Course Introduction
Financial Decision Making
Test Bank
Financial Decision Making is designed to develop students' understanding of how individuals and organizations make critical financial choices. The course covers key concepts such as budgeting, investment analysis, risk assessment, capital structure, and valuation techniques. Students learn to interpret and use financial statements, evaluate financial performance, and apply quantitative methods to optimize decision making. Through real-world case studies and practical exercises, the course emphasizes analytical skills and strategic thinking required to address challenges in personal finance, corporate finance, and financial markets.
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) ABC Bank offers term deposits with 8 percent compounded annually,while XYZ Bank offers term deposits with 7.8 percent compounded monthly.ABC Bank offers a higher effective yield.
A)True
B)False
Answer: False
Q3) If the interest rate is zero,the future value interest factor equals
A)0)0.
B)-1.0.
C)1)0.
D)Undefined
Answer: C
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Chapter 1: Tools for Financial Planning - Planning with
Personal Financial Statements
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) Net worth always increases when you increase the value of your assets. A)True
B)False Answer: False
Q2) Someone with a monthly income of $5000,$5000 in their checking account and monthly expenses of $5000 would have Liquidity Ratio of 2.
A)True
B)False Answer: False
Q3) It is possible to budget for irregular expenses paid infrequently.
A)True
B)False Answer: True
Q4) If JT's gross income is $50 000,disposable income is $36 000,and he saves $5000 annually,his savings ratio is 10%.
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) Canada's tax system is called "progressive," which means the higher someone's income,the higher the percentage of income paid in taxes.
A)True
B)False
Answer: True
Q2) Income from outside of Canada is not subject to Canadian income tax.
A)True
B)False Answer: False
Q3) If Jack has total RPP and RRSP contributions of $9000,he can deduct that amount from his total income to calculate his taxable income.
A)True
B)False Answer: True
Q4) The Basic Personal Amount is a non-refundable tax credit that reduces ones taxes by $11 635 in 2017.
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
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Sample Questions
Q1) If you have $10 000 that you do not expect to need for expenses in the next few years and you wish to put it somewhere so that it will earn a return,which of the following financial institutions would be the best option?
A)A bank
B)A mutual fund company
C)A credit union
D)Any of the above
Q2) A Canada Savings Bond is a typical investment in a money market fund.
A)True
B)False
Q3) Credit unions and caisses populaires are non-for-profit depository institutions that offer similar services as chartered banks,but only to members.
A)True
B)False
Q4) An example of a depository financial institution is an insurance company.
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
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Sample Questions
Q1) Despite a high credit score,your income level may be the determining factor in whether you can get a loan.
A)True
B)False
Q2) When do you need to use a credit repair service?
A)When you find an error on your credit report which is negatively affecting your score
B)At the point that you need to work with the trustee in bankruptcy to develop a consumer proposal
C)A credit repair company should be contacted only as a last resort to avoid bankruptcy.
D)Never,as they have no special powers to correct information on your credit report.
Q3) Which of the following is the most serious threat from identity theft?
A)Criminal activities attributed to the victim
B)The financial cost to society
C)Loss of access to credit
D)Credit card charges made by the perpetrator
Q4) Discuss at least four ways in which you can protect yourself from identity theft.
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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) The purchase of a home represents a potential risk if you need to move quickly and the home does not appreciate rapidly in value.
A)True
B)False
Q4) Describe some of the advantages and disadvantages of selling your home yourself instead of hiring a realtor.
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) Independent insurance agents are those that work for one Chaptericular company.
A)True
B)False
Q2) If Eric's dog ran across a road and caused a driver to swerve and injure a passerby,Eric's umbrella personal liability coverage could cover the expenses of both the driver and the injured pedestrian.
A)True
B)False
Q3) A Chapter of accident benefits coverage includes coverage for drivers and their passengers in the event of an accident caused by an uninsured driver.
A)True
B)False
Q4) On average,which is the largest category for claims to homeowner's insurance?
A)Fire and lightning
B)Wind and hail
C)Water damage and freezing
D)Other claims not specified above
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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) 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
Q2) Employment Insurance (EI)does not provide adequate coverage for a long-term disability because
A)it provides benefits for only a 15-week period.
B)it provides only 20 percent of regular income for the insured.
C)it takes a long time to process the application.
D)it is only payable in extreme cases of disability.
Q3) For long-term care insurance,all else equal,the higher the premium charged,the more comprehensive the coverage.
