Financial Literacy
Final Exam Questions
Course Introduction
Financial Literacy introduces students to the essential concepts and skills needed to effectively manage personal finances in today's complex economic environment. This course covers topics such as budgeting, saving, investing, credit management, loans, insurance, and retirement planning. Emphasis is placed on practical strategies for making informed decisions about money, understanding financial products and services, and recognizing the impact of economic factors on personal financial wellbeing. By the end of the course, students will be equipped with the tools to set financial goals, avoid common pitfalls, and build a strong foundation for lifelong financial security.
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) Develop an example to illustrate the power of compound interest.Be sure to illustrate your points using numbers and calculations.
Answer: There are many possibilities.
Comparing a simple interest example versus compound interest over many years. Illustrating that saving $200 per month for 40 years at 7% return is more than saving $800 a month for 20 years with the same return.
Example: Saving $200 per month from age 25 to 65 at 7% return would give a future value of
$494 308
I/Y 7,N 40 × 12,PMT -200,PV 0 and CPT FV
And $96 000 was actually saved - $200 × 12 × 40
Compare with the future value of saving $800 per month for 20 years at 7% return.
I/Y 7,N 20 × 12,PMT - 800,PV 0 and CPT FV $406 029
And $192 000 was actually saved - $800 × 12 × 20
Q2) The rent charged for the use of money is called a dividend.
A)True
B)False Answer: False
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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) Raymond has a $5000 bank loan due in nine months,$3000 in credit card liabilities due in 1.5 months,and another $4000 loan due in 1.5 years.In this case,Raymond has total long-term liabilities of $4000.
A)True
B)False
Answer: True
Q2) Which of the following would increase your liquid assets?
A)Paying off a loan
B)Depositing funds to a savings account
C)Buying rental property
D)Contributing to an RRSP
Answer: B
Q3) Stocks are considered a short-term liquid investment.
A)True
B)False
Answer: False
Q4) It is possible to budget for irregular expenses paid infrequently. A)True
B)False
Answer: True
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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) 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) Sally's total income is $38 000 and she divorced last year.She does not own a home,but has charitable contributions of $1500 and interest on her car of $2100.This year she also paid spousal support of $2000,child support of $5000,and tuition of $2600.Her basic personal amount is $11 138.What is Sally's taxable income?
A)$34 500
B)$31 900
C)$36 000
D)$20 762
Answer: C
Q3) Tax planning is best done at the same time you file your tax return.
A)True
B)False
Answer: False
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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) 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
Q2) A 180-day GIC pays annualized interest at six and a half percent.How much interest will you earn on $5000 if you hold it to maturity?
A)$300
B)$160.27
C)$325.00
D)$162.50
Q3) Which of the following accounts would normally give you higher interest combined with access to your funds with a few days' notice?
A)Money market funds
B)Chequing account
C)Canada Savings Bond
D)Savings account
Page 6
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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) In making the purchase versus lease decision,it is important to remember that A)dealers may impose additional charges for leasing.
B)leasing is less risky because you do not have equity.
C)leasing is less expensive overall than purchasing.
D)you won't be required to pay maintenance costs on the leased car.
Q2) One of the greatest benefits of leasing a car is that you do not have the hassles of ownership.
A)True
B)False
Q3) If a buyer has limited capital,leasing a car will usually require lower monthly payments than a car loan.
A)True
B)False
Q4) What monthly payment (to the nearest dollar)would Dieter need to make on a $10000 loan with a nine percent interest rate compounded monthly and a three-year maturity?
A)$303
B)$318
C)$329
D)$360
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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) The terms duplex and semi-detached both refer to the same type of property.
A)True
B)False
Q2) A variable-rate mortgage starts with higher payments,which decrease as the mortgage is paid off.
A)True
B)False
Q3) The interest rate on a VRM may be adjusted
A)only when prime rate moves higher.
B)only on the expiry of the term.
C)only when prime rate moves lower.
D)any time the prime rate changes.
Q4) It is possible to sell a house without paying a commission.
A)True
B)False
Q5) Refinancing a home may incur penalties which outweigh the benefits of acquiring a lower interest rate,so should therefore be thoroughly investigated before acting.
A)True
B)False
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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) The first step in the risk management process is to define and recognize your exposure to risk.
A)True
B)False
Q2) Additional coverage on your automobile insurance policy can be purchased for
A)the cost of a rental car while you are having the oil changed.
B)the protection of valuables you are carrying in your car.
C)reupholstering a worn driver's seat.
D)repainting the vehicle before preparing to trade it in.
Q3) Comprehensive coverage would cover financial losses due to
A)damage to your car caused by a hit and run collision.
B)damage to your car in an accident for which you were at fault.
C)damage to your car caused by wind or hail.
