Money Management Exam Questions
Course Introduction
Money Management is a foundational course that explores the principles and practices of effective personal financial planning. Students will learn how to create budgets, manage expenses, understand credit and debt, establish savings goals, and make informed decisions about banking, investing, and insurance. The course also covers topics such as tax planning, retirement preparation, and strategies for building and maintaining financial security in both short-term and long-term contexts. Emphasis is placed on practical tools, real-life case studies, and applicable skills to help students develop sound money management habits and achieve financial well-being.
Recommended Textbook
Personal Finance 4th Canadian Edition by Jeff Madura
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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 higher the interest rate,the lower the present value interest factor,other things being equal.
A)True
B)False
Answer: True
Q2) Ralph wants to know what he should be able to save in his child's RESP account if he contributes $2,500 per year and also gets the CES grant of $500 each year.He wants to assume a conservative investment return of four percent annual return and that he will only contribute until the child is 15 (assume 15 years of $3000 deposits made at the end of the year).
A)$46 500
B)$52 200
C)$65 500
D)$60 700
Answer: D
Q3) The nominal interest rate is also called an annual percentage rate (APR).
A)True
B)False
Answer: True
Page 3
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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) Your net worth can change even if your net cash flows are zero.
A)True
B)False Answer: True
Q2) Paying off a credit card with savings will have what effect on net worth?
A)Increase
B)Decrease
C)No effect
D)Insufficient data
Answer: C
Q3) It is possible to budget for irregular expenses paid infrequently.
A)True
B)False
Answer: True
Q4) Cash outflows represent your liabilities,such as the pay-off value on your car or home.
A)True
B)False
Answer: False
4
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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) Knowledge of individual income taxes is somewhat relevant to financial planning. A)True
B)False Answer: False
Q2) Which of the following best summarizes the correct process?
A)Calculate total income,subtract tax credits and deductions,determine refund or balance owing.
B)Add all deductions and subtract the credits from total income,determine refund or balance owing.
C)Calculate total income,deduct RRSP contribution,apply tax credits and deductions,determine refund or balance owing.
D)Calculate total income,subtract deductions,calculate taxable income,apply tax credits,determine refund or balance owing.
Answer: D
Q3) The spousal/common law tax credit is available to those supporting a spouse who had earnings under $11 635 in 2017.
A)True
B)False
Answer: True
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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) 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.
Q2) Which of the following is a depository institution?
A)Manulife Securities
B)Bank of Nova Scotia
C)Capital One Bank
D)RBC Insurance
Q3) A total of $80 in charges for writing an NSF cheque is a real possibility.
A)True
B)False
Q4) The Canada Deposit Insurance Corporation insures money on deposit at
A)insurance companies.
B)brokerage and securities dealers.
C)chartered banks.
D)all of the above.
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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
Source URL: https://quizplus.com/quiz/9171
Sample Questions
Q1) What would be the real cost of borrowing in the following case? A home equity loan is advertised at three percent compounded monthly,however,there is a legal fee of $400 and appraisal fee of $450 to set up the house as collateral.If Sarah needs to borrow $20 000 for one year,at which time will be able to repay the full amount,what is the effective rate of borrowing the $20 000 for the year?
A)3)04%
B)7)29%
C)7)25%
D)4)25%
Q2) Which of the following statements is true regarding a review of your credit agency report?
A)You will not have authority to make corrections,as the information must come from a financial institution.
B)It will help determine if there are credit cards you should apply for to improve your credit standing.
C)It will reveal if you have sufficient income to carry additional debt.
D)It will reveal deficiencies that you can work on to improve your credit rating.
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Page 7
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 would be the best mortgage option if you anticipate a windfall in the next year or two?
A)A one-year closed fixed-rate mortgage
B)A closed convertible five-year VRM
C)An open variable-rate mortgage
D)A closed two-year VRM
Q2) How are most home purchases initially funded?
A)With a vendor take-back mortgage
B)With a 5 to 20 percent down payment and a mortgage
C)With a 0 to 5 percent down payment and a mortgage
D)With a 25 to 50 percent down payment and a mortgage
Q3) The total household income available is $3963.Mortgage payments including taxes,principal,and interest are $1189.In addition,there are condo fees of $126 and heating costs of $56 monthly and a car lease of $241.What is the gross debt service ratio?
A)40.7 percent
B)33.0 percent
C)39.1 percent
D)34.6 percent
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Chapter 3: Protecting Your Wealth - Auto and Homeowner's Insurance
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88 Verified Questions
88 Flashcards
Source URL: https://quizplus.com/quiz/9173
Sample Questions
Q1) It is a good idea to list all of your personal assets,estimate the market value of each item,and then film the contents of your house with a video camera to be able to show proof of their existence.
A)True
B)False
Q2) Comprehensive coverage insures Peter against damage to his car that results from something such as hail or vandalism.
A)True
B)False
Q3) Some credit cards provide you with collision and comprehensive insurance benefits if you use that card to pay for car rentals.
A)True
B)False
Q4) If your neighbour falls down the steps in your home and sues you for damages,you could be held responsible to pay compensation for his or her injuries and rehabilitation.
A)True
B)False
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Chapter 3: Protecting Your Wealth - Health and Life Insurance
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95 Verified Questions
95 Flashcards
Source URL: https://quizplus.com/quiz/9174
Sample Questions
Q1) The death benefit and cash values are not guaranteed in a universal life insurance contract but are in whole life.
A)True
B)False
Q2) Jenny has no dependants,an annual income of $50 000,and debt of $100000 .How much insurance should she buy using the income method and a factor of 10?
