Personal Wealth Management
Textbook Exam Questions
Course Introduction
Personal Wealth Management is a comprehensive course designed to equip students with essential knowledge and practical skills for managing individual and family finances. The curriculum explores key topics such as budgeting, saving, investing, risk management, retirement planning, tax strategies, insurance, and estate planning. Through case studies and real-world scenarios, students learn how to set financial goals, analyze financial options, and make informed decisions to build and protect personal wealth over time. This course is ideal for those seeking to develop lifelong financial security and independence.
Recommended Textbook
Personal Finance 4th Canadian Edition by Jeff Madura
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15 Chapters
1325 Verified Questions
1325 Flashcards
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Page 2
Chapter 1: Tools for Financial Planning - Applying Time
Value Concepts
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) Alexis wants to have saved $600 000 by the time she retires at age 60.She is turning 46 in the next week and has accumulated $220000 in her RRSP accounts.Assuming she can continue to get a 6% annual return on her RRSP investments,how much does she need to keep saving at the end of each month to reach her goal?
A)$2262
B)$1467
C)$2102
D)$396
Answer: D
Q2) Raymond has an investment of $25 000 now,and in three years it will mature and pay Raymond $32 000.What is the approximate annual interest rate he will receive?
A)9)3 percent
B)8)6 percent
C)8)9 percent
D)Insufficient information to calculate this question
Answer: B
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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) A personal cash flow statement is usually the starting point for an individual's or family's budget.
A)True
B)False
Answer: True
Q2) Which of the following is the worst approach to solving the problem of an annual budget deficit?
A)Liquidate enough savings or investments to make up the deficit.
B)Get an additional credit card and cover the deficit with that.
C)Renegotiate debt to longer term,lower interest options.
D)Increase income by getting an additional part-time job.
Answer: B
Q3) A debt-to-asset ratio above 1 is more important than a liquidity ratio above 1. A)True
B)False Answer: False
Q4) Students with a negative net worth are essentially bankrupt. A)True
B)False Answer: False
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Chapter 1: Tools for Financial Planning - Using Tax Concepts for Planning
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89 Verified Questions
89 Flashcards
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Sample Questions
Q1) Self-employed taxpayers must have paid all taxes owing by April 30th of the following year.
A)True
B)False
Answer: True
Q2) If a stock was purchased for $3000 in January 2003 and is sold in June 2003 for $4000,what is the taxable result?
A)Capital gain of $1000 and taxable income of $500
B)Business income of $1000 and taxable amount of $1000
C)Capital gain of $1000 and taxable income of $1000
D)Taxable capital gain of $1000
Answer: A
Q3) Tax credits are used to reduce tax
A)when calculating total income.
B)after total taxes payable are calculated.
C)before you subtract all deductions.
D)by deducting them from total income.
Answer: B
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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
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Sample Questions
Q1) Depository institutions are financial institutions that accept deposits (that are insured up to a maximum level)from individuals or firms and provide loans.
A)True
B)False
Q2) If you have $10 000 that you do not expect to need for expenses in the next few years and you wish to put it somewhere so that it will earn a return,which of the following financial institutions would be the best option?
A)A bank
B)A mutual fund company
C)A credit union
D)Any of the above
Q3) Which of the following provides the least guarantee of payment to the payee?
A)Certified cheque
B)Money order
C)Traveller's cheque
D)Personal cheque
Q4) A Canada Savings Bond is a typical investment in a money market fund.
A)True
B)False
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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
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Sample Questions
Q1) Using your credit card provides you free financing each month.
A)True
B)False
Q2) TransUnion is aware that you are one month late on your car payment,while Equifax has not yet uncovered this information.Which of the following statements is correct?
A)TransUnion will have a lower credit score for you than Equifax.
B)Both companies will have the same credit score because of the grace period.
C)Being late one month on a car payment will not affect your BEACON score.
D)Both companies will have the same credit score because car payments are backed by collateral.
Q3) The greatest benefit of student loans is that the interest is tax deductible. A)True
B)False
Q4) A BEACON score of 820 indicates a person has a high likelihood of paying back debt as expected.
