Financial Planning
Midterm Exam
Course Introduction
Financial Planning is a comprehensive course designed to introduce students to the fundamental concepts and practices involved in managing personal and organizational finances. The course covers critical topics such as budgeting, saving, investing, taxation, insurance, retirement planning, and estate planning. Students will develop practical skills to create and analyze financial plans, understand financial products and markets, and make informed decisions to achieve long-term financial goals. Through case studies and real-world applications, participants will learn strategies to optimize financial resources, manage risk, and enhance overall financial well-being. This course is suitable for those seeking to improve their personal financial literacy or pursue careers in financial advisory and wealth management.
Recommended Textbook
Personal Finance 4th Canadian Edition by Jeff Madura
Available Study Resources on Quizplus 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) The amount to be invested today at a given interest rate over a specified period in order to equal a future amount is called the
A)present value interest factor.
B)future value.
C)present value.
D)future value interest factor.
Answer: C
Q2) Alexis wants to have saved $600 000 by the time she retires at age 60.She is turning 46 in the next week and has accumulated $220000 in her RRSP accounts.Assuming she can continue to get a 6% annual return on her RRSP investments,how much does she need to keep saving at the end of each month to reach her goal?
A)$2262
B)$1467
C)$2102
D)$396
Answer: D
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Page 3
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) Which of the following is required in creating a cash flow statement?
A)The values of all assets
B)Value of all liabilities
C)Amounts used for expenses
D)The ideal emergency fund amount
Answer: C
Q2) A personal cash flow statement is usually the starting point for an individual's or family's budget.
A)True
B)False
Answer: True
Q3) Students with a negative net worth are essentially bankrupt.
A)True
B)False
Answer: False
Q4) In order to have a successful budget experience,you must use both the envelope and the pay yourself first methods.
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) If you are working as a Certified Financial Planner and you pay $500 to your association every year for membership,you can deduct $500 on your personal tax return as
A)union/professional dues as long as you receive a tax receipt.
B)an eligible tax credit as long as you do not get reimbursed for the amount.
C)an employment expense as long as you receive a tax receipt.
D)union/professional dues as long as you do not get reimbursed for the amount.
Answer: D
Q2) If Helen earns $105 000 taxable income in 2017,how much federal income tax does she have to pay according to the brackets and rates in the textbook.What is Helen's average tax rate for federal tax? Show your calculations.What is Helen's average tax rate using the combined rates in the textbook for your province? Show your calculations.
Answer: = (45 282 × 15%)+ (90 563 - 45 282)× 20.5% + (105 000 - 90 563)× 26% = 6792
+9283 + 3754= 19 829
Average federal tax rate for Helen = 19 829/105 000 = 18.9% This will vary by province. Example for Alberta: 45 916 × .25 + 45 915 × 30.5 +13 169 × .36 = 11 479 +14 004
= 28.8 percent
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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) Investments with a higher risk of default pay higher rates of interest than those that are less risky.
A)True
B)False
Q2) An example of a depository financial institution is an insurance company.
A)True
B)False
Q3) The Canada Deposit Insurance Corporation (CDIC)insures
A)bank deposits and GICs to a specified limit.
B)your chequing accounts for a small charge to the depositor.
C)only guaranteed investment certificates.
D)GICs,Canada Savings Bonds,and Canada Premium Bonds.
Q4) 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
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Sample Questions
Q1) The item that receives the most weight in the BEACON credit scoring system is A)the amount of credit used each month.
B)credit payment history.
C)credit use.
D)the total amount of credit.
Q2) Tom needs a car to commute to work and has found a suitable Honda Civic from a dealer for $8000.He has $3000 saved for it and can afford a monthly payment up to $250.Which of the following is the best (lowest total cost)financing option for him?
A)Make a $2500 deposit and take a two year loan with monthly payments of $241.
B)Make a $3000 deposit and take a two year loan with monthly payments of $221.
C)Make a $2000 deposit and take a three year loan with monthly payments of $185.
D)Make a $1000 deposit and take a three year loan with monthly payments of $210.
Q3) Using email messages from a supposedly legitimate source to obtain account information for the purpose of identity theft is referred to as A)pharming. B)phishing.
C)skimming. D)trolling.
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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) Which of the following is an advantage of using online realtor services?
A)Easier access to qualified realtors
B)Enables you to shop online and save time
C)Increases your chances of selling a house by over 20 percent
D)Higher price for houses sold or lower prices for houses bought
Q2) Mortgage companies usually charge interest semi-annually.What would be the effective rate of interest on a mortgage at 8.25 percent compounded semi-annually?
A)8)56 percent
B)8)42 percent
C)8)46 percent
D)8)38 percent
Q3) Loan protection life and disability insurance protects the lending institution against financial loss as a result of injury,illness,or death of the borrower.
A)True
B)False
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
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Sample Questions
Q1) Since insurance companies rely mostly on their premiums to cover claims,they price their insurance policies to reflect the probability of a claim and the size of the claim.
