Family Financial Management
Exam Materials
Course Introduction
Family Financial Management explores the principles and practices necessary for effective management of personal and family finances. This course covers key topics such as budgeting, saving, investment strategies, credit management, risk management, insurance, and retirement planning. Students will develop skills in financial decision-making, set short- and long-term financial goals, and understand the impact of economic and social factors on family finances. Emphasis is placed on developing practical strategies for attaining financial stability and well-being throughout various stages of the family lifecycle.
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 invested $10 000 when you turned 20 years of age and received a return of 11 percent annually,you would have over two million dollars when you turned 70.
A)True
B)False
Answer: False
Q2) 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
Q3) Ten percent compounded quarterly with 10 years' investment means 40 compounding periods.
A)True
B)False Answer: True
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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) Bills that are to be paid off within a year are called
A)short-term liabilities.
B)one-year liabilities.
C)current liabilities.
D)insignificant bills.
Answer: C
Q2) Ben's salary is $3000 per month,taxes are $500,fixed expenses are $1500 and savings are $500.His disposable income is A)$1500.
B)$3000.
C)$2500.
D)$500.
Answer: C
Q3) A low liquidity ratio means that
A)you have very few debts.
B)you will not likely have trouble paying your monthly bills.
C)you probably will have trouble paying your monthly bills.
D)you have many liquid assets.
Answer: C
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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) For qualified individuals,a contribution to a registered retirement savings plan (RRSP)will be
A)a tax credit.
B)a deduction from total income.
C)eligible to be transferred to a spouse
D)a deduction from federal tax payable.
Answer: B
Q2) For people in the highest marginal tax bracket,which would save them the largest financial benefit?
A)A $10 000 RRSP contribution
B)A $10 000 RESP contribution.
C)A $10 000 TFSA contribution.
D)These would all be the same.
Answer: A
Q3) You have to file a personal tax return by April 30 each year only if the Canada Revenue Agency sent you a request to file.
A)True
B)False
Answer: False
Page 5
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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) You are charged by your bank,but not by the institution you wrote the cheque to,for writing an NSF cheque.
A)True B)False
Q2) Rashid's monthly expenses are $4000 and he expects that his cash flow will always be sufficient to cover his expenses.How much should he ideally have in his emergency fund?
A)$12 000 using a combination of liquid investments and access to credit B)$24 000 because it is always best to be safe
C)None,but he needs a $24 000 limit on his credit card.
D)$12,000 invested in two- to three-year GICs to earn a higher return
Q3) Research two financial institutions on the web and compare them based on important factors you should consider when choosing a financial institution.What advantages do they each give to students? How does that change once one is no longer a student? Indicate and justify which institution you feel would be better for you.Cite your sources.
Q4) Investments with a higher risk of default pay higher rates of interest than those that are less risky.
A)True B)False
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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) The most important element affecting your credit score is your debt level.
A)True
B)False
Q2) Making extra payments on a loan
A)reduces the total interest paid.
B)frees up cash flow for other expenses.
C)lengthens the maturity of the loan.
D)reduces the size of future payments.
Q3) If you apply for a payday loan of $1000 from a financial institution for 10 days,you pay back $1150.What is the cost of financing this payday loan?
Q4) The best policy regarding credit is
A)always go for the highest credit limit possible.
B)always make the minimum payment.
C)pay back debt using consistent payments every month.
D)take steps to increase your credit score.
Q5) Explain how use of a credit card can affect the successful implementation of a financial plan.Itemize at least ten benefits and disadvantages of using credit cards in the financial planning process.
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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) If the average price of homes you are considering went from $300 000 to $330 000 last year,it would make sense to estimate that they should be worth around $439 000 in three more years.
A)True
B)False
Q2) Ianna has found a fixed rate mortgage for $300 000 at four percent interest amortized over 30 years.Her payment will be $1426 per month.How much would her payment be if she wanted to amortize the mortgage over 15 years?
A)$2219
B)$1733
C)$2214
D)$1711
Q3) Which of the following options regarding a $200000 mortgage,compounded semi-annually requires the lowest total interest payment?
A)A 4.0 percent interest rate,paid monthly and amortized over 15 years
B)A 3.5 percent interest rate,paid monthly and amortized over 20 years
C)A 3.5 percent interest rate,paid biweekly and amortized over 18 years
D)A 3.25 percent interest rate,paid monthly and amortized over 22 years
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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) Refusing to go bungee jumping is
A)avoiding risk.
B)accepting risk.
C)transferring risk.
D)sharing risk.
Q2) 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
Q3) Insurance protects you against potential financial losses or liability that results from unexpected events.
A)True
B)False
Q4) If Fred caused a car accident and his passenger required expensive medical care as a result,his third Chaptery liability coverage would first be used to cover those expenses.
A)True
B)False
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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) Some disadvantages of term insurance are that it increases in cost when you renew it and that it has no value when it matures or you discontinue your policy.
A)True
B)False
Q2) Critical illness insurance benefits are paid out to disabled employees on a monthly basis.
A)True
B)False
Q3) In comparing term insurance with mortgage life insurance,which of the following is true?
A)The premiums decrease with mortgage insurance but not with term insurance.
B)Mortgage insurance is less expensive because of the group discount.
C)The owner has more control with term insurance.
D)Mortgage insurance is guaranteed renewable.
Q4) The cost of having an aide provide basic care such as assistance with feeding and dressing can easily cost over $50 000 per year.
