MCS2100 Exam Review 1 Questions
with All Correct Answers (2025-2026)
Updated.
6 steps of financial planning process - Answer 1. Develop Financial Goals=
2. Determine your current financial situation=
3. Identify alternative courses or action=
4. Evaluate alternatives=
5. Create and Implement a Financial action plan=
6. Re-evalulate and revise the plan=
Economic and Product Risk - Answer 1. Interest Rate Risk
2. Inflation Risk
3. Liquidity Risk
4. Product Risk
Personal Risks - Answer 1. Risk of Death
2. Risk of Income loss
3. Health Risk
4. Asset and Liability Risk
4 main characteristics of useful financial goal - Answer 1. Financial goals should be realistic
2. Financial goals should be stated in specific measurable terms
3. Have a time Frame
4. Should indicate the type of action to be taken
What are examples of typical tax deductions? Who benefits most from deductions? - Answer
Usually deductions are income related. Union dues, professional memberships, moving
expenses, pension plans, child care expenses etc. Income earners in the top tax brackets see the
most benefit. This is because deductions reduce the amount of income that is taxed at the top
rate.
What are typical tax credits? What are tax credits applied against? Do any tax payers benefit
more than others from tax credits - Answer Typical tax credits are the personal amount, age
amount, tuition and education, medical expenses, charitable donations, political party
donations and dividend tax credit. Items allowed for tax credits are typically multiplied by a tax
rate (15% in the text, could be changing by year) and then this number is used to reduce taxes
,payable. Everyone benefits equally from tax credits because everyone uses the same tax rate for
them.
Tax Deferral Techniques - Answer 1. RRSP= Registered Retirement Savings Plan, put a small
amount of each pay check away and it will not be taxed until ti is removed from the RRSP.
2. RPP= Registered Pension Plan, employer contributes a small amount on your behalf
3. IPP= Individual Pension Plan, optimal for people over 53, making over 100,000 or Owners of a
company
4.DPSP= Deferred Profit Sharing Plan, similar to RPP, your employer makes contributions and
you are only taxed when you receive the funds. However you are not allowed to contribute to
the plan
Purpose and Income Splitting Techniques - Answer Tax payers try to move income to spouses
or children that are in lower tax brackets to reduce the the taxed amount.
Some Strategies:
1. Making contributions to a spousals RRSP
2. Having the higher income earner pay living costs and the lower income earner invest
3. Splitting your CPP with your spouse
4. Transferring assets that will be used to make business income as business income attributable
What happens to an existing will upon marriage? What can be done to avoid the problems this
poses? - Answer If you marry after you have made a will, the will is revoked automatically
unless one of the following:
1. The will indicates an intent that it not be revoked by a subsequent marriage
2. The will was drafted under circumstances indicating that it was in contemