Life Skills and Personal Finance Test Preparation
Course Introduction
This course equips students with essential life skills and a foundational understanding of personal finance to help them navigate adulthood with confidence. Topics include effective communication, decision-making, time management, and stress management, as well as key concepts in budgeting, saving, investing, credit management, and responsible borrowing. By exploring real-world scenarios and practical tools, students gain the knowledge and skills necessary to make informed choices, achieve personal goals, and ensure financial well-being throughout their lives.
Recommended Textbook
Personal Finance 3rd Canadian Edition by Jeff Madura
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16 Chapters
1387 Verified Questions
1387 Flashcards
Source URL: https://quizplus.com/study-set/991
Page 2
Chapter 1: Overview of a Financial Plan
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97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/19493
Sample Questions
Q1) Which of the following is a decision that you would make during estate planning?
A)How you will minimize taxation and probate
B)How much money you should allocate to retirement plans
C)How your wealth will be distributed before and after your death
D)How to enhance your net worth
Answer: C
Q2) Which of the following is a credit management decision?
A)Purchasing a used car with cash
B)Putting money into an emergency fund
C)Obtaining a student loan to attend college or university
D)Putting money into short-term investments
Answer: C
Q3) You must be employed before you can establish a credit rating.
A)True
B)False
Answer: False
Q4) According to a 2011 study,75 percent of youth carry debt.
A)True
B)False
Answer: False
Page 3
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Chapter 2: Tools for Financial Planning - Applying Time
Value Concepts
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82 Verified Questions
82 Flashcards
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Sample Questions
Q1) Hazel needs to plan the mortgage amount she can afford.How much would she need to pay monthly on a mortgage of $200 000 at six percent interest,calculated semi-annually and amortized over 30 years?
A)$555
B)$1211
C)$1199
D)$1190
Answer: D
Q2) Julian is a student relying on student loans.He feels he would like to borrow an extra $4000 each year for the next four years to take vacations to recover from studying.Assume that no interest accrues until he completes his education and begins paying off the loan.The interest rate for the loan amount will be seven percent per year compounded monthly and he will pay it off over five years.What would his monthly payment be on this loan?
A)$374
B)$267
C)$271
D)$317
Answer: D
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Chapter 3: 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) What is the purpose of creating your personal cash flow statement?
A)To develop your budget
B)To create your balance sheet
C)To track your net worth
D)For your annual tax return records
Answer: A
Q2) Which of the following has the best debt-to-asset ratio?
A)John has total assets of $600 000 and total debt of $400 000.
B)Fred has total assets of $36 000 and total debt of $23 000.
C)Maria has a monthly gross income of $8000 and expenses of $6000.
D)Cassandra has a gross monthly income of $2000 and expenses of $1200. Answer: B
Q3) Which of the following is not a True statement about mutual funds?
A)They are managed by professional managers.
B)They are only invested in stocks.
C)A minimum investment is required.
D)The value of shares is reported in The Globe and Mail.
Answer: B
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Chapter 4: Tools for Financial Planning - Using Tax Concepts for Planning
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87 Verified Questions
87 Flashcards
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Sample Questions
Q1) Organizing your records to take advantage of tax credits and deductions and investing in tax sheltered accounts like RRSPs and TFSAs are the best ways to avoid taxes.
A)True
B)False
Q2) The T4 slip provided by your employer shows all your earnings and deductions for the year.
A)True
B)False
Q3) Your earnings last year were $120 000,which is the 40 percent marginal tax bracket and 30 percent average tax bracket,in your province.How much would your taxes be reduced if you made the full RRSP contribution for this year (and had no additional RRSP room)?
A)$6480
B)$8640
C)$21 600
D)$12 960
Q4) Tax avoidance may be subject to both criminal and civil prosecution.
A)True
B)False
6
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Chapter 5: Managing Your Financial Resources - Banking
Services and Managing Your Money
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83 Verified Questions
83 Flashcards
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Sample Questions
Q1) The difference between a bank and a trust company is that only the trust company can provide estate planning and administrative services.
A)True
B)False
Q2) Illustrate how you would quantify the effective annual interest rate for someone who was charged two $40 NSF fees on their account due to bouncing a cheque (writing a cheque when there are not enough funds in their bank account to cover it)for $1000 which would have been covered by their pay cheque in five days' time.Explain the effective interest rate charged if they had overdraft protection with a 21 percent interest charge and a $5.00 fee.Comment on better ways to manage liquidity than either of these options.
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) A TFSA and a Term Deposit are essentially the same thing.
A)True
B)False
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Chapter
Securing
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99 Verified Questions
99 Flashcards
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Sample Questions
Q1) If Brian has a home worth $400 000 and a mortgage of $200 000,he should be able to get a HELOC for $160 000 at a better interest rate than if he got an unsecured line of credit.