A)True
B)False
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Chapter 4: Personal Investing - Investing Fundamentals
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89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/9175
Sample Questions
Q1) For someone whose salary is $120 000,what type of investment income receives the lowest tax consequences?
A)Dividends
B)Interest
C)Capital gains
D)Trust income
Q2) If you wish to have a direct voice in the running of a company,you should purchase A)directorships.
B)debentures.
C)common stock.
D)preferred stock.
Q3) Owners of common stock have the right to vote on key corporate issues and have the last claim to the profits of a company.
A)True
B)False
Q4) Low-risk bonds tend to offer higher interest payments.
A)True
B)False
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11
Chapter 4: Personal Investing - Investing in Stocks
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84 Verified Questions
84 Flashcards
Source URL: https://quizplus.com/quiz/9176
Sample Questions
Q1) How much should a share of stock be worth for a firm whose earnings per share are $4 if the industry's average P/E is 11?
A)$40
B)$44
C)$48
D)$88
Q2) A brokerage firm currently limits the margin rate to 70 percent.The amount that can be borrowed for a transaction to buy 100 shares at $50 is
A)$4000.
B)$3500.
C)$5000.
D)$1500.
Q3) One of the most commonly used measures of inflation is the A)gross domestic product.
B)fiscal policy.
C)consumer price index.
D)inflation factor.
Q4) Discuss investing on margin,illustrating the positives and negatives of this investing technique.Illustrate with a specific example.
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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) Leonardo purchased a bond today with an 8 percent semi-annual coupon and with a face value of $15000 .A semi-annual coupon is due in exactly one month and the bond was priced at 94.8.What was the total price for the bond?
Q2) Given the following bond information: Issuer coupon maturity price yield
Ontario 3.150 2022-Jun-02 99.00 3.28
What would be the taxable income on this bond if it were purchased at this price on June 1st and sold December 1st for a price of 103.00 and has face value of $20 000 and a semi-annual coupon payment?
A)Taxable capital gain of $800 and interest of $630.
B)Taxable capital gain of $400 and interest of $315.
C)Taxable capital gain of $1600 and interest of $656.
D)Taxable capital gain of $200 and interest of $157.50.
Q3) Bonds with a high degree of default risk are most susceptible to default when economic conditions are
A)strong.
B)weak.
C)stable.
D)expanding.
Q4) List and describe three strategies to invest in bonds.
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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) Which of the following bond mutual funds have both the highest default risk and interest rate risk?
A)Long-term AAA corporate bonds
B)Short-term BBB corporate bonds
C)Short-term high-yield corporate bonds
D)High-yield long-term corporate bonds
Q2) Global bond funds potentially offer higher yields than Canadian bond funds,but have higher MERs and more risk.
A)True
B)False
Q3) Which of the following applies to global bond funds in comparison to Canadian bond funds?
A)They are a safe way to ensure higher yields.
B)They have less interest rate risk,but more exchange rate risk.
C)The currency rate risk is offset by the diversification benefits.
D)They have potential for higher yields and have higher risk.
Q4) If you own seven mutual funds further diversification is not recommended.
A)True
B)False
Q5) List considerations you should take into account when purchasing a mutual fund.
Page 14
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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) Which of the following applies to the CPP?
A)You will collect more total CPP if you claim it at age 60.
B)The amount you qualify for can be increased by up to 42% if you defer claiming it.
C)Most Canadians qualify for the maximum CPP retirement income.
D)It is a tax-free benefit that provides an income of roughly $16 000 per year.
Q2) Old Age Security benefits
A)can be deferred five years which would increase your benefit by 36%.
B)begins to be clawed back for people whose income reaches $50,000.
C)can be claimed at age 60,but at a reduced amount.
D)are a nontaxable benefit.
Q3) Before the end of the year in which you have your 71st birthday
A)you must transfer your RRSP assets to a RRIF.
B)the assets inside your RRSP must be converted to cash and placed in a RRIF.
C)you must pay tax on the profits sheltered in your RRSP.
D)you must start annual withdrawals of 18 percent of the value of your RRIF.
Q4) A pension assignment is when a married or common-law couple decides to share their CPP retirement pensions in order to reduce their income taxes.
A)True
B)False
Page 15
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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) Explain the differences between and the importance of using continuing and non-continuing forms of a power of attorney in estate planning.
Q2) Minor changes to a will can be made with a simple document called a codicil.
A)True
B)False
Q3) If an administrator is appointed to settle an estate,this can cause delays,additional expenses and decisions the testator would not have wished.
A)True
B)False
Q4) A trust involves the transfer of assets to a third Chaptery who manages these assets for a beneficiary.
A)True
B)False
Q5) The document that describes funeral preferences and indicates where key financial records are kept is called the letter of last rites.
A)True
B)False
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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) Which of the following will increase your net worth over time?
A)Leasing a car
B)Renting a house
C)Buying a house
D)Term insurance
Q2) Which of the following increases your net worth?
A)Experiencing investment growth in your retirement savings
B)Starting a pension plan
C)Cashing in an investment to pay off a loan
D)Purchasing a new car
Q3) Budgeting allows you to forecast how much money you will have at the end of each month so you can determine how much you will be able to invest in assets.
A)True
B)False
Q4) Retirement and estate planning do not need to be addressed until you are closer to retirement age.
A)True
B)False
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