Individual Financial Management
Final Test Solutions
Course Introduction
Individual Financial Management provides students with the knowledge and skills necessary to effectively manage personal finances throughout different stages of life. The course covers a range of topics, including budgeting, saving, investing, credit management, insurance, retirement planning, and tax strategies. Emphasis is placed on the development of critical thinking and decision-making skills for achieving financial goals and building long-term financial security. Through practical exercises and real-life case studies, students learn to assess financial options, avoid common pitfalls, and make informed choices tailored to their individual circumstances.
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) Gross domestic product (GDP)can be described as the difference between a country's exports and its imports.
A)True
B)False
Answer: False
Q2) Analyzing your current financial position is a part of the first stage of the financial planning process.
A)True
B)False
Answer: True
Q3) Increased consumer spending will usually cause:
A) lower consumer prices.
B) reduced employment levels.
C) lower tax revenues.
D) lower interest rates.
E) higher employment levels.
Answer: E
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Page 3
Chapter 2: Money Management Skills
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75 Verified Questions
75 Flashcards
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Sample Questions
Q1) Definite financial obligations are referred to as variable expenses.
A)True
B)False
Answer: False
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) A personal cash flow statement presents income and outflows of cash for a given time period,such as a month.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Taxes in Your Financial Plan
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65 Verified Questions
65 Flashcards
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Sample Questions
Q1) "Grossed-up" Canadian dividends are multiplied by what amount in order to determine the level of taxable dividends?
A)15%
B)18.97%
C)45%
D)50%
E)60%
Answer: B
Q2) Jennifer made $2000 worth of charitable donations.Her total income is $36,000 and she is in the 22% federal tax bracket.What is her charitable donations tax credit?
A)$320
B)$440
C)$552
D)$2,000
E)$5,760
Answer: C
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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 "prime" rate is __________________________.
A)The lending rate banks charge their most creditworthy clients
B)The yield on 91-day treasury bills
C)The yield on 30-year government bonds
D)The yield on 1-year government bonds
E)The yield on corporate bonds
Q2) The storage of funds for future use is the purpose of ____________ services.
A)trust
B)borrowing
C)credit card
D)savings
E)cash chequing
Q3) Based on the following information,find the true balance of your chequing account and the sum,if any,of deposits in transit.
Balance on bank statement,$581
Total of outstanding cheques,$200
Service charges,$11
Interest earned on account,$7
Balance in your chequebook,$540
Q4) 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) There is always a transaction fee attached to make a cash advance.
A)True
B)False
Q2) It is legal for creditors to ask or assume anything about a woman's childbearing plans.
A)True
B)False
Q3) A car loan is an example of a consumer loan.
A)True
B)False
Q4) When did installment credit explode on the North American scene?
A) Just after World War II
B) with the advent of television in the late 1940s
C) with the advent of the automobile in the early 1900s
D) during the recession of the 1950s
E) during the inflation of the 1970s
Q5) A line of credit is considered a form of revolving credit.
A)True
B)False
Page 7
Q6) How can you protect yourself against credit/debit card fraud?
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Page 8
Chapter 6: Consumer Purchasing Strategies and Wise
Buying of Motor Vehicles
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87 Verified Questions
87 Flashcards
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Sample Questions
Q1) The most commonly purchased type of credit insurance is credit life insurance. A)True
B)False
Q2) Which of the following may indicate potential debt problems?
A) paying only the minimum balance each month.
B) always borrowing to make it to next payday.
C) your wages have been garnished to pay for debt.
D) your utility company cuts off service because your bills are unpaid.
E) paying only the minimum balance each month,always borrowing to make it to next payday,your wages have been garnished to pay for debt,and your utility company cuts off service because your bills are unpaid.
Q3) Compounding the annual percentage rate (APR)four times a year is equivalent to:
A) the annual percentage rate (APR)quoted by a financial institution.
B) the annual percentage rate (APR)compounded semi-annually.
C) the effective annual rate (EAR)annually.
D) the effective annual rate (EAR)semi-annually
E) the effective annual rate (EAR)quarterly.
Q4) The Annual Percentage Rate is the percentage cost of credit on a yearly basis. A)True B)False
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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) What factors influence the type of housing a family will select?
Q2) Renting is more advantageous than buying a home for A) lower short-term living costs.
B) financial benefits.
C) long-term investment purposes.
D) receiving tax benefits.
E) permanence of residence.
Q3) A cost associated with home buying would be A) appraisal.
B) property taxes.
C) legal fees.
D) A & B are correct.
E) A,B and C are correct.
Q4) A split-rate mortgage helps to reduce interest rate risk.
A)True B)False
Q5) Variable rate mortgages with a rate cap prevent the borrower from having to pay an interest rate significantly higher than the one in the original agreement. A)True
B)False
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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) No-fault insurance systems have consistently reduced the time and costs involved in settling claims.
