Financial Planning Practice Exam
Course Introduction
Financial Planning is a comprehensive course that introduces students to the principles, tools, and strategies involved in creating and managing effective financial plans for individuals and organizations. The course covers topics such as budgeting, saving, investing, retirement planning, tax strategies, insurance, and estate planning. Students will learn how to assess financial goals, analyze financial statements, and develop practical plans to achieve short-term and long-term objectives. Emphasis is placed on ethical considerations and real-world application, preparing students with the knowledge and skills necessary for both personal financial management and careers in financial advising.
Recommended Textbook
Personal Finance 4th Canadian Edition by Jack Kapoor
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15 Chapters
1246 Verified Questions
1246 Flashcards
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Page 2
Chapter 1: Personal Financial Planning in Action
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74 Verified Questions
74 Flashcards
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Sample Questions
Q1) When prices are increasing at a rate of 6 percent,the cost of products would double in about 12 years.
A)True
B)False
Answer: True
Q2) Higher inflation usually results in lower interest rates.
A)True
B)False
Answer: False
Q3) A question associated with the saving component of financial planning is:
A) Is your will current?
B) Do you have an adequate emergency fund?
C) Is your investment program appropriate to your income and tax situation?
D) Do you have a realistic budget for your current financial situation?
E) Are your transportation expenses minimized through careful planning?
Answer: B
Q4) Changes in interest rates don't affect your financial planning.
A)True
B)False
Answer: False
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Chapter 2: Money Management Skills
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75 Verified Questions
75 Flashcards
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Sample Questions
Q1) If a family planned to spend $370 for food during March but only spent $348,this difference would be referred to as a
A) surplus.
B) deficit.
C) fixed living expense.
D) budget reduction.
E) contribution to net worth.
Answer: A
Q2) Which of the following presents a summary of income and outflows for a period of time?
A) A cash flow statement
B) A bank statement
C) An investment summary
D) balance sheet
E) An asset report
Answer: A
Q3) Furniture,jewelry,and an automobile are examples of liquid assets.
A)True
B)False
Answer: False
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Chapter 3: Taxes in Your Financial Plan
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65 Verified Questions
65 Flashcards
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Sample Questions
Q1) Several courses of appeal are available to taxpayers who disagree with a revenue service ruling on their tax return audit.
A)True
B)False
Answer: False
Q2) Which of the following would be excluded from total income to obtain net income?
A)contributions to RPPs
B)mortgage interest
C)child support payments
D)foreign income exclusion
E)charitable contributions
Answer: C
Q3) The ______________ property tax is based on the value of land and buildings.
A)personal
B)real estate
C)direct
D)proportional
E)regressive
Answer: B
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Page 5
Chapter 4: Financial Services: Savings Plans and Payment Accounts
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60 Verified Questions
60 Flashcards
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Sample Questions
Q1) The increase in purchasing power of an investment is not reflected in its real rate of return.
A)True B)False
Q2) The money market fund offered by investment companies is a highly liquid financial service.
A)True
B)False
Q3) The funds deposited in a chequing account can be restricted for use by A)a holding period.
B)outstanding cheques.
C)interest earned.
D)service charges.
E)electronic banking.
Q4) Credit unions frequently offer lower loan rates than other financial institutions.
A)True
B)False
Q5) What are the main types of financial institutions used by consumers?
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Chapter 5: Consumer Credit: Advantages, Disadvantages,
Sources, and Costs
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Financing from car dealers in affiliation with car manufacturers is called a conditional sales contract.
A)True
B)False
Q2) A credit arrangement that has no extra costs and no specific repayment plan is called
A) installment sales credit.
B) incidental credit.
C) line of credit.
D) single lump-sum credit.
E) revolving check credit.
Q3) A term that refers to the borrower's assets or net worth is called A) capacity.
B) character.
C) capital.
D) collateral.
E) conditions.
Q4) How do creditors determine your credit-worthiness?
Q5) What can you do if your identity is stolen?
Q6) What are the two basic types of credit? Give examples of both. Page 7
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Page 8
Chapter 6: Consumer Purchasing Strategies and Wise
Buying of Motor Vehicles
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87 Flashcards
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Sample Questions
Q1) Lines of credit usually charge a variable interest rate,tied to the lender's prime rate.
A)True
B)False
Q2) Using parents or family members as lenders is the most risky type of loan method.
A)True
B)False
Q3) It takes considerably longer to repay an interest only line of credit than it takes to repay a traditional consumer installment loan.
A)True
B)False
Q4) The best way to pay off credit is to follow the minimum payment amount stated on your bill.
A)True
B)False
Q5) Credit costs usually do not vary.
A)True
B)False
Q6) What are two key concepts to keep in mind as you shop for credit?
Page 9
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Chapter 7: Selecting and Financing Housing
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70 Verified Questions
70 Flashcards
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Sample Questions
Q1) The most common service provided by a real estate agent when selling your home is
A) providing legal advice.
B) qualifying buyers for a mortgage.
C) screening potential buyers.
D) making needed repairs.
E) getting you the lowest offer
Q2) Lenders commonly use a GDS ratio of 50% and a TDS ratio of 60% as guidelines to determine the amount you can comfortably afford for housing.
A)True
B)False
Q3) The total debt service ratio is your monthly mortgage payment and other outstanding debts as a percentage of your gross monthly income.
A)True
B)False
Q4) Zoning laws are restrictions on how the property area can be used.
A)True
B)False
Q5) What factors influence the type of housing a family will select?
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Chapter 8: Home and Automobile Insurance
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65 Verified Questions
65 Flashcards
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Sample Questions
Q1) Home insurance costs are affected most directly by
A) the number of claims in an area.