A)True
B)False
Q2) Homeowner's insurance also covers medical payments and loss of income to the policyholder.
A)True
B)False
Q3) Consider the loss from fire damage of furniture which cost $6000 thee years ago and has an expected life of ten years.This furniture would cost $9000 to purchase today.Under a replacement cost policy,how much would the insurance company pay you for this loss?
A)$6000
B)$9000
C)$4200
D)$6300
Q4) Discuss six ways to reduce your automobile insurance premiums and indicate whether it is via sharing,reducing,avoiding,or accepting.
Page 9
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Chapter 3: Protecting Your Wealth - Health and Life Insurance
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95 Verified Questions
95 Flashcards
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Sample Questions
Q1) "Term-100" life insurance generally costs more than "minimum premium universal life".
A)True
B)False
Q2) Your life insurance policy can be terminated if you understate your age on the application form.
A)True
B)False
Q3) If Tom is a technology consultant and wants to purchase reliable long-term disability insurance coverage that is cost effective for him,which would be the best choice?
A)Professional occupation
B)Any occupation
C)Regular occupation
D)Own occupation
Q4) 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
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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) If you believe that a firm will grow rapidly in the future,you should buy its A)bonds.
B)debentures.
C)common stock.
D)preferred stock.
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) A younger firm,with more growth opportunities,is less likely to pay dividends than an older company.
A)True
B)False
Q4) In the secondary market,stock prices are
A)determined by supply and demand.
B)often undervalued.
C)easy to predict.
D)less expensive than on the primary market.
Page 11
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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) Which of the following orders to buy or sell is an odd lot?
A)1000 shares at $10
B)$3780 worth of shares at $20
C)$8600 worth of shares at $4.30
D)500 shares at $22.50
Q2) Which of the following was put in place to restore investor confidence in the markets and to prevent further occurrences of corporate fraud?
A)Ontario Securities Commission (OSC)
B)Securities and Exchange Commission (SEC)
C)Investment Industry Regulatory Organization of Canada (IIROC)
D)Sarbanes-Oxley Act
Q3) The risk of a market order is that you could pay more for a stock than you anticipated.
A)True
B)False
Q4) Technical analysts look for stock price patterns which
A)indicate stocks with rapidly changing P/Es.
B)indicate a possible price trend.
C)indicate value trends.
D)demonstrate profit trends.
Page 12
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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) A passive strategy of bond investing consists of buying bonds for the long-term and not selling them until maturity.
A)True
B)False
Q2) A retractable bond pays a lower interest rate,all else equal.
A)True
B)False
Q3) If a company's stock price is expected to increase substantially over the next few years,which of the following may entice potential bondholders to accept a lower coupon rate?
A)Extendibility
B)Call feature
C)Convertibility
D)A put feature
Q4) 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?
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
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Sample Questions
Q1) If you own seven mutual funds further diversification is not recommended.
A)True
B)False
Q2) Which is the best reason for investing in funds?
A)Management expense ratios
B)Portfolio managers' performance
C)Sector investment goals
D)Diversification
Q3) Three advantages of investing in mutual funds are diversification,marketability and economies of scale.
A)True
B)False
Q4) Index stock funds contain every company's stock that make up the Chaptericular index.
A)True
B)False
Q5) List ten types of bond mutual funds in order of least risk to highest,considering multiple risk factors and indicate which ones are most crucial for each type.
Q6) 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
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Sample Questions
Q1) If you earned $66 000 in the previous year and received a pension adjustment of $8200,then you would have $3680 RRSP room left for that year.
A)True
B)False
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) If you are age 65 and were in a defined-benefit pension plan for 22 years which was based on earning a benefit of 1.8 percent of your best three years earnings,you would receive around 39.6 percent of your salary from your pension.
A)True
B)False
Q4) In the past 10 years or so,many employers have shifted from defined-benefit to defined-contribution retirement plans to reduce their financial risk in funding employees' retirements.
A)True
B)False
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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) Indicate five personal situations where having a will and estate plan is most essential and two where having a will would not be as important.
Q2) 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
Q3) 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.
Q4) When a testator dies in December,the tax return must be filed
A)three months after the estate is settled.
B)by December 31st in the year after death.
C)by June 30th of the following year.
D)by April 30th of the following year.
Q5) A handwritten will is called a notarial will.
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 investments achieves the greatest diversification?
A)Ten international stocks
B)A TSX ETF
C)A balanced mutual fund
D)A GIC
Q2) Which of the following accounts offers tax deferral,tax sheltering,and tax deduction for contributions?
A)Only TFSA
B)RRSP and TFSA
C)Only RRSP
D)RRSP and RESP
Q3) An important Chapter of financial planning is making trade-offs between various important decisions.
A)True
B)False
Q4) Some large well-known firms pay no dividends,but most do.
A)True
B)False
Page 17
Q5) List three types of financing you have studied and an important consideration about each one of them
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