A)True
B)False
Q5) Discuss six of the choices to be made when making a decision between leasing and buying a car with a personal loan.
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Chapter 2: Managing Your Financial Resources -
Purchasing and Financing a Home
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) Mortgage companies usually charge interest semi-annually.What would be the effective rate of interest on a mortgage at 8.25 percent compounded semi-annually?
A)8)56 percent
B)8)42 percent
C)8)46 percent
D)8)38 percent
Q2) A house is sold for $300 000 and appraised for $285 000.What down payment will be needed to qualify for a conventional mortgage?
A)$60 000
B)$57 000
C)$71 250
D)$72 000
Q3) Which of the following options regarding a $200000 mortgage,compounded semi-annually requires the lowest total interest payment?
A)A 4.0 percent interest rate,paid monthly and amortized over 15 years
B)A 3.5 percent interest rate,paid monthly and amortized over 20 years
C)A 3.5 percent interest rate,paid biweekly and amortized over 18 years
D)A 3.25 percent interest rate,paid monthly and amortized over 22 years
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Chapter 3: Protecting Your Wealth - Auto and Homeowner's Insurance
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88 Verified Questions
88 Flashcards
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Sample Questions
Q1) The first step in the risk management process is to define and recognize your exposure to risk.
A)True
B)False
Q2) While renter's insurance would reimburse you if you had to replace furniture damaged in a fire,it would not pay for the medical expenses for a friend who was injured in your home.
A)True
B)False
Q3) Various home homeowners' insurance policy features can play a significant role in the protection of one's net worth.Give your own specific examples of what the following elements of property insurance could protect you from,compared with someone who had weaker coverage,or no coverage.
Comprehensive coverage versus named perils
Personal property floater
Umbrella personal liability coverage
Tenant's insurance
Personal property replacement cost
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Chapter 3: Protecting Your Wealth - Health and Life Insurance
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95 Verified Questions
95 Flashcards
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Sample Questions
Q1) The similarity between disability income and long-term care insurance is
A)they both require proof of income.
B)they both have a waiting period.
C)they both provide a death benefit.
D)they both extend benefits beyond age 65.
Q2) Non-forfeiture options allow you to re-instate your term insurance if you lapse the policy accidentally and have no medical conditions.
A)True
B)False
Q3) Which of the following is not an important consideration from the employer's perspective in sponsoring a group benefits plan?
A)The ability to write off premiums as business expenses
B)Providing coverage for employees who are uninsurable
C)Encouraging loyalty and trust from employees
D)Improving staff retention
Q4) Over 30 percent of Canadians over age 65 receive some kind of kind of care due to long-term health problems.
A)True
B)False
10
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Chapter 4: Personal Investing - Investing Fundamentals
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89 Flashcards
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Sample Questions
Q1) You have been given an overview of stocks,bonds,and mutual funds.Give one advantage and one disadvantage of investing in each of these.
Q2) An investor whose income is less than $20 000 will pay more tax on capital gains than on the same amount of divided income.
A)True
B)False
Q3) An investor's willingness to accept (or not accept)risk in their investments is referred to as risk intolerance.
A)True
B)False
Q4) Describe three applications used to judge an investment's risk.Do you feel these methods give a full explanation of how investors feel about risk?
Q5) The return-risk relationship means
A)the ideal investment has high return and low risk.
B)the downside risk is all that really matters to investors.
C)the higher the return expectation of an investment,the greater the uncertainty. D)a diversified mutual fund will have low risk.
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Chapter 4: Personal Investing - Investing in Stocks
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84 Verified Questions
84 Flashcards
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Sample Questions
Q1) Which of the following factors would contribute to an increase in stock prices?
A)Low inflation
B)High interest rates
C)Fiscal policy to increase tax rates
D)Inflationary monetary policy
Q2) Technical analysts look for stock price patterns which
A)indicate stocks with rapidly changing P/Es.
B)indicate a possible price trend.
C)indicate value trends.
D)demonstrate profit trends.
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) What is the fair market value of a preferred share that pays $2.25 in dividends per year when long-term government bond yield is 5.42 percent annually?
