Course Introduction
Financial Education
Textbook Exam Questions
Financial Education introduces students to the essential principles of personal and institutional financial management. Covering topics such as budgeting, saving, investing, credit, debt, insurance, and financial planning, the course equips students with the skills and knowledge necessary to make informed monetary decisions throughout their lives. Emphasis is placed on understanding financial markets, the impact of economic trends, and responsible consumer practices. Through practical applications and real-world case studies, students learn to assess financial risks, set achievable goals, and build a solid foundation for financial well-being.
Recommended Textbook
Personal Finance 4th Canadian Edition by Jack
Kapoor
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1246 Verified Questions
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Page 2
Chapter 1: Personal Financial Planning in Action
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Sample Questions
Q1) The changing cost of money is referred to as ____________ risk.
A) interest-rate
B) inflation
C) economic
D) trade-off
E) personal
Answer: A
Q2) A risk premium associated with interest rates refers to:
A) higher earnings due to uncertainty.
B) lower consumer prices.
C) the opportunity cost of borrowing
D) a loan with a short maturity.
E) expected lower inflation.
Answer: B
Q3) A higher opportunity cost implies a lower current value.
A)True
B)False
Answer: True
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Chapter 2: Money Management Skills
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Q1) If expenses for a month are greater than income,an increase in net worth will result.
A)True
B)False
Answer: False
Q2) When one money management decision is selected,something else must be given up.
A)True
B)False Answer: True
Q3) Evidence exists that a person's choice of employment influences his or her lifestyle.
A)True
B)False
Answer: True
Q4) Leveraged investing in common shares is expected to increase your net worth.
A)True
B)False Answer: True
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Chapter 3: Taxes in Your Financial Plan
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Sample Questions
Q1) An RPP differs from an RRSP in that
A)earnings on the RPP are tax free after five years.
B)contributions may exceed $2,000 in the RRSP.
C)an RRSP is set up by an employer for an employee.
D)An RPP is set up by an employer for an employee.
E)funds are only to be used for education expenses
Answer: D
Q2) Phillip Marnier had earnings from his salary of $40,000,interest on savings of $700,and a contribution to a registered retirement saving plan of $1,500.Phillip's net income would be
A)$39,200.
B)$40,000.
C)$39,300.
D)$38,500.
E)$41,500.
Answer: A
Q3) Taxable income is the total earnings of a person.
A)True
B)False
Answer: False
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Chapter 4: Financial Services: Savings Plans and Payment Accounts
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Sample Questions
Q1) All financial institutions are able to process customer deposit and withdrawal transactions.
A)True
B)False
Q2) A trust has the purpose of
A)solving a person's financial problems.
B)obtaining low-interest loans.
C)handling daily money management activities.
D)managing the assets of a person.
E)improving a person's budgeting skills.
Q3) A saver will usually earn the highest rate with which of the following types of savings plans?
A)Guaranteed Investment Certificates
B)club account
C)passbook account
D)share account
E)NOW account
Q4) Activity accounts are designed for people who write many cheques each month.
A)True B)False
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Chapter 5: Consumer Credit: Advantages, Disadvantages,
Sources, and Costs
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Sample
Questions
Q1) Debt payments-to-income ratio is
A) calculated by dividing total liabilities by net worth.
B) calculated by dividing monthly debt payments (not including house payments)by net monthly income.
C) determined by dividing your assets into liabilities.
D) a useless ratio for determining your credit capacity.
E) rarely used by creditors in determining credit worthiness.
Q2) A credit file is a report which includes the individual's present employer and position,former employer(s),public records and a list of cheques returned for insufficient funds.
A)True
B)False
Q3) If there is incorrect information in your credit file,
A) you should sue the credit bureau.
B) you must sue the merchant who denied the credit.
C) the credit bureau must reinvestigate and modify or remove inaccurate data.
D) pray that the credit bureau goes bankrupt.
E) you cannot dispute the derogatory information.
Q4) What are the two general rules of measuring credit capacity?
Q5) How can you protect yourself against credit/debit card fraud?
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Chapter 6: Consumer Purchasing Strategies and Wise
Buying of Motor Vehicles
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Sample Questions
Q1) What are the major sources of consumer credit?
Q2) In a straight bankruptcy many,but not all,debts are forgiven.
A)True
B)False
Q3) Obtaining credit may be easier for people who file a consumer proposal rather than a bankruptcy.
A)True
B)False
Q4) Which of the following offer the least expensive loan?
A) finance companies
B) banks
C) savings and loan associations
D) parents or family members
E) loan sharks
Q5) Inflation increases the purchasing power of money.
A)True
B)False
B)False Page 8
Q6) The fairest method of calculating the interest is the adjusted balance method. A)True
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Page 9
Chapter 7: Selecting and Financing Housing
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Sample Questions
Q1) Belinda Williams plans to rent instead of buying her house.What advantage of renting will Belinda encounter?
A) tax advantages
B) financial benefits
C) community pride
D) lower initial costs
E) home improvement flexibility
Q2) A lease only protects the rights of the tenant.
A)True
B)False
Q3) Which of the following would increase the amount that a person could afford to spend on a home?
A) lower financial obligations
B) increased interest rates
C) increased down payment
D) decreased family income
E) increased monthly living expenses
Q4) Gerry Bruce is considering buying a home.What actions would you recommend for her to take to accomplish this goal of buying a home?