A)True
B)False
Q2) ____________ provides coverage for the risk of financial loss due to legal expenses,medical expenses,lost wages,and other expenses associated with injuries caused by an automobile accident for which you were responsible.
A) Medical payments
B) No-fault insurance
C) Uninsured motorist's protection
D) Bodily injury liability
E) Comprehensive insurance
Q3) The requirement for a minimum level of home insurance coverage refers to which of the following?
A) Deductible
B) Specified perils
C) Endorsement
D) Co-insurance
E) Basic
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Page 11
Chapter 9: Health and Disability Income Insurance
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) The premium for non-cancelable and guaranteed renewable disability income insurance is higher,
A) therefore,younger people should skip these coverages.
B) hence,the insurance companies enjoy better profit margins.
C) therefore,very few older workers should carry these coverages.
D) but the coverages are well worth the extra cost
E) hence,the policy pays benefits for life.
Q2) A factor that affects the cost of a life insurance policy is
A) the seasons.
B) inflation.
C) provincial laws.
D) federal laws.
E) the mortality rate.
Q3) Critical insurance illness usually provides money for care if you are diagnosed with a serious illness such as AIDS.
A)True
B)False
Q4) Single persons living alone have little or no need for life insurance.
A)True
B)False
Page 12
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Chapter 10: Financial Planning With Life Insurance
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93 Flashcards
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Sample Questions
Q1) Which of the following investments offers the greatest growth potential?
A) bank accounts
B) common stock
C) corporate bonds
D) government bonds
E) option bonds
Q2) Bad products or poor financial management may result in investors experiencing ____________ risk.
A) business failure
B) interest rate
C) inflation.
D) market
E) income
Q3) All except which one of the following are good ways to acquire money for starting an investment program?
A) Pay bills first,and then save a reasonable amount of money for investment.
B) Participate in an elective savings program offered by your employer.
C) Make a special savings effort one month per year.
D) Borrow money specifically for investment purposes.
E) Take advantage of gifts,inheritances,and windfalls.
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Chapter 11: Investing Basics and Evaluating Bonds
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Today,it is possible for investors to access a corporation's home page in order to evaluate an investment in its stock.
A)True
B)False
Q2) A request that a stock be bought or sold at a specified price is called a ____________ order.
A) market
B) limit
C) stop
D) round
E) discretionary
Q3) The price-earnings ratio is calculated by dividing the earnings per share of a stock by its fair market value.
A)True
B)False
Q4) The term churning is to describe the excessive buying and selling of securities to generate commissions.
A)True
B)False
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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) Sarah Peterson has been thinking about investing in corporate bonds.She is concerned about safety and wants the most secure bond investment possible.She would most likely invest in ____________ bonds.
A) debenture
B) subordinated.
C) indenture
D) convertible
E) mortgage
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) Although unpopular a few years back,more and more corporations are issuing bearer bonds.
A)True
B)False
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 the following is not a true statement?
A) Many investors have found a wealth of information about mutual fund investments on the Internet.
B) It is possible to obtain market quotes for a mutual fund by using the Internet.
C) Most investment companies that sponsor mutual funds have a Web page.
D) It is impossible to obtain online information about a mutual fund by accessing the Web page for one of the professional advisory services.
E) A mutual fund's Web site will provide information about how to open an account,current market quotes,and other important information about a specific fund.
Q2) The management fee for most mutual funds ranges between ____________ percent.
A) 0.5 to 4
B) 1 to 2
C) 2 to 4
D) 5 to 6½
E) 7 to 8½
Q3) Why do investors purchase mutual funds instead of purchasing stocks,bonds,or other investments on their own?
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Chapter 14: Starting Early: Retirement and Estate Planning
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83 Verified Questions
83 Flashcards
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Sample Questions
Q1) One of the following is not an advantage of the Canada Pension Plan retirement income:
A) earned income partially offsets benefits.
B) forced savings.
C) portable from job to job.
D) cost shared with employer.
E) survivorship rights.
Q2) 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
Q3) Federal programs are the major source of public retirement pensions.
A)True
B)False
Q4) At age 65,the life expectancy of a woman is 13 years.
A)True
B)False
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Chapter 15: Daily Spending Diary
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72 Flashcards
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Sample Questions
Q1) Which type of will is usually prepared with an attorney's assistance?
A) informal will
B) formal will
C) holographic will
D) letter of last instruction
E) trustor's will
Q2) A person who assumes the responsibilities of providing the children with personal care and managing the estate for them is called a(n):
A) beneficiary.
B) executor.
C) trustee.
D) guardian.
E) executrix.
Q3) What is estate planning? What are the personal aspects of estate planning?
Q4) Under provincial family law,getting married does not usually void a will made prior to the wedding.
A)True
B)False
Q5) How do wills and trusts help in planning your estate?
Q6) What are the legal aspects of estate planning?
Page 18
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