Introduction to Personal Finance Exam Review
Course Introduction
Introduction to Personal Finance provides students with the foundational knowledge and practical skills necessary to make informed decisions about their financial futures. The course covers essential topics such as budgeting, saving, investing, credit management, insurance, and retirement planning. Students will learn how to set financial goals, understand the basics of financial statements, and explore strategies for managing debt and building wealth. By emphasizing real-life applications and responsible money management, this course empowers students to take control of their personal finances and develop habits that contribute to long-term financial stability and well-being.
Recommended Textbook
Personal Finance 7th Canadian Edition by Jack Kapoor
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15 Chapters
1696 Verified Questions
1696 Flashcards
Source URL: https://quizplus.com/study-set/2458
Page 2
Chapter 1: Personal Financial Planning: An Introduction
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112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/48853
Sample Questions
Q1) Your life situation is affected by which of the following?
A)Buying a car
B)Vacations
C)Getting a raise at work
D)Retirement
E)Grades
Answer: D
Q2) The stages that an individual goes through based on age, financial needs, and family situation is called the:
A)adult life cycle.
B)budgeting procedure.
C)personal economic cycle.
D)financial planning process
E)tax planning process.
Answer: A
Q3) Household size is a major influence on personal financial planning decisions.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Money Management Strategy: Financial
Statements and Budgeting
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) A person's net worth is the difference between the value of the items owned and the amounts owed to others.
A)True
B)False
Answer: True
Q2) Spending money on current living expenses reduces the amount you can use for saving and investing for long-term financial security is an example of a(n):
A)Opportunity cost
B)Cash flow management
C)Spending habits
D)Savings plan
Answer: A
Q3) An organized system of financial records provides a basis for:
A)Completing required tax reports.
B)Handling long term business affairs
C)Handling moderate term business affairs
D)Cash flow projections
Answer: A
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Chapter 3: Planning Your Tax Strategy
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99 Verified Questions
99 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) Money received in the form of dividends or interest is ____________ income.
A)business income
B)earned or employment
C)excluded
D)capital gain
E)investment
Answer: E
Q3) Taxes are only considered in financial planning in April.
A)True
B)False
Answer: False
Q4) One of the legitimate methods to reduce one's taxes is tax avoidance
A)True
B)False
Answer: True
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Chapter 4: Banking Services of Financial Institutions
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82 Verified Questions
82 Flashcards
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Sample Questions
Q1) A personal cheque with guaranteed payment is called a
A)traveler's cheque.
B)bank draft.
C)certified cheque.
D)money order.
E)cashier's cheque.
Q2) If the annual rate is 3% and inflation is 2%, then the approximate real rate of return is:
A)5.00%
B)3.00%
C)1.00%
D)- 1.0%
E)0%
Q3) Short term financial servies for short term needs include which one of the following?
A)Cheque cashing
B)Cash loans for autos
C)RRSP's
D)Insurance
E)Budget counselling
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6
Chapter 5: Introduction to Consumer Credit
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138 Verified Questions
138 Flashcards
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Sample Questions
Q1) What would your credit rating be if you pay between 60 and 90 days from the due date, or not more than three payments late?
A)R5
B)R2
C)R6
D)R3
E)R9
Q2) What would your credit rating be if your credit is too new to rate?
A)R5
B)R2
C)R6
D)R0
E)R9
Q3) What is not a type of revolving credit?
A)Credit cards
B)Lines of credit
C)Overdraft protection
D)Mortgages
E)Charge cards
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Page 7
Chapter 6: Choosing a Source of Credit: The Costs of Credit
Alternatives
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113 Verified Questions
113 Flashcards
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Sample Questions
Q1) The shorter the term of the loan the greater the amount of interest charges that must be paid.
A)True
B)False
Q2) Consumer credit counselling services are often offered by Universities.
A)True
B)False
Q3) What is the EAR for a $100 loan when the interest is compounded monthly and the stated annual interest rate is 7 percent?
A)7.0 percent
B)8.0 percent
C)7.23 percent
D)12.0 percent
E)16.0 percent
Q4) In a straight bankruptcy many, but not all, debts are forgiven.
A)True
B)False
Q5) Inflation decreases the purchasing power of money. A)True
B)False
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Chapter 7: The Finances of Housing
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109 Verified Questions
109 Flashcards
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Sample Questions
Q1) An escrow account is designed to reduce the cost of a mortgage.
A)True
B)False
Q2) Zoning laws are restrictions on how the property area can be used.
A)True
B)False
Q3) Which of the following would increase the amount that a person could afford to spend on a home?
A)higher financial obligations
B)decreased interest rates
C)increased down payment
D)decreased family income
E)increased monthly living expenses
Q4) A real estate agent can best assist a homebuyer by
A)assisting in getting a mortgage
B)setting the purchase price.
C)offering new home warranties.
