Personal Money Management
Final Test Solutions
Course Introduction
Personal Money Management provides students with essential knowledge and practical skills to effectively handle their personal finances. The course covers topics such as budgeting, saving, credit management, debt reduction, banking, investing basics, understanding taxes, insurance, and planning for financial goals. Through case studies, discussions, and exercises, students will learn how to make informed financial decisions, develop strategies for building wealth, and avoid common pitfalls. By the end of the course, students will gain confidence in managing their own money and be better prepared for financial independence and long-term well-being.
Recommended Textbook
Personal Finance 2nd Canadian Edition by Jeff Madura
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17 Chapters
2226 Verified Questions
2226 Flashcards
Source URL: https://quizplus.com/study-set/3367
Page 2
Chapter 1: Overview of a Financial Plan
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128 Verified Questions
128 Flashcards
Source URL: https://quizplus.com/quiz/66868
Sample Questions
Q1) A type of insurance that can be used to protect assets is
A)home insurance.
B)self-insurance.
C)disability insurance.
D)a deductible policy.
Answer: A
Q2) An example of an opportunity cost is the cost of tuition while attending college or university instead of the hourly rate you could earn from being employed.
A)True
B)False
Answer: True
Q3) The value of what you own minus the value of what you owe is called your "net assets."
A)True
B)False
Answer: False
Q4) List the two things that those in the pre-career stage of financial planning should consider with regards to current financial position.
Answer: Establish good money management habits and establish a credit rating
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Chapter 2: Tools for Financial Planning - Applying Time
Value Concepts
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81 Verified Questions
81 Flashcards
Source URL: https://quizplus.com/quiz/66859
Sample Questions
Q1) PVA = PMT × PVIFA
A)True
B)False Answer: True
Q2) The best way to understand the time value of money is to use timelines to capture all information.
A)True
B)False Answer: True
Q3) What is the present value of $1000 to be received ten years from today, assuming an interest rate of nine percent per annum?
A)$402.
B)$488.
C)$470.
D)$422. Answer: D
Q4) Compound interest is the process used to earn interest on interest.
A)True
B)False Answer: True
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Chapter 3: Tools for Financial Planning - Planning With
Personal Financial Statements
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152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/66858
Sample Questions
Q1) What is the best technique for keeping track of expenses?
A)By paying with a debit card or credit card
B)By paying with cash and carefully tracking receipts
C)By using an envelope budgeting system
D)By using a pay yourself first budgeting system
Answer: A
Q2) If your budget forecasts a shortfall in cash flow, the best way to use your budget is to
A)eliminate all entertainment expenses for that period.
B)build an emergency fund to prepare for the shortfall.
C)increase cash flows from all sources not previously recorded.
D)obtain credit in advance of the predicted shortfall.
Answer: B
Q3) Long-term liabilities are debts that will be paid at least three years into the future. A)True
B)False
Answer: False
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Chapter 4: Tools for Financial Planning - Using Tax
Concepts for Planning
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136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/66857
Sample Questions
Q1) The T4 slip provided by your employer shows all your
A)income earned and tax deducted for the year.
B)income, union dues, and taxes for the year.
C)income earned and RPP deductions for the year.
D)income and deductions made by that employer for the year.
Q2) You have a salary of $30 000, an RPP deduction of $2000, and union dues of $800. The federal tax rate is 15.5 percent. What federal tax do you owe?
A)$4340
B)$2216
C)$1416
D)$4216
Q3) Tax avoidance is not allowed because it is a method of bending the rules to reduce tax liability.
A)True
B)False
Q4) Students should not file income tax returns because they have to pay sales taxes such as the GST and PST.
A)True
B)False
6
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Chapter 5: Banking Services and Managing Your Money
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116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/66856
Sample Questions
Q1) The key feature that makes Canada Savings Bonds better than Canada Premium Bonds is
A)they are guaranteed by the government.
B)they are cashable at any time.
C)they are on sale all year.
D)they pay a higher rate of interest.
Q2) Mutual fund investments such as a money market fund are guaranteed by the CDIC.
A)True
B)False
Q3) You can be assured that if your ABM query shows you have a certain balance in your chequing account, that figure is more accurate than the amount in your cheque register.
A)True
B)False
Q4) Securities firms primarily sell insurance to protect individuals from adverse events.
A)True
B)False
Q5) Describe four factors you should consider when choosing a financial institution.
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Chapter 6: Managing Your Liquidity - Assessing,
and Securing Your Credit
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140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/66855
Sample Questions
Q1) When applying for a credit card, you will be asked to provide the following information except
A)monthly income.
B)expenses.
C)credit history.
D)tax refund.
Q2) Identity theft occurs only through individuals who do not have legitimate access to your information.