B) insurance agents' commission.
C) government regulations that set premiums.
D) processing costs of claims.
E) the profits of the insurance company.
Q2) What factors affect the cost of home insurance?
Q3) Your home insurance provides for replacement value for personal property losses.A microwave is stolen.It cost $300 two years ago and has an expected life of six years.A comparable microwave costs $200 today.What amount will the insurance company pay?
A) $100
B) $150
C) $200
D) $350
E) $300
Q4) A home made of wood is more expensive to insure than a comparable brick structure.
A)True
B)False
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Chapter 9: Health and Disability Income Insurance
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115 Flashcards
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Sample Questions
Q1) Critical insurance illness usually provides money for care if you are diagnosed with a serious illness such as AIDS.
A)True
B)False
Q2) Disability income insurance is probably the most coveted form of available insurance protection.
A)True
B)False
Q3) What are the steps in creating a plan to buy your life insurance?
Q4) A method of evaluating the cost of life insurance by taking into account the time value of money is called
A) double indemnity.
B) guaranteed insurability.
C) an interest-adjusted index.
D) the consumer price index.
E) a present value index.
Q5) The fact is that for all age groups disability is more likely than death. A)True B)False
Q6) What are the two types of life insurance? What are the major types and subtypes?
Page 12
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Chapter 10: Financial Planning With Life Insurance
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Sample Questions
Q1) The fees for investor services and newsletters may range between $30 and $750 a year.
A)True
B)False
Q2) The amount put aside as an emergency fund should be equal to 1 to 3months of living expenses.
A)True
B)False
Q3) Earnings that are reinvested in a corporation are called
A) retained earnings.
B) surplus earnings.
C) retention capital.
D) additional capital.
E) collected capital.
Q4) Studies show that investors are willing to run a greater risk to avoid a loss than to make a gain.In behavioural finance this is called loss aversion.
A)True
B)False
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Page 13
Chapter 11: Investing Basics and Evaluating Bonds
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Jamie Presner purchased 100 shares of Bank of Montreal for $86.00 Jamie also paid $50 commission.What was the total purchase price for this transaction?
A) $50.00
B) $86.00
C) $8,650.00
D) $8,289.50
E) $860.00
Q2) A stock that is issued by a corporation that has a large amount of capitalization is called a(n)____________ stock.
A) small-cap
B) medium-cap
C) large-cap
D) unlimited-cap
E) giant-cap
Q3) A stock split is a procedure in which a stockholder's common stock is exchanged for preferred stock.
A)True
B)False
Q4) 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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90 Verified Questions
90 Flashcards
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Sample Questions
Q1) A government security issued in minimum units of $1,000 with maturities that are less than one year is called a:
A) subordinated bond.
B) treasury bond.
C) treasury note.
D) treasury bill.
E) savings bond.
Q2) Although there is a great deal of information on the Internet about stock investments,it is impossible to evaluate bonds using the Internet.
A)True
B)False
Q3) Which ranks bonds from lowest to highest risk?
A) Federal marketable bonds,corporate bonds,provincial bonds
B) Canada savings bonds,municipal bonds,provincial bonds
C) Canada savings bonds,provincial bonds,federal marketable bonds
D) Provincial bonds,municipal bonds,corporate bonds
E) Provincial bonds,Canada saving bonds,corporate bonds
Q4) How do interest rates in the economy affect the price of a corporate bond? Give a numerical example.
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Chapter 13: Investing in Mutual Funds
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86 Flashcards
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Sample Questions
Q1) Which of these is not a true statement?
A) ETFs can be purchased through a broker.
B) ETFs can be purchased on margin.
C) ETFs can be sold short.
D) ETFs have lower management expenses than conventional mutual funds.
E) ETFs can be purchased through a broker,on margin,sold short,and have lower management expenses than conventional mutual funds.
Q2) Another name for a mutual fund that charges a contingent deferred sales load is a(n)____________ fund.
A) bare bones
B) end state
C) bare back
D) back-end
E) pay later
Q3) A mutual fund that aims for capital gains is:
A) a balanced asset allocation fund
B) a bond fund
C) an equity or common stock fund
D) a specialty fund
E) an ethical fund
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Chapter 14: Starting Early: Retirement and Estate Planning
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83 Flashcards
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Sample Questions
Q1) A(n)____________ is appealing because it allows people to stay in their homes as they grow older and frail.
A) accessory apartment
B) caretaker arrangement
C) commercial rental
D) universal design home
E) congregate housing
Q2) Which statement is correct about retirement planning of young professionals?
A) They don't want to retire with plenty of money.
B) They would rather save money now for retirement than spend it.
C) They are not worried about having enough money to retire comfortably.
D) Young people are in the best position to save.
E) Saving money does not come naturally to many young people.
Q3) Which employer retirement plan specifies the benefits promised to the employee at the normal retirement age?
A) defined-contribution plan
B) undefined-contribution plan
C) undefined-benefit plan
D) defined-benefit plan
E) surplus-employee plan
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Chapter 15: Daily Spending Diary
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Sample Questions
Q1) Your executor can be a family member,a friend,an attorney,an accountant,or the trust department of a bank.
A)True
B)False
Q2) An inheritance tax is levied on the right of an heir to receive all or part of the estate and life insurance proceeds of a deceased person.
A)True
B)False
Q3) A documentary agreement between spouses before marriage in which one or both parties often waive a right to receive property under the other's will or under state law is called a:
A) letter of last instruction.
B) codicil.
C) prenuptial agreement.
D) postnuptial agreement.
E) marital share will.
Q4) If you die without a will,you die intestate.
A)True
B)False
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