Personal Finance
Test Preparation
Course Introduction
Personal Finance is a foundational course designed to equip students with essential knowledge and practical skills to effectively manage their personal economic resources. The course covers topics such as budgeting, saving, investing, credit management, insurance, taxes, and retirement planning. Through real-life scenarios and hands-on activities, students will learn how to create financial plans, make informed financial decisions, and develop strategies to achieve both short-term and long-term financial goals, fostering responsible and sustainable financial habits that can be applied throughout life.
Recommended Textbook
Personal Finance 6th Canadian Edition by Kapoor
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15 Chapters
1555 Verified Questions
1555 Flashcards
Source URL: https://quizplus.com/study-set/3061
Page 2
Chapter 1: Personal Financial Planning: An Introduction
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87 Verified Questions
87 Flashcards
Source URL: https://quizplus.com/quiz/60765
Sample Questions
Q1) The financial planning process is complete once you implement your financial plan.
A)True
B)False
Answer: False
Q2) Assume your uncle will pay you $100 for each of the next two years and $200 in years 3 and these amounts will be paid at year end. Assume the interest rate is 10% for the first two years and 12% for the next two (years 3 and 4). What is your uncle's promise worth in today's dollars? (Round your answer)
A) $317
B) $342
C) $453
D) $512
E) $600
Answer: C
Q3) Developing financial goals is the first step in the financial planning process.
A)True
B)False
Answer: False
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3
Chapter 2: Money Management Strategy: Financial Statements and Budgeting
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95 Verified Questions
95 Flashcards
Source URL: https://quizplus.com/quiz/60758
Sample Questions
Q1) Opportunity costs are only associated with money management decisions involving long-term financial security.
A)True
B)False
Answer: False
Q2) A decrease in net worth would be the result of:
A) income greater than expenses for a month.
B) expenses greater than income for a month.
C) assets greater than expenses.
D) increased earnings on the job.
E) income and expenses equal for a month.
Answer: B
Q3) A personal cash flow statement can serve as the basis for the budget categories used by an individual or family.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Planning Your Tax Strategy
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86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/60757
Sample Questions
Q1) Tax evasion refers to illegal actions to reduce one's taxes.
A)True
B)False
Answer: False
Q2) A field audit requires that a taxpayer visit an auditing agent to clarify some aspect of his or her tax return.
A)True
B)False
Answer: False
Q3) Which of the following is an example of a tax credit?
A) mortgage interest
B) amounts withheld for social insurance
C) individual retirement account contributions
D) caregiver and medical expenses
E) net business income
Answer: D
Q4) Income from a partnership is included under net business income.
A)True
B)False
Answer: True
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Chapter 4: The Banking Services of Financial Institutions
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78 Verified Questions
78 Flashcards
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Sample Questions
Q1) When preparing a bank reconciliation, outstanding cheques should be
A) added to the bank statement balance.
B) subtracted from the bank statement balance.
C) added to the chequebook balance.
D) subtracted from the chequebook balance.
E) added to direct deposits.
Q2) When interest rates are falling, a person would be best served by
A) short term loans
B) short-term savings instruments.
C) same approach as if interest rates are rising.
D) variable-rate loans.
E) long term loans.
Q3) A restrictive endorsement will usually include the words "for deposit only."
A)True
B)False
Q4) The more frequent the compounding, the less a person will earn on a savings account.
A)True
B)False
Q5) What are the main types of financial institutions used by consumers?
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Chapter 5: Introduction to Consumer Credit
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) What are the two general rules of measuring credit capacity?
Q2) A line of credit is considered a form of revolving credit.
A)True
B)False
Q3) Which of these is not a characteristic of Paypal?
A) Facilitates online auction payments.
B) Offers password protected accounts.
C) Allows use of credit cards.
D) Transfers funds in U.S. dollars.
E) No annual fees.
Q4) Consumer credit refers to the use of credit for personal needs (except a home mortgage) by individuals.
A)True B)False
Q5) A credit file is a report which includes the individual's present employer and position, former employer(s), public records and a list of cheques returned for insufficient funds.
A)True B)False
Q6) What are the two basic types of credit? Give examples of both.
Page 7
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Chapter 6: Choosing a Source Credit: the Costs of Credit
Alternatives
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) Increasingly, the bankruptcy debtor is likely to be female.
A)True
B)False
Q2) For some debtors, bankruptcy has become an acceptable tool of credit management.
A)True
B)False
Q3) Which type of credit insurance repays your debt in the event of a loss of income due to illness or injury?
A) credit life insurance
B) credit accident and health insurance
C) credit property insurance
D) credit casualty insurance
E) credit debit insurance
Q4) Over-indebtedness is one of the nation's main family financial problems.
A)True
B)False
Q5) 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 Page 8
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Page 9
Chapter 7: The Finances of Housing
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93 Verified Questions
93 Flashcards
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Sample Questions
Q1) Negotiating a purchase price for a home usually involves an offer and counteroffers.
A)True
B)False
Q2) Current interest rates can affect the price of a home.
A)True
B)False
Q3) If you sell your home without the use of a real estate agent, you should still make use of a
A) broker.
B) insurance agent.
C) lawyer.
D) contractor.
E) rental agent.
Q4) Ease of mobility is an advantage of owning a house.
A)True
B)False
Q5) A split-rate mortgage helps to reduce interest rate risk.
A)True
B)False
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Chapter 8: Home and Automobile Insurance
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90 Verified Questions
90 Flashcards
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Sample Questions
Q1) Anne has an expensive diamond ring. Which coverage from the following list would pay for damage or theft of this item?