D)damage to a neighbour's fence caused by your car.
Q4) While renter's insurance would reimburse you if you had to replace furniture damaged in a fire,it would not pay for the medical expenses for a friend who was injured in your home.
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) The major underwriting factors of life insurance are age,sex,smoking status,driving record,and other health and lifestyle considerations.
A)True
B)False
Q2) 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.
Q3) Term life insurance is considered temporary insurance,since the policy is in effect for only a relatively short period of time.
A)True
B)False
Q4) Universal life insurance is similar to whole life except it provides less guarantees.
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) Many more shares of stock are traded daily on the primary market than on the secondary market.
A)True
B)False
Q2) Stocks that are undervalued by the market for reasons other than the performance of their business are called
A)growth stocks.
B)value stocks.
C)preferred stocks.
D)dividend stocks.
Q3) If you predicted that a stock would be worth $40 in five years and that you wanted to get a nine percent average annual return,what price should you be willing to pay for it now? (Assume no fees or taxes.)
A)$38.53
B)$22.00
C)$26.00
D)$25.54
Q4) You have been given an overview of stocks,bonds,and mutual funds.Give one advantage and one disadvantage of investing in each of these.
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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) What additional risk is involved when buying stock on margin?
A)The interest rate charge
B)The leverage
C)A margin call
D)The amount borrowed
Q2) When you look at inventory turnover (cost of goods sold divided by average daily inventory),a high ratio means that a company is more efficient than those with lower ratios.
A)True
B)False
Q3) What is the appropriate time for someone to invest in the stock market and when should the investment be moved to safer vehicles? Do you believe you have enough knowledge to invest in the stock market? Why or why not? How would you assess your success?
Q4) 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.
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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) Which of the following bond quotes might indicate a bond has a high default risk?
A)GM 6 percent due 11/19 with a current yield of 7.5 percent
B)Cott Beverages 6.5 percent due 09/19 with a current yield of 7.75 percent
C)Eaglecrest Explorations 5.75 percent due 06/19 with a current yield of 7.60 percent
D)Abitibi Price 7.0 percent due 09/19 with a current yield of 9.85 percent
Q3) If an investor is expecting a period of higher interest rates soon,which bond feature would she prefer?
A)Callable
B)Retractable
C)Convertible
D)Extendible
Q4) List and describe three strategies to invest in bonds.
Q5) Name and explain five risks involved with investing in bonds and indicate the magnitude of these risks and ways to mitigate them.
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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) A mutual fund is a diversified portfolio of stocks and/or bonds,depending on the investment objective of the fund.
A)True
B)False
Q2) Hedge funds use risky strategies to successfully earn high returns for wealthy investors.
A)True
B)False
Q3) You own 500 units of a fund that now has a NAV of $12.30.What is your total investment worth?
A)$6150
B)$61 500
C)$6150,minus the load fee
D)$6150,plus the load fee
Q4) The most important considerations in choosing a mutual fund is your investment objectives and comparing fees and expenses charged.
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) The combination of Old Age Security and the Canada Pension plan provide sufficient income to support the retirement lifestyle of most individuals.
A)True
B)False
Q2) RRSP contribution room
A)can be carried forward until age 71.
B)is eliminated each year if it is not used.
C)can be carried forward until age 65.
D)can be used until age 75 as long as you have earned income.
Q3) Payments made to you by Old Age Security are based on
A)your residency in Canada between ages 16 and 65.
B)the length of time you worked in Canada prior to age 65.
C)your average YMPE earnings between ages 18 and 65.
D)your adult residency in Canada between 10 and 40 years.
Q4) The year's maximum pensionable earnings (YMPE)will
A)change each year based on a calculation of average incomes in Canada.
B)change each year based on inflation as measured by the CPI.
C)be adjusted periodically based on government fiscal policy.
D)be adjusted every few years based on average Canadian incomes and CPI.
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) In which province is the preferential share most generous to the surviving spouse?
A)British Columbia
B)Newfoundland
C)Ontario
D)Quebec
Q2) Minor changes to a will can be made with a simple document called a codicil.
A)True
B)False
Q3) If you wish to be cremated when you die,this request should be included in a
A)durable power of attorney.
B)letter of last instruction.
C)codicil.
D)letter of last rites.
Q4) A general power of attorney
A)enables the attorney to make a new will for you.
B)terminates automatically when assets run out.
C)does not provide immediate authority until someone becomes ill.
D)terminates if the attorney dies.
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 should make investments only after you have sufficient liquidity and sufficient insurance to protect your existing assets.
A)True
B)False
Q2) 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
Q3) 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
Q4) If you are looking for fast-growth stocks,you should look for stocks that do not pay dividends.
A)True
B)False
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