D)assisting you in obtaining financing.
E)paying the first month's mortgage payment.
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Chapter 8: Home and Automobile Insurance
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99 Verified Questions
99 Flashcards
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Sample Questions
Q1) ____________ 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
Q2) Identify the areas covered by tenants' insurance. I Personal property protection.
II Additional living expenses.
III Personal liability.
IV Replacement value of premises.
A)I, II and III only
B)I and III only
C)II, III and IV only
D)I, II, III and IV
E)I, II, and IV
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Chapter 9: Life, Health, and Disability Insurance
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) If you wanted to pay exactly the same life insurance premium each year, you would choose a
A)variable life policy.
B)participating policy.
C)term insurance policy.
D)nonparticipating policy.
E)endowment policy.
Q2) Suppose you are a typical family.Your annual income is $60,000.Use the income replacement method to determine your need for life insurance.Your insurance should be in the amount of (use 7 years)
A)$245,000.
B)$294,000.
C)$345,000.
D)$400,000.
E)$450,000.
Q3) Agents and direct insurers represent multiple insurance companies and can offer the products of those companies where the agent or direct insurer has a contract.
A)True
B)False
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Page 11
Chapter 10: Fundamentals of Investing
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) Investing in global may result in investors experiencing ____________ risk.
A)currency exchange rate
B)interest rate
C)inflation.
D)market
E)income
Q2) The maturity dates for most bonds range between ____________ years.
A)0 to 5
B)5 to 15
C)10 to 15
D)1 to 30
E)1 to 40
Q3) Which of the following investments has the best rate of return when adjusted for inflation?
A)savings accounts
B)corporate bonds
C)Canadian treasury bills
D)common stocks
E)preferred stocks
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Page 12
Chapter 11: Investing in Stocks
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) A corporation whose stock is owned by relatively few people and is not traded openly in stock markets is called a(n) ____________ corporation.
A)public
B)private
C)partnership
D)common
E)preferred
Q2) PowerLight Corporation holds its annual meeting in April.Marie Stewart, who owns stock in the company, cannot attend the meeting.She can vote by a:
A)voluntary certificate.
B)preemptive right.
C)participatory certificate.
D)cumulative certificate.
E)proxy.
Q3) A limit order is a request that a stock be purchased or sold at the current market price.
A)True
B)False
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13
Chapter 12: Investing in Bonds
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) A bond issued with detachable coupons that the bondholder must present to a paying agent or the issuer in order to receive interest payments is called a __________ bond.
A)registered coupon
B)certified
C)revenue
D)zero-coupon
E)general obligation
Q2) When a bond is selling for less than its face value, it is said to be selling at a: A)discount.
B)premium.
C)commission.
D)conservative value.
E)prospectus value.
Q3) In reality, there is no guarantee that convertible bondholders will convert to common stock even if the price of the common stock does increase.
A)True
B)False
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14
Chapter 13: Investing in Mutual Funds
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) Capital gain distributions result when you decide to sell shares in a mutual fund at a price higher than you paid.
A)True
B)False
Q2) Which of the following publications does not provide readers with an annual survey of mutual funds?
A)Canadian Business
B)Report on Business
C)Canada's Guide to Quality Mutual Funds
D)IE: Money
E)The Economist
Q3) What is not an advantage of investing in mutual funds?
A)Diversification
B)Professional management
C)Easy of buying and selling shares
D)Potential market risk
E)Switching privileges
Q4) Index funds are bought at end-of-day prices.
A)True
B)False
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Chapter 14: Retirement Planning
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99 Verified Questions
99 Flashcards
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Sample Questions
Q1) Which type of housing is designed to allow people to stay in their homes as they grow older?
A)Accessory apartment
B)ECHO unit
C)Rooming house
D)universal design
E)professional companionship arrangement
Q2) An employee whose pension has not vested will lose all contributions to her pension plan if she transfers to a new employer.
A)True
B)False
Q3) Your retirement will last only about 15 years.
A)True
B)False
Q4) You can qualify for reduced CPP retirement benefits at age 50.
A)True
B)False
Q5) You can expect to spend about 16 to 20 years in retirement.
A)True
B)False
Page 16
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Chapter 15: Estate Planning
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95 Verified Questions
95 Flashcards
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Sample Questions
Q1) A spousal trust can be classified as either an inter vivos trust or a testamentary trust.
A)True
B)False
Q2) Which of the following is not a potential tax that may be incurred at death?
A)income tax due to deemed disposition rules
B)provincial probate taxes
C)estate taxes
D)U.S.estate taxes on U.S.assets
E)Canadian estate taxes on U.S.assets
Q3) Changes to your marital status can affect the validity of your will.
A)True
B)False
Q4) A living will _______________
A)is a legal term in Canada
B)is also called a holographic will
C)is part of a formal will
D)is also called an ethical will
E)should be signed by witnesses
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