A) an umbrella policy
B) a household inventory
C) additional living expense coverage
D) a personal articles endorsement
E) a coinsurance floater
Q2) Personal property refers to building and other structures covered by homeowner's insurance.
A)True
B)False
Q3) The uncertainties of direct and indirect losses due to fire, wind, accident, theft, etc., are called ____________ risks.
A) personal
B) business
C) property
D) liability
E) speculative
Q4) Which type of automobile insurance is usually considered to be most important?
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Chapter 9: Life, Health, and Disability Insurance
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) The easy method of estimating life insurance requirements is remarkably useful.
A)True
B)False
Q2) Which type of health insurance policy may not cover all of your health insurance needs or may deny benefits if you lose your job?
A) group health
B) individual health
C) Basic health
D) Comprehensive medical
E) Disability income
Q3) A co-payment provision requires the policyholder to share the expenses beyond the deductible amount.
A)True
B)False
Q4) Canadians are amongst the most life-insured people in the world.
A)True
B)False
Q5) Renewable term and decreasing term are types of whole life policies.
A)True
B)False
Page 12
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Chapter 10: Fundamentals of Investing
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) A speculative investment is an investment that is made in the hope of earning a relatively large profit over a long period of time.
A)True
B)False
Q2) If interest rates in the overall economy decrease, what will happen to the market value of a corporate bond with a fixed interest rate?
A) The value of the bond will increase.
B) The bond is worthless.
C) The value of the bond will decrease.
D) The value of the bond will not change.
E) It is impossible to determine if the bond's value will increase or decrease.
Q3) Leveraged investing in common shares is expected to increase your net worth. A)True B)False
Q4) A long-term objective may take more than five years to accomplish. A)True B)False
Q5) Describe the sources of investment information investors can use to evaluate a potential investment.
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Chapter 11: Investing in Stocks
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) Assume that you purchased 50 shares of Home Depot stock for $35 a share, that you received an annual dividend of $0.30 a share, and that you sold your Home Depot stock for $40 a share at the end of one year. What is the total return for your investment? (Ignore commission amounts for this question.)
A) 10.00 percent
B) 12.50 percent
C) 13.25 percent
D) 14.29 percent
E) 15.14 percent
Q2) A blue-chip stock is too speculative for most investors.
A)True
B)False
Q3) Which of the following statements is not true?
A) Corporations are required by law to have two stockholder meetings each year.
B) Stockholders must approve any amendment of the corporate charter.
C) Stockholders must approve the sale of certain corporate assets.
D) Corporations are required by law to distribute annual reports.
E) Stockholders may vote in person or by proxy.
Q4) Describe the steps involved in a typical margin transaction.
Q5) What is the primary difference between common stock and preferred stock?
Page 14
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Chapter 12: Investing in Bonds
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Identify the incorrect statement.
A) Canada Savings Bonds are marketable bonds.
B) Long-term bonds embody more inflation risk than short-term bonds.
C) A bond denominated in U.S. dollars subjects a Canadian bondholder to foreign currency risk.
D) Bonds sold before they mature can incur capital gains or losses.
E) Provincial bonds are relatively risk free
Q2) Define yield to maturity.
Q3) 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
Q4) A mortgage bond is a corporate bond that is secured by various assets of the issuing firm.
A)True
B)False
Q5) What is the difference between a federal government marketable bond, treasury bill, and Canada Savings Bond?
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Chapter 13: Investing in Mutual Funds
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) A mutual fund in which no sales charge is paid by the individual investor is called a(n) ____________ fund.
A) closed-end
B) open-end
C) load
D) no-load
E) convertible fund.
Q2) The Capitalist Mutual Fund's portfolio is valued at $55 million. The fund has liabilities of $4 million, and the investment company sponsoring the fund has issued 2,400,000 shares. What is the fund's net asset value?
A) $100
B) $21.25
C) $22.91
D) $24.58
E) $1
Q3) For a mutual fund, the typical yearly management fee ranges from 2.5 to 5 percent of total dollar amount invested.
A)True
B)False
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Page 16
Chapter 14: Retirement Planning
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) Your first step in retirement planning is to analyze your current assets and liabilities.
A)True
B)False
Q2) In a reverse annuity mortgage, a lender uses your house as collateral to buy an annuity for you from a life insurance company.
A)True
B)False
Q3) In an RRSP, contributions are tax-deductible and earnings accumulate tax free.
A)True
B)False
Q4) The ground rules for retirement planning are fast changing.
A)True
B)False
Q5) Which one of the following is a true statement about retirement planning?
A) I should update my retirement plan periodically.
B) My pension benefits will increase to keep pace with inflation.
C) Saving just a little bit won't help.
D) My employer's health insurance plan will cover my medical expenses.
E) Medicare will cover my medical expenses.
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Chapter 15: Estate Planning
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95 Verified Questions
95 Flashcards
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Sample Questions
Q1) In a basic will the clause that enables your executor to exercise various powers in the management of your estate without the approval of the court is the ____________
A) identification and revocation clause
B) specific bequests clause
C) legacies clause
D) power clause
E) testimonium and attestation clause
Q2) In a basic will the clause that outlines the distribution of specific personal property, such as furniture, jewellery, cars, RRSPs, RRIFs, and pensions is the
A) identification and revocation clause
B) specific bequests clause
C) legacies clause
D) power clause
E) testimonium and attestation clause
Q3) If you never married, you don't need to organize your personal and financial documents.
A)True
B)False
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Page 18