A)True
B)False
Q3) Retail store credit cards, such as a Sears card, can be used in a restaurant.
A)True
B)False
Q4) If you had a major payment problem with your credit card in 2009, you expect that a credit report will still highlight this problem
A)up to 2013.
B)up to 2014.
C)up to 2015.
D)up to 2016.
Page 8
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Chapter 7: Personal Financing - Personal Loans
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119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/66854
Sample Questions
Q1) In determining the amount of your loan, you should ask for about 20 percent more than you need in order to give yourself financial flexibility in the future.
A)True
B)False
Q2) Common practices used by dishonest lenders include
A)charging additional interest on late payments.
B)charging fees which make the real financing cost much higher than the quoted interest rate.
C)charging higher interest rates than the banks.
D)All of the above.
Q3) Which is true regarding resale value of cars?
A)You cannot really determine the resale value very accurately before you buy a car.
B)You are always better off buying a higher-priced car with a greater resale value.
C)You are always better off buying a lower-priced car with a lower resale value.
D)Resale values can depend on the model of vehicle and can be researched in advance.
Q4) List four components of a loan contract.
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Chapter 8: Personal Financing - Purchasing and Financing a Home
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121 Verified Questions
121 Flashcards
Source URL: https://quizplus.com/quiz/66853
Sample Questions
Q1) Since most of the problems have already been fixed, older homes usually have lower maintenance expenses than newer homes.
A)True
B)False
Q2) Ianna has found a fixed rate mortgage for $300,000 at four per cent interest amortized over 30 years. Her payment will be $1426.56 per month. How much would her payment be if she wanted to amortize the mortgage over 15 years?
A)$2853.12
B)$1733.33
C)$2214.12
D)$1711.46
Q3) Who is responsible for determining the value of the home for the mortgage application process?
A)Banker
B)Loan officer
C)Real estate appraiser
D)Real estate agent
Q4) Is purchasing a home an expense, an investment, or both?
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Chapter 9: Protecting Your Wealth - Auto and Homeowners Insurance
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125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/66852
Sample Questions
Q1) The most popular forms of insurance for individuals are property and casualty, life insurance, and health insurance.
A)True
B)False
Q2) 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)You may not want to drop this coverage on an older car that is not being financed.
D)The deductible is really a form of transferring insurance.
Q3) Comprehensive coverage would cover financial losses due to
A)damage to your car caused by a hit and run collision.
B)damage to your car in an accident for which you were at fault.
C)damage to your car caused by wind or hail.
D)damage to a neighbour's fence caused by your car.
Q4) A replacement value home insurance policy pays the actual costs of the damaged property.
A)True
B)False
Page 11
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Chapter 10: Protecting Your Wealth - Health and Life Insurance
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191 Verified Questions
191 Flashcards
Source URL: https://quizplus.com/quiz/66867
Sample Questions
Q1) What should an individual, who is claiming benefits from his disability insurance, be most concerned with?
A)The non-cancelable provision
B)Taxes paid on the benefits
C)The waiting period
D)The renewable provision
Q2) A disadvantage of variable life policies is that the cash value may actually decrease in value if stocks or other investments decline.
A)True
B)False
Q3) A coinsurance of 20 percent on a $400 prescription drug will require you to pay $80. A)True
B)False
Q4) From the employer's perspective, describe the three advantages for group health insurance plans.
Q5) CPP has a disability option that will cover you if you are partially disabled. A)True B)False
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Chapter 11: Personal Investing - Investing Fundamentals
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140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/66866
Sample Questions
Q1) An investment with a return of 9.5 percent, while the government rate for a similar investment is 3.5 percent, has a 6 percent risk premium.
A)True
B)False
Q2) To measure an investment's risk, which of the following would you use?
A)Time value of money
B)Range of returns on the entire market
C)Standard deviation of returns
D)Standard deviation of prices
Q3) The difference between common and preferred stock is that preferred stock
A)may or may not receive dividends.
B)has predictable income and more safety.
C)has greater potential for capital appreciation.
D)is issued more frequently than common stock.
Q4) You have been given an overview of stocks, bonds, and mutual funds. Give one advantage and one disadvantage of investing in each of these.
Q5) Describe common stock.
Q6) Describe two applications used to judge an investment's risk.
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Chapter 12: Personal Investing - Investing in Stocks
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130 Verified Questions
130 Flashcards
Source URL: https://quizplus.com/quiz/66865
Sample Questions
Q1) You ________ a stock when you think that it is ________.
A)sell, undervalued
B)buy, undervalued
C)buy, overvalued
D)buy, no value
Q2) In deciding to invest in stocks, the most time-consuming part is
A)fundamental analysis.
B)choosing a broker.
