Family Financial Management
Test Bank
Course Introduction
Family Financial Management explores the principles and practices involved in making informed financial decisions within the family context. This course covers topics such as budgeting, saving, investing, credit use, managing debt, insurance, retirement and estate planning, and financial goal setting. Students will learn how to develop and implement strategies for effective resource allocation, evaluate financial products and services, and understand the impact of economic and social factors on family financial well-being. Through practical exercises and case studies, the course equips students with the skills necessary to create and maintain financial stability and security for individuals and families throughout various life stages.
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 could choose any of the following interest rates for your investment which would you choose to give you the highest return?
A)15% compounded annually
B)14% compounded semi-annually
C)14% compounded quarterly
D)14% compounded monthly
Answer: A
Q2) Ruby is expecting her first child next month and would like to have $80000 saved for university education when the child turns 17.If Ruby can get a 6.6 percent annual return on the education savings for her child,approximately how much does she need to start saving at the end of each month once the baby is born?
A)$2688
B)$392
C)$224
D)$218
Answer: D
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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) If your debt-to-asset ratio is less than 1,which of the following will improve it?
A)Taking out a line of credit
B)Buying a car with cash
C)Paying off a student loan
D)Buying stock with cash
Answer: C
Q2) Getting financial help from family and friends should be your first options in case of emergencies.
A)True
B)False
Answer: False
Q3) Property such as a person's home,car,and furniture is called
A)personal assets.
B)household assets.
C)major property assets.
D)long-term assets.
Answer: B
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Page 4
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) By what date must self-employed individuals file their income tax returns?
A)December 31
B)April 30
C)June 15
D)90 days after their fiscal year-end
Answer: C
Q2) A capital gain results from profit on the sale of capital assets.
A)True
B)False
Answer: True
Q3) Knowledge of individual income taxes is somewhat relevant to financial planning.
A)True
B)False
Answer: False
Q4) Income from outside of Canada is not subject to Canadian income tax.
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) Which of the following is a true statement about overdraft protection?
A)Overdraft protection is an inexpensive form of short-term credit.
B)Your bank may charge you for having overdraft protection even if you don't use it.
C)Overdraft fees are already included in your regular monthly bank fees.
D)Overdraft interest may be as high as 29% compounded daily.
Q2) Which short-term investment likely offers the highest return?
A)Savings account
B)Chequing account
C)GIC
D)Term deposit
Q3) 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
Q4) Mortgage companies pay more interest on deposits than a chartered bank.
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) Credit insurance
A)is a free benefit on most credit cards.
B)can be used to pay off all debt when a creditor becomes unemployed.
C)is a good substitute for health and disability insurance.
D)can cover monthly credit repayments if a consumer cannot work.
Q2) Revolving open-end credit typically does not specify a maximum amount that can be borrowed.
A)True
B)False
Q3) Posing as an employee of a financial institution to obtain information for purposes of identity theft is an example of pretexting.
A)True
B)False
Q4) Despite a high credit score,your income level may be the determining factor in whether you can get a loan.
A)True
B)False
Q5) Discuss six of the choices to be made when making a decision between leasing and buying a car with a personal loan.
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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 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
Q2) Malcolm has a down payment of $45 000 on a house valued at $200 000.He might be better off to borrow an additional $5000 on a personal loan to avoid the high ratio insurance premium.
A)True
B)False
Q3) What is the most important factor in determining the price of a home?
A)An estimate of the future value of the home for resale
B)The market analysis to find the per foot price of other homes nearby
C)The highest price you are willing to pay that the seller will accept
D)The quality of the structure and materials
Q4) Discuss in detail all of the factors that may affect the value of your investment in a home in the future.
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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) What would be the main benefit to Peter on the option of including a personal property floater in his insurance policy?
A)Reduce the amount of deductible in his insurance claims.
B)Extend liability insurance protection to his boat and secondary properties.
C)Receive replacement cost coverage in the event of insurance claims.
D)Extend his homeowner's insurance policy to cover certain expensive assets.
Q2) The best way to reduce your homeowner's insurance premiums is to
A)insure your home for 60 percent of its value.
B)drop coverage for medical payments.
C)increase deductibles.
D)eliminate liability coverage.
Q3) Your home insurance provides for replacement value for personal property losses.If your china hutch (ten year depreciation)was vandalized and completely destroyed and cost $400 four years ago,but a new one will cost $600,how much will the insurance company pay?
A)$400
B)$240
C)$600
D)Nothing,vandalism is not covered.
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 buy a term insurance policy with a conversion option,this means that you
A)can covert the policy to variable life insurance before it terminates.
B)can convert the amount of coverage by a set amount at the renewal time.
C)can convert it to a whole life policy before it terminates.
D)can convert it to a longer term at the renewal time.
