to carry additional debt.
D)It will reveal deficiencies that you can work on to improve your credit rating.
Q2) Someone with a credit score of 800 will pay a higher interest rate than someone with a score of 820.
A)True
B)False
Q3) A credit bureau report may include
A)your account history.
B)your spouse's name.
C)a list of debtor contacts.
D)all of the above.
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Page 7
Chapter 2: Managing Your Financial Resources -
Purchasing and Financing a
Home
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86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/9172
Sample Questions
Q1) A 15-year mortgage compared to a 30-year mortgage has
A)higher total principal payments.
B)lower monthly payments.
C)higher total payments.
D)lower total payments.
Q2) If Adam's house was purchased for $280 000 five years ago and is worth $296000 now,and his mortgage was $224000 and amortized over 25 years,at four percent interest,compounded semi-annually,what is his equity in his house now? (To the nearest $1000)
A)$101 000
B)$72 000
C)$85 000
D)Not enough information given to answer this
Q3) For a $72 000 mortgage at nine percent,the monthly payments would be $730 for a 15-year mortgage and $579 for a 30-year mortgage.What would be the expected total savings in interest by taking a 15-year mortgage?
A)$27 180
B)$54 360
C)$77 040
D)$131 000
Page 8
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Chapter 3: Protecting Your Wealth - Auto and Homeowner's Insurance
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88 Verified Questions
88 Flashcards
Source URL: https://quizplus.com/quiz/9173
Sample Questions
Q1) If Jack damages his car by skidding on ice and colliding with a fence,his property damage liability would cover the damage to his car.
A)True
B)False
Q2) Which of the following actions is a suggestion to reduce your homeowner's insurance?
A)Install better locks or a security system.
B)Make prompt small claims against your policy.
C)Eliminate your deductible all together.
D)Decrease your liability coverage.
Q3) Third Chaptery liability insurance coverage would cost more for an expensive car than for an inexpensive car of the same age.
A)True
B)False
Q4) Using one insurer for all types of insurance will not reduce your homeowner's insurance premium.
A)True
B)False
Page 9
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Chapter 3: Protecting Your Wealth - Health and Life Insurance
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95 Verified Questions
95 Flashcards
Source URL: https://quizplus.com/quiz/9174
Sample Questions
Q1) If you become disabled while employed and have disability insurance coverage,what types of resources might you have to cover you during the waiting period?
Q2) Some advantages of whole life insurance are that it can provide coverage until death,the premiums and death benefit are guaranteed,and there is a savings or cash value feature.
A)True
B)False
Q3) What happens if a policyholder with a universal life insurance policy misses a payment?
A)The policy is terminated after 30 days.
B)The cash value is refunded and the policy terminated.
C)Funds are withdrawn from the cash value to pay the premium.
D)The policy is terminated after 60 days.
Q4) Your life insurance policy can be terminated if you understate your age on the application form.
A)True
B)False
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Q5) From the employer's perspective,describe four advantages for group health insurance plans.
Chapter 4: Personal Investing - Investing Fundamentals
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89 Verified Questions
89 Flashcards
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Sample Questions
Q1) Amalgamated Monkey Nuts Inc.has a range of returns between 4 percent and 7 percent while Moose Pasture Minerals Ltd.has a range of returns between 3 percent and 10 percent.This means
A)Amalgamated Monkey Nuts Inc.is a less risky stock.
B)Moose Pasture Minerals Ltd.is a less risky stock.
C)Amalgamated Monkey Nuts Inc.is a more risky stock.
D)Moose Pasture Minerals Ltd.is a better investment.
Q2) If you invest $1000 in stock that pays no dividends and sell the stock exactly one year later for $1100,what will be your return? (Ignore commissions and trading fees.)
A)1 percent
B)5 percent
C)10 percent
D)100 percent
Q3) Taking a loan for $5000 to invest in a conservative portfolio is always more risky than saving $5000 to invest in the conservative portfolio.
A)True
B)False
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Chapter 4: Personal Investing - Investing in Stocks
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84 Verified Questions
84 Flashcards
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Sample Questions
Q1) You bought IBM stock at $70 per share.It is now $120 a share.You think it could go higher but you are nervous that it could go down and you would lose your gains.To protect your gains but still give yourself the chance to make future profits,you could place a
A)limit order to sell for $130 a share.
B)sell stop order at $110 a share.
C)limit order to sell for $110 a share.
D)sell stop order at $130 a share.
Q2) What is the fair market value of a preferred share that pays $2.25 in dividends per year when long-term government bond yield is 5.42 percent annually?
Q3) Computer systems that match up buyers and sellers of stocks or bonds are
A)the NYSE Euronext exchange.