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Chapter 4: Personal Investing - Investing in Bonds
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) A bond with a credit rating of AA is riskier than a bond with a credit rating of A.
A)True
B)False
Q2) If a new issue corporate bond offers a coupon rate of 6.2 percent and Government of Canada bonds with the same term and features are paying a 3.8 percent coupon,then the risk premium for the corporate bond is 2.4 percent.
A)True
B)False
Q3) Given the following bond quotations: Issuer coupon maturity price yield Ontario 3.150 2022-Jun-02 99.00 3.28
7.350 2024-Dec-22 107.00 6.56
Which of the following statements is true?
A)The Bombardier bond appears to have a higher risk premium.
B)The Ontario bond has a 6.3 percent annual coupon rate.
C)The yields on these bonds illustrate the liquidity preference theory.
D)The Ontario bond is a better price.
Q4) List and describe three strategies to invest in bonds.
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Page 13
Chapter 4: Personal Investing - Investing in Mutual Funds
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85 Verified Questions
85 Flashcards
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Sample Questions
Q1) Index funds offer tax advantages because
A)they trade frequently,generating frequent capital gains.
B)they generate less capital gains through trades.
C)they have higher MERs which reduces taxable distributions.
D)they do not receive dividends or interest.
Q2) If Betty has inherited significant wealth but has very limited investment knowledge,which of the following funds would be least appropriate for her?
A)Segregated funds
B)Dividend funds
C)Hedge funds
D)Balanced funds
Q3) The units of a segregated fund differ from the units of a mutual fund in that
A)a segregated fund does not report a NAV.
B)the units of the segregated fund are owned by the unit holder.
C)each unit is insured from the date of purchase.
D)the units of the segregated fund are owned by the insurance company.
Q4) Most mutual funds are conservative investments.
A)True
B)False
Q5) List considerations you should take into account when purchasing a mutual fund.
Page 14
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Chapter 5: Retirement and Estate Planning - Retirement Planning
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84 Verified Questions
84 Flashcards
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Sample Questions
Q1) For each resident of Canada,their CPP entitlement is calculated based on their A)number of years as working adult resident of Canada with income under $70000. B)income earned each year between the YBE and YMPE.
C)number of years up to age 65 as an adult resident of Canada. D)income earned above the YMPE each year.
Q2) An RRSP allows tax-deductible contributions of up to 18 percent of gross income regardless of whether you are enrolled in a pension plan at work.
A)True
B)False
Q3) According to Statistics Canada,for many Canadians,the most important source of retirement income will be
A)the OAS benefits.
B)the investments in their RRSPs.
C)the equity they have in their homes.
D)their pension plans.
Q4) Old Age Security is funded by general tax revenues.
A)True
B)False
Page 15
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Chapter 5: Retirement and Estate Planning - Estate Planning
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84 Verified Questions
84 Flashcards
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Sample Questions
Q1) If John is going to have his first child,which of the following should he do for his estate planning?
A)Add a codicil to his will
B)Review his will
C)Update his will
D)Review his power of attorney
Q2) You may want to execute a codicil to your existing will
A)to add alternate executors.
B)if you remarry.
C)if you move to a different province.
D)if you give birth to a child.
Q3) The value of the estate is calculated using A)cost.
B)fair market value.
C)cost plus inflation.
D)the consumer price index.
Q4) In many cases,the executor and the trustee is the same individual.
A)True
B)False
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Chapter 6: Synthesis of Financial Planning - Integrating the
Components of a Financial Plan
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84 Verified Questions
84 Flashcards
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Sample Questions
Q1) The purpose of financial planning is to help do all of the following except A)set goals.
B)decrease your food expenses.
C)become financially educated.
D)increase your net worth.
Q2) Paying off loans rather than making additional investments is appropriate when the expected investment return is higher than the interest rates on loans.
A)True
B)False
Q3) Investing in stocks of large,well-known firms typically offer lower return and risk than stocks of growth companies.
A)True
B)False
Q4) If you are looking for fast-growth stocks,you should look for stocks that do not pay dividends.
A)True
B)False
Q5) List three types of financing you have studied and an important consideration about each one of them
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