C)the actual purchase of the stock.
D)monitoring results.
Q3) Fiscal policy, the means by which the Canadian government imposes taxes on individuals and corporations and spends its money, has an impact on spending and thus an impact on the stock of some companies.
A)True
B)False
Q4) A good measure of a company's liquidity is the current ratio, which is the ratio of its short-term assets to its short-term liabilities.
A)True
B)False
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Chapter 13: Personal Investing - Investing in Bonds
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131 Verified Questions
131 Flashcards
Source URL: https://quizplus.com/quiz/66864
Sample Questions
Q1) Use of Financial Calculator TI BA II Plus required. Jan buys a $1000 10 percent semi-annual coupon bond for a price of $1094 and holds it to maturity in six years. What is the bond's yield to maturity?
A)10 percent
B)8)0 percent
C)8)6 percent
D)9)0 percent
Q2) All bonds, except those issued by the Government of Canada are subject to interest rate risk.
A)True
B)False
Q3) Business Development Bank of Canada bonds are an example of bonds issued by A)a corporation.
B)the Treasury.
C)a municipality.
D)a Crown corporation.
Q4) One important aspect of bond research includes finding the bond rating. Bond ratings are related to what type of risk?
Q5) List and describe three strategies to invest in bonds.
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Chapter 14: Personal Investing - Investing in Mutual Funds
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148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/66863
Sample Questions
Q1) Which of the following characteristics is true of closed-end funds?
A)They are not regulated.
B)They repurchase units from investors.
C)They are bought and sold through a mutual fund dealer.
D)They may sell above or below NAV.
Q2) The most important expense statistic mentioned in the prospectus is the A)gross profit margin ratio.
B)expense ratio.
C)times interest earned ratio.
D)back-end load ratio.
Q3) Capital appreciation funds are mutual funds that focus on stocks that are expected to grow at a very high rate.
A)True
B)False
Q4) In non-registered accounts, investors in high tax brackets will normally prefer mutual funds that generate A)dividends.
B)long-term capital gains.
C)long-term stock dividends.
D)short-term capital gains.
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Chapter 15: Retirement and Estate Planning - Retirement Planning
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135 Verified Questions
135 Flashcards
Source URL: https://quizplus.com/quiz/66862
Sample Questions
Q1) An RRSP allows tax-deductible contributions of up to 18 percent of gross income even if you are enrolled in a pension plan at work.
A)True
B)False
Q2) Paul starts saving $1000 per year from age 25, while Harper starts saving $5000 per year at age 40. At a moderate rate of return of 7 percent, how much will each have at age 65?
Q3) Use of Financial Calculator TI BA II Plus required. If you invest a lump sum of $65 000 at an eight percent annual return for 25 years, how much will it be worth in a tax-sheltered RRSP?
A)$477 111
B)$445 151
C)$408 821
D)$268 000
Q4) Payments made to you by Old Age Security are based on your
A)residency in Canada older than 16.
B)the length of time you worked in Canada.
C)both employee and employer contributions.
D)adult residency in Canada between 10 and 40 years.
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Chapter 16: Retirement and Estate Planning - Estate Planning
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117 Verified Questions
117 Flashcards
Source URL: https://quizplus.com/quiz/66861
Sample Questions
Q1) A document that specifies changes to an existing will is
A)a letter of instruction.
B)a codicil.
C)an amendment.
D)an addendum.
Q2) A trust involves the transfer of assets to a third party who manages these assets for a beneficiary.
A)True
B)False
Q3) A testamentary trust is taxed at
A)the highest probate rates.
B)progressive rates similar to an individual taxpayer.
C)the lowest rate.
D)the highest combined federal and provincial marginal tax rate.
Q4) What three types of planning help you protect your wealth?
Q5) The minimum age to create a valid will is 16 years.
A)True
B)False
Q7) Estate planning decisions are affected by what five areas? Page 18
Q6) Briefly describe the conditions needed to create a valid will.
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Page 19
Chapter 17: Synthesis of Financial Planning - Integrating the Components of a Financial Plan
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116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/66860
Sample Questions
Q1) Which of the following investments achieves the greatest diversification?
A)Stocks
B)Bonds
C)Mutual funds
D)Savings accounts
Q2) You will know your financial plan is working when
A)the plan has been revised to increase your risk tolerance for improved performance.
B)your net worth increases each year in step with your goals.
C)you have sufficient capital to meet all of your established goals.
D)you have reached the highest tax bracket.
Q3) Automobile insurance protects
A)your family.
B)your car and wealth.
C)your wealth.
D)your car and assets.
Q4) The more you spend, the less money you will have available for other purposes.
A)True
B)False
Q5) What are three types of financing you have studied?
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