B)the over-the-counter (OTC)markets.
C)the Toronto Stock Exchange.
D)the national stock exchanges.
Q4) Fundamental analysis is the valuation of stocks based on sensitivity of the firm's performance to economic conditions.
A)True
B)False
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Chapter 4: Personal Investing - Investing in Bonds
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86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/9177
Sample Questions
Q1) Rejean purchased a 20-year 6 percent real return bond for $15 000 and the CPI has increased by 1.5 percent in the first year.What interest payment will Rejean receive in the second year?
Q2) Investors are willing to purchase bonds with a call feature only if the bonds offer a A)slightly lower return than similar bonds without a call feature.
B)slightly higher number of shares of the issuer's stock.
C)slightly higher interest rate than similar bonds without a call feature.
D)sinking fund provision.
Q3) A bond with a credit rating of AA is riskier than a bond with a credit rating of A. A)True B)False
Q4) When the economic conditions are weak,bonds with higher default risk become more susceptible.
A)True
B)False
Q5) Callable bonds and mortgage backed securities both have prepayment risk.
A)True
B)False
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Chapter 4: Personal Investing - Investing in Mutual Funds
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85 Verified Questions
85 Flashcards
Source URL: https://quizplus.com/quiz/9166
Sample Questions
Q1) A fund with a favourable historical track record is likely to continue to outperform funds with similar objectives in the future.
A)True
B)False
Q2) The units of a segregated fund differ from the units of a mutual fund in that
A)a segregated fund does not report a NAV.
B)the units of the segregated fund are owned by the unit holder.
C)each unit is insured from the date of purchase.
D)the units of the segregated fund are owned by the insurance company.
Q3) A conservative investor should only invest in a variety of bond mutual funds.
A)True
B)False
Q4) Which of the following uses the most risky strategies?
A)Sector funds
B)Hedge funds
C)Segregated funds
D)Small-Cap funds
Q5) List ten types of bond mutual funds in order of least risk to highest,considering multiple risk factors and indicate which ones are most crucial for each type.
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Chapter 5: Retirement and Estate Planning - Retirement Planning
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84 Verified Questions
84 Flashcards
Source URL: https://quizplus.com/quiz/9167
Sample
Questions
Q1) You are retiring and the balance of your RRSP is $203 126.What amount of monthly income could this provide you for 20 years if you can get a four percent annual return?
A)$1223
B)$846
C)$880
D)$1782
Q2) All of your contributions to RPPs and RRSPs are tax deductible dollar for dollar against gross earned income.
A)True
B)False
Q3) Tax-free withdrawals can be made from an RRSP under which of the following circumstances?
A)Each spouse can withdraw $40 000 tax-free for the purchase of a house.
B)You can withdraw $10 000 under the Lifelong Learning Plan to educate your children.
C)You can withdraw any amount necessary to pay off your mortgage if over 55 years of age.
D)You can withdraw $10 000 for two years for your spouse to be a full time student.
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Page 15
Chapter 5: Retirement and Estate Planning - Estate Planning
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84 Verified Questions
84 Flashcards
Source URL: https://quizplus.com/quiz/9168
Sample Questions
Q1) A holograph will
A)is the most common will in Quebec.
B)remains in effect after a new marriage.
C)does not require the signatures of witnesses.
D)must be witnessed by a notary or lawyer.
Q2) Which of the following is the start of the probate process?
A)Payment of claims against the estate
B)The validation of the will
C)Determination of legal heirs
D)Filing the will and probate form with the court
Q3) To create a valid will,an individual must be
A)financially viable.
B)mentally competent.
C)physically competent.
D)visually competent.
Q4) If a spouse dies intestate all their assets will transfer to the surviving spouse.
A)True
B)False
Page 16
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Chapter 6: Synthesis of Financial Planning - Integrating the
Components of a Financial Plan
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84 Verified Questions
84 Flashcards
Source URL: https://quizplus.com/quiz/9169
Sample Questions
Q1) When considering the goal of funding retirement the best strategy is to A)rely on getting a job with a good pension plan.
B)ensure that you have enough cash flow to save in an RRSP or TFSA.
C)rely on CPP and OAS to look after most of your retirement needs.
D)pay off large purchases before opening an RRSP.
Q2) Paying off loans rather than making additional investments is appropriate when the expected investment return is higher than the interest rates on loans.
A)True B)False
Q3) All components of a financial plan start with A)your financial goals.
B)cost benefit analysis.
C)security planning.
D)budgeting.
Q4) Normally,you should use all of your liquid assets to pay off your loan.
A)True B)False
Q5) You must have assets to be able to access financing for large purchases.
A)True
B)False
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