A)none
B)$100 000
C)$400 000
D)$500 000
Q3) Which of the following is correct regarding long-term care insurance?
A)It has an elimination period before owners are eligible to have their long-term care costs covered.
B)It is relatively inexpensive and good value for those over age 60.
C)It covers most Canadians over age 65 who receive care due to a long-term health problem.
D)It offers standard coverage and insurance premiums.
Q4) From the employer's perspective,describe four advantages for group health insurance plans.
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Chapter 4: Personal Investing - Investing Fundamentals
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89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/9175
Sample Questions
Q1) Buying more of a stock that has just plummeted in value is an example of A)averaging your cost base down.
B)purchasing stocks on sale.
C)dollar cost averaging.
D)taking excessive risk to recover from a losing position.
Q2) You are investing a lump sum of $7200 with a goal of saving $200 000 total in 30 years.What annual interest rate on your investments would you need to reach your goal?
A)15 percent
B)11.7 percent
C)11.3 percent
D)12.4 percent
Q3) Real estate is a good investment option for individuals and it offers the same liquidity as stocks or bonds.
A)True
B)False
Q4) Savvy investors can find investments that generate high rates of return with low levels of risk.
A)True
B)False
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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) What can be said about broker and analyst recommendations?
A)They generally beat the markets.
B)They tend to be optimistic on "buy" recommendations.
C)They cannot own the stocks they recommend.
D)They tend to give more "sell" recommendations.
Q2) The Toronto Stock Exchange (TSX)is the only Canadian stock exchange.
A)True
B)False
Q3) A brokerage firm currently limits the margin rate to 70 percent.The amount that can be borrowed for a transaction to buy 100 shares at $50 is
A)$4000.
B)$3500.
C)$5000.
D)$1500.
Q4) Which are the main Canadian stock exchanges?
A)TSX,TSX Venture Exchange and Montreal Exchange
B)TSX,NASDAQ,and Montreal Exchange
C)TSX,TSX Venture Exchange and Canadian OTC
D)TSE,NASDAQ and Canadian OTC
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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 corporate bond trading at below par will have
A)a higher yield to maturity than the coupon rate.
B)a lower yield to maturity than the coupon rate.
C)lower risk than one trading at par.
D)higher risk than one trading at par.
Q2) Bond interest is exempt from income tax (in the current year)if it is held in an RRSP,a TFSA or an RESP.
A)True
B)False
Q3) A bond's yield to maturity is the annualized percentage return of both interest and capital gains or losses if the bond were held until it matured.
A)True
B)False
Q4) Canada Savings Bonds and T-Bills are both secure short-term debt securities which can be purchased on the secondary market.
A)True
B)False
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
Source URL: https://quizplus.com/quiz/9166
Sample Questions
Q1) The most important expense statistic mentioned in the Fund Facts is the A)gross expense ratio.
B)management expense ratio.
C)total expense ratio.
D)trading expense ratio.
Q2) You are considering investing in a no-load mutual fund that focuses on growth stocks or in an index fund based on the TSX.The growth stocks fund had a five year average annual return of 11 percent with MER of 2.6 percent.The index fund had a five year average annual return of 11 percent with MER of 1.1 percent.Assuming equal risk,you should buy
A)the index fund because it has a lower MER.
B)the growth fund because its portfolio performed better.
C)some of both,for diversification,as they performed equally.
D)neither,because the expenses are too high for funds of this type.
Q3) A mutual fund that buys only the stocks of the TSX is a good example of a sector fund.
A)True
B)False
Q4) List considerations you should take into account when purchasing a mutual fund.
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Chapter 5: Retirement and Estate Planning - Retirement Planning
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84 Verified Questions
84 Flashcards
Source URL: https://quizplus.com/quiz/9167
Sample Questions
Q1) Pending rule changes from the government will require you to be 67 years old (instead of 65)before you can begin collecting Old Age Security retirement benefits.
A)True
B)False
Q2) If you qualify,the maximum withdrawal allowed under the Home Buyers' Plan (HBP)is
A)$20 000 per person.
B)$25 000 per person.
C)$25 000 per couple.
D)$40 000 per couple.
Q3) A pensioner who only receives Old Age Security income will also receive the maximum Guaranteed Income Supplement.
A)True
B)False
Q4) Defined contribution pension plans are not worth taking advantage of because they are essentially the same as an RRSP.
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) If a spouse dies intestate all their assets will transfer to the surviving spouse.
A)True
B)False
Q2) As long as a holograph is in the handwriting of the testator,it is valid in Canada.
A)True
B)False
Q3) The liability clause in a will serves what purpose?
A)It holds the executor legally liable for any mistakes made in the administration of the will.
B)It absolves the executor of legal liability for any mistakes made in the administration of the will.
C)It holds the executor legally liable for any mistakes made in the administration of the will on in the case of gross negligence.
D)It absolves the executor of legal liability for any mistakes made in the administration of the will if the executor acted in good faith.
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Page 16
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 will increase your net worth over time?
A)Leasing a car
B)Renting a house
C)Buying a house
D)Term insurance
Q2) You must have assets to be able to access financing for large purchases.
A)True
B)False
Q3) What is meant by the financing trade-off?
A)Financing is a necessary evil and people today could not live without it.
B)Financing enables people to get what they want faster but encourages greed.
C)Borrowing can slow the growth of your net worth if it is for depreciating assets.
D)Borrowing is an important tool but it can cause budgeting problems.
Q4) Normally,you should use all of your liquid assets to pay off your loan.
A)True
B)False
Q5) It is possible to have too much insurance.
A)True
B)False
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