Q2) Jane and Joe each earn $55 000 and have estimated that over the next 20 years will need 60 percent of total income to manage debt,pay off the mortgage,and pay for children's postsecondary education.How much life insurance should they apply for? (Investment returns are 6 percent.)
A)$587 000
B)$1 320 000
C)$843 000
D)$757 000
Q3) The income method,basing life insurance needs on multiples of current income,is the most useful method for determining how much life insurance a person should buy.
A)True
B)False
Q4) From the employer's perspective,describe four advantages for group health insurance plans.
Page 10
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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) You have invested $16 000.How long it will approximately take to accumulate $100000 at the fairly conservative rate of 6 percent?
A)38 years
B)34 years
C)28 years
D)31 years
Q2) Given the bank rate of 3.5 percent,and a corporate bond that will pay 10 percent.What is the risk premium?
A)13.5 percent
B)6)5 percent
C)7)5 percent
D)0 percent
Q3) You can reduce your investment risk most effectively through A)asset allocation.
B)limiting the time horizon.
C)diversifying stocks.
D)maximizing the beta.
Q4) Low-risk bonds tend to offer higher interest payments. A)True
B)False
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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) As long as you purchase the stock of a good company,it will be a good investment.
A)True
B)False
Q2) Floor traders no longer exist on the TSX because trades are now handled electronically.
A)True
B)False
Q3) One of the key ways to apply fundamental analysis is by
A)following an investor newsletter.
B)tracking historical stock price trends.
C)charting stock price patterns.
D)using the dividend discount model.
Q4) 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
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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) The total return on a 5 year bond with $10000 par value and an annual coupon rate of 6 percent will be most favourable if interest rates
A)increase to 8 percent.
B)decrease to 4 percent.
C)increase to 7 percent.
D)decrease to 5 percent.
Q2) A bond with a coupon rate of 6.5 percent and trading at $960 will pay annual interest of $62.40.
A)True
B)False
Q3) If you purchased a bond with face value $10 000 and coupon of 6 percent,then sold it for $10600 a half year later,you would have to pay tax on the capital gain as well as tax on the coupon payment of $300.
A)True
B)False
Q4) The inclusion of real return bonds in the federal government's financing requirements has made them very attractive.Discuss all of the features of a real return bond.What risk is attached to a 25 year real return bond yielding 4 percent?
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Page 13
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) Three advantages of investing in mutual funds are diversification,marketability and economies of scale.
A)True
B)False
Q2) A mutual fund has a beginning balance of $100 million,earns interest of $10 million,receives dividends of $15 million,and has expenses of $5 million.If 10 million shares are outstanding,what is the NAVPS?
Q3) In order to select appropriate mutual funds for yourself,you should determine your investment objectives,evaluate your risk tolerance,and the final step is to
A)review and compare key information from the relevant Fund Facts documents.
B)review and compare key information from the simplified prospectuses.
C)open an account with a broker.
D)consult a certified financial planner.
Q4) A mutual fund with investments in bonds,stock,and preferred shares would best be described as
A)a balanced fund.
B)a three sector fund.
C)a diversified fund.
D)a balanced growth and income fund.
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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) Once a pensioner reaches age 71,she is able begin withdrawing money from her RRSP tax free.
A)True B)False
Q2) If you earn the maximum pensionable earnings (YMPE)amount in a given year,you and your employer will have funded the maximum amount to the Canada Pension Plan for that year.
A)True
B)False
Q3) 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
Q4) If you qualify,the maximum withdrawal allowed under the Home Buyers' Plan (HBP)is
A)$20 000 per person.
B)$25 000 per person.
C)$25 000 per couple.
D)$40 000 per couple.
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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) If you die without a will,the court will appoint A)a grantor.
B)an attorney.
C)an administrator.
D)a settlor.
Q2) What is the maximum number of bequests that can be made in a standard holographic will?
A)15
B)50
C)100
D)Unlimited
Q3) Inter vivos trusts
A)are formed to protect assets for a dependant child.
B)may not be used for fixed assets such as a cottage.
C)are continually and actively managed by the settlor.
D)pay taxes on earnings at the highest marginal rate.
Q4) A preferential share claimed by a spouse may limit the amount granted to other beneficiaries.
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 is true regarding RRSP withdrawals?
A)The tax withheld on your RRSP withdrawal will likely not match the amount of tax you will actually owe on the withdrawal.
B)The tax withheld on your RRSP withdrawal is all the tax that will be owed on the withdrawal.
C)The tax withheld on your RRSP withdrawal is always more than the amount of tax you will actually owe on the withdrawal.
D)There is no tax owing on RRSP withdrawals.
Q2) Discuss ten specific measures a risk taker versus risk averse investor may take to protect and maintain their wealth.
Q3) In deciding how much to contribute to your retirement savings,which of the following should you ignore?
A)Anticipated inheritances
B)Other financial goals
C)Liquidity needs
D)Current expenses
Q4) List three types of financing you have studied and an important consideration about each one of them
Page 17
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