A)True
B)False
Q4) The similarity between disability income and long-term care insurance is
A)they both require proof of income.
B)they both have a waiting period.
C)they both provide a death benefit.
D)they both extend benefits beyond age 65.
Page 10
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Chapter 4: Personal Investing - Investing Fundamentals
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89 Verified Questions
89 Flashcards
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Sample Questions
Q1) An investor's willingness to accept (or not accept)risk in their investments is referred to as risk intolerance.
A)True
B)False
Q2) A stock with larger standard deviations of returns has higher risk than a stock with lower standard deviations.
A)True
B)False
Q3) Which portfolio provides the advantage of asset allocation?
A)A portfolio invested in stocks of several different countries to maximize return with less risk
B)A portfolio invested in bonds and stocks in equal amounts to maximize return with less risk
C)A portfolio invested in a variety of assets to maximize return with less risk
D)A fully diversified equity portfolio eliminating unsystematic risk
Q4) The primary market is used by firms to raise funds and is a market where newly issued securities are traded.
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) Which of the following is a limitation of the P/E method?
A)Finding the price of the stock
B)Finding earnings per share information
C)Difficulty forecasting earnings
D)Changing dividend payouts
Q3) The dividend discount model method is used to value a stock based on a firm's ________ and is ________ at an appropriate rate of interest.
A)future dividend payments,compounded
B)future earnings,discounted
C)future earnings,compounded
D)future dividend payments,discounted
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Page 12
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) 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.
Q2) When the economic conditions are weak,bonds with higher default risk become more susceptible.
A)True
B)False
Q3) A 25-year strip bond with face value of $25 000 and yielding 4.2 percent should cost $8938.
A)True
B)False
Q4) You should be willing to pay $12 064 for a $10 000 face value bond with semi-annual 5 percent coupon which matures in 14 years,if similar bonds are now yielding 4 percent.
A)True
B)False
Q5) 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 is true about MERs?
A)MERs only include manager and sales expenses.
B)Mutual funds with lower MERs tend to outperform those with higher.
C)All types of mutual funds have similar MERs.
D)You need to subtract the MER from the posted return to figure out performance.
Q2) A conservative investor should only invest in a variety of bond mutual funds.
A)True
B)False
Q3) Which of the following can be a source of taxation even if not paid out to owners of a Canadian bond mutual fund?
A)Interest,dividends and capital gains
B)Interest and capital gains
C)Interest and dividends
D)Interest income only
Q4) There are three ways that taxable income can be generated for investors in mutual funds without the investor actually receiving any income.
A)True
B)False
Q5) List considerations you should take into account when purchasing a mutual 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) Arnie is 21 years old and earning $35 000 annually.If inflation averages three percent annually over his career,what will he have to earn at age 60 to equal his current pay?
A)$105 500
B)$114 171
C)$128 500
D)$110 846
Q2) Defined contribution pension plans are not worth taking advantage of because they are essentially the same as an RRSP.
A)True
B)False
Q3) To be eligible for Old Age Security retirement benefits,you will need to have worked in Canada for at least 10 years since turning 18.
A)True
B)False
Q4) Once you are 'vested' in your company's pension plan,you can cash in the funds in if you decide to leave the company.
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) Discuss the characteristics and expertise you would look for in the person you want to appoint as your executor or attorney.
Q2) A legal document granting a person the power to make specific decisions for you in the event that you become incapacitated is called a(n)
A)durable power of attorney.
B)enduring power of attorney.
C)living will.
D)general power of attorney.
Q3) A non-continuing power of attorney with a specified task
A)becomes enforceable as a will if the grantor dies.
B)becomes transferable if the attorney is incapacitated.
C)expires when the task or event has been completed.
D)has all-encompassing power if the grantor becomes incapacitated.
Q4) A will,while nice to have,isn't Chaptericularly important in estate planning because each province has laws to determine the distribution of assets when a will was not created.
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) You must have assets to be able to access financing for large purchases.
A)True
B)False
Q2) Personal financing
A)allows you to make grocery purchases with your credit card.
B)increases your assets overall.
C)achieve your goals.
D)helps increase your ability to save.
Q3) An important Chapter of financial planning is making trade-offs between various important decisions.
A)True
B)False
Q4) If you want investment income,which of the following investments should you purchase?
A)Bonds and dividend producing equities
B)Stocks with high betas
C)Growth mutual funds
D)IPOs
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Q5) What are four types of financial investment accounts and indicate the likely purposes they would have in your financial plan?