A)True
B)False
Q2) A house was purchased for $300 000 and has a market value of $325 000 and a mortgage of $213 000.The equity in this house is
A)$87 000.
B)34.5 percent.
C)$112 000.
D)$25 000.
Q3) If your only credit is a credit card with a $15 000 limit which you've had for ten years,and you keep your balance below $2000 and always pay at least the minimum due,you will have a good credit rating.
A)True
B)False
Q4) When you use credit to purchase a second coat at half price,you save money. A)True B)False
Page 8
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Chapter 7: Managing Your Financial Resources -
Purchasing and Financing
a Home
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79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/19499
Sample Questions
Q1) In addition to closing costs,realtor fees of three to seven percent are charged when you buy a home.
A)True
B)False
Q2) Gross debt service ratio refers to a calculation of all mortgage-related financing and must not exceed 32 percent of total household income.
A)True
B)False
Q3) Which of the following is True regarding conventional mortgages?
A)They require a down payment of at least twenty-five percent.
B)They require a down payment of at least twenty percent.
C)They receive more favourable interest rates for the buyer.
D)They are a form of closed mortgage.
Q4) What is the best advice regarding mortgage financing?
A)Get a pre-approval certificate to guarantee your mortgage approval.
B)Let an expert choose the type and length of mortgage you will need.
C)Ensure the mortgage payments do not absorb all your excess income.
D)Select the maximum payments you can afford based on your cash flow.
Page 9
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Chapter 8: Protecting Your Wealth - Auto and Homeowner's Insurance
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88 Verified Questions
88 Flashcards
Source URL: https://quizplus.com/quiz/19500
Sample Questions
Q1) Which of the following statements is True concerning comprehensive and collision insurance?
A)If you are financing a car,this insurance is required by the lender.
B)Financially,it is advisable to take out the lowest deductible possible.
C)If you were in an accident,this coverage could enable you to replace your older car with a new one.
D)The deductible is really a form of transferring insurance.
Q2) You are in an accident which causes $3000 in damages to your car,and your policy has a $500 deductible for collision and $300 for comprehensive.If the other driver is at fault,which is correct?
A)You pay $500 deductible and claim it from the other driver's insurance company.
B)You pay $300 deductible and claim it from the other driver's insurance company.
C)Your insurance company covers the deductible.
D)You have to pay the deductible and can claim it back if you have an umbrella policy.
Q3) Drivers considered "high risk" cannot get automobile insurance at any price.
A)True
B)False
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Page 10
Chapter 9: Protecting Your Wealth - Health and Life Insurance
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95 Verified Questions
95 Flashcards
Source URL: https://quizplus.com/quiz/19501
Sample Questions
Q1) Jane and Joe each earn $55 000 and have estimated that over the next 20 years will need 60 percent of total income to manage debt,pay off the mortgage,and pay for children's postsecondary education.How much life insurance should they apply for? (Investment returns are 6 percent. )
A)$587 000
B)$1 320 000
C)$843 000
D)$757 000
Q2) Which of the following would be of little concern when calculating the amount of disability insurance needed?
A)The cost of one's monthly mortgage payments
B)One's level of CPP disability coverage
C)One's employee group disability insurance coverage
D)One's financial goals
Q3) Individual health insurance plans
A)duplicate coverage offered by group plans.
B)expire when you resign your employment.
C)have less expensive premiums.
D)are purchased directly through agents.
11
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Chapter 10: Personal Investing - Investing Fundamentals
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87 Verified Questions
87 Flashcards
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Sample Questions
Q1) A company has a choice of whether to distribute dividends to common shareholders or to keep their profits in the company as retained earnings.
A)True
B)False
Q2) Explain how it is possible to add more risky assets to a portfolio and reduce the overall risk.Give a specific example of how this could be done for a conservative portfolio.
Q3) Describe how someone's risk tolerance directly impacts their retirement planning.Use an example to illustrate how much difference it would make if someone was a conservative investor who averaged a six percent return over 35 years on their savings versus another more aggressive investor who averaged eight percent over the same period.
Q4) Which is True about dividends?
A)They are earnings distributed to shareholders.
B)They usually provide the same return as bonds.
C)They are retained earnings.
D)They change each quarter.
Q5) 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 11: Personal Investing - Investing in Stocks
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84 Verified Questions
84 Flashcards
Source URL: https://quizplus.com/quiz/19503
Sample Questions
Q1) The best assessment of the performance of your selection of stocks is to compare the returns to
A)the average gains or losses you had in the last five years.
B)the average returns of GICs.