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Chapter 8: Home and Automobile Insurance
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Q1) Ahmed Hadad was injured in an accident caused by another driver who did not have insurance.Ahmed's medical expenses would be covered by
A) medical payments.
B) collision.
C) bodily injury liability.
D) uninsured motorist's protection.
E) no-fault coverage.
Q2) Which of the following is considered personal property for home insurance coverage?
A) an automobile
B) a garage
C) a house
D) appliances
E) trees and shrubs
Q3) There are no significant differences in home owner rates when comparing different insurance companies
A)True
B)False
Q4) Which type of automobile insurance is usually considered to be most important?
Q5) What events are commonly covered in a homeowner's insurance policy?
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Chapter 9: Health and Disability Income Insurance
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Sample Questions
Q1) Life insurance premiums are determined basically by the
A) forces of supply.
B) forces of demand.
C) forces of competition.
D) use of mortality tables.
E) guesswork of insurance executives.
Q2) Which type of insurance provides for the partial replacement of income lost by employees as a result of an accident,illness,etc?
A) Comprehensive major medical
B) Major medical expense
C) Physician's expense
D) Disability income
E) Surgical expense
Q3) Which of the following will be used to determine a term insurance policy?
A) age at which people will die.
B) number of people who will die this year.
C) number of people who will buy insurance this year.
D) number of agents who sell life insurance.
E) number of accidents in the region
Q4) What is disability income insurance? What are the sources of disability income?
Page 12
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Chapter 10: Financial Planning With Life Insurance
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Sample Questions
Q1) Bondholders generally receive interest payments every five months.
A)True
B)False
Q2) Which of the following is not a true statement?
A) Dividends are a distribution of money,stock,or other property to stockholders.
B) Dividend income must be reported to the CCRA.
C) Dividends are taxed as capital gains.
D) Dividends are not taxed as ordinary income.
E) Generally,the payer will send you or your broker a form that states how much dividend income you have received.
Q3) Generally,options are not long-term investment techniques.
A)True
B)False
Q4) A speculative investment is an investment that is made in the hope of earning a relatively large profit over a long period of time.
A)True
B)False
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Chapter 11: Investing Basics and Evaluating Bonds
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Sample Questions
Q1) If the board of directors approves a two for one stock split,an investor who owns 200 shares before the split owns ____________ shares after the split.
A) 75
B) 200
C) 225
D) 400
E) 450
Q2) Capital gains yield is the stock's appreciation in value divided by its end-of-year stock price.
A)True
B)False
Q3) A bear market develops when investors are optimistic about the overall economy and purchase stocks.
A)True
B)False
Q4) Preferred stocks are often referred to as "middle" investments.
A)True
B)False
Q5) What is an option? What is the difference between a call and put option?
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Chapter 12: Investing in Stocks
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Sample Questions
Q1) The dollar amount repaid at maturity on a bond is referred to as its
A) Face value
B) market value
C) coupon payment
D) capital gain
E) future value
Q2) Treasury bills are:
A) discounted securities sold by the government of Canada
B) discounted securities sold by corporations
C) regular interest bonds
D) compound interest bonds
E) simple-interest bonds
Q3) A mortgage bond is a corporate bond that is secured by various assets of the issuing firm.
A)True
B)False
Q4) Collateral trust bonds are secured,through a pledge of real property.
A)True
B)False
Page 15
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Chapter 13: Investing in Mutual Funds
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Sample Questions
Q1) The value of the mutual fund's portfolio minus the mutual fund's liabilities divided by the number of shares outstanding is called the:
A) net asset value.
B) outstanding balance.
C) per share value.
D) book value.
E) accounting value.
Q2) A mutual fund in which new shares are issued and redeemed by the investment company at the request of investors is called a(n)____________ fund.
A) closed-end
B) no-load
C) load
D) open-end
E) convertible
Q3) An investment company sponsoring a mutual fund must furnish shareholders a prospectus each year.
A)True
B)False
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Chapter 14: Starting Early: Retirement and Estate Planning
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Q1) Which one of the following expenditures for retirees is likely to decrease?
A) food and medical care
B) federal income taxes
C) expenses for leisure activities
D) medical expenses
E) insurance
Q2) Only saving now and curtailing current spending can ensure comfortable retirement later.
A)True
B)False
Q3) Which of the following statements is false?
A) Payments for a life annuity can continue until death.
B) Transfers between annuity companies are tax-free.
C) Annuities are legitimate tax shelters.
D) An annuity has no investment limit.
E) Annuities provide opportunities for retirement income to grow.
Q4) At age 65,the life expectancy of a man is 14 years.
A)True
B)False
Q5) What are the possible sources of income for retirees?
Page 17
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Chapter 15: Daily Spending Diary
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Q1) A testamentary trust is a trust established by your will that becomes effective upon your death.
A)True
B)False
Q2) Which will should not be witnessed?
A) informal will
B) letter of last instruction
C) formal will
D) statutory will
E) holographic will
Q3) A legal document authorizing someone to act on your behalf is called a
A) codicil.
B) rider.
C) power of attorney.
D) trustor.
E) proxy.
Q4) Your estate consists of everything you own.
A)True
B)False
Q5) What are the legal aspects of estate planning?
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