C)a comparable stock index during the same period.
D)the prime rate set by the Bank of Canada.
Q2) A firm's financial leverage indicates its reliance on debt to support its operations. A)True B)False
Q3) You purchased stock worth $10 000 on margin (50 percent).Now the value of your stock has declined to $7000 and you receive a margin call.How much cash do you need to bring the margin back to the minimum level?
A)$1500
B)$3000
C)$5000
D)$2000
Q4) The NYSE Euronext is the largest stock exchange in the world. A)True B)False
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Chapter 12: Personal Investing - Investing in Bonds
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84 Verified Questions
84 Flashcards
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Sample Questions
Q1) When there is an element of default risk on a bond,the interest rate will include
A)additional premium.
B)risk premium.
C)default premium.
D)nominal premium.
Q2) If a company anticipates a substantive decline in interest rates during the term of the bond,which feature is likely to be included in its bond offering?
A)Extendible
B)Callable
C)Convertible
D)retractable
Q3) A bond with a credit rating of Aa is riskier than a bond with a credit rating of A.
A)True
B)False
Q4) Name and explain five risks involved with investing in bonds and indicate the magnitude of these risks and ways to mitigate them.
Q5) List and describe three strategies to invest in bonds.
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Page 14
Chapter 13: Personal Investing - Investing in Mutual Funds
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83 Verified Questions
83 Flashcards
Source URL: https://quizplus.com/quiz/19505
Sample Questions
Q1) The net asset value (NAV)per share of a mutual fund is determined by the market value of securities owned minus liabilities divided by the number of mutual fund units outstanding.
A)True
B)False
Q2) What is the most important difference between an index mutual fund and an exchange traded fund (ETF)?
A)ETFs are better managed.
B)ETFs trade like stocks.
C)There are more types of ETFs.
D)ETFs have higher MERs.
Q3) Index stock funds contain every company's stock that make up the particular index.
A)True
B)False
Q4) Which of the following uses the most risky strategies?
A)Sector funds
B)Hedge funds
C)Segregated funds
D)Small-Cap funds
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Chapter 14: Retirement and Estate Planning - Retirement Planning
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82 Verified Questions
82 Flashcards
Source URL: https://quizplus.com/quiz/19506
Sample Questions
Q1) In 2014,if you were a resident of Canada from age 24 to 65,the monthly OAS benefit payment you would have received would have been approximately
A)$550.
B)$650.
C)$750.
D)$850.
Q2) Which is a key difference between RRSPs and TFSAs?
A)TFSA withdrawals are taxed.
B)RRSPs' contribution limit accumulates.
C)TFSAs give tax deductions on contributions.
D)RRSP withdrawals are taxed.
Q3) A pensioner who only receives Old Age Security income will also receive the maximum Guaranteed Income Supplement.
A)True
B)False
Q4) Saving $100 per month from age 20 to age 70 with an eight percent return will give you over three quarter million dollars.
A)True
B)False
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Chapter 15: Retirement and Estate Planning - Estate Planning
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79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/19507
Sample Questions
Q1) A non-continuing power of attorney with a specified task
A)becomes enforceable as a will if the grantor dies.
B)becomes transferable if the attorney is incapacitated.
C)expires when the task or event has been completed.
D)has all-encompassing power if the grantor becomes incapacitated.
Q2) If no named executor is able to perform the appointed tasks,
A)the surviving spouse would become the executor.
B)the courts would appoint an administrator.
C)the next of kin becomes the executor.
D)the will becomes invalid.
Q3) A limited power of attorney for finances for a specific time while you are travelling outside the country can give someone you designate the power to make which of the following decisions?
A)Sell stock in your portfolio
B)Make a new power of attorney for you
C)Decide which assets should be sold if you pass away before returning
D)Decide which care home you can afford if you become incapacitated during the trip
Q4) Name and explain the different features of three types of trusts and give circumstance where they would be applicable.
Page 17
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Chapter 16: Synthesis of Financial Planning - Integrating
the Components of a Financial
Plan
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77 Verified Questions
77 Flashcards
Source URL: https://quizplus.com/quiz/19508
Sample Questions
Q1) Some large well-known firms pay no dividends,but most do.
A)True
B)False
Q2) Investing in mutual funds is a conservative investment strategy.
A)True
B)False
Q3) Maintaining all documents in a safe place and leaving instructions on their location is not necessary in the high-tech age.
A)True
B)False
Q4) Property and casualty insurance protects your A)home and family.
B)car and home.
C)home and health.
D)home and income.
Q5) Once someone is deemed incompetent,the only way you can make arrangements to look after their financial decisions is to complete a durable power of attorney.
A)True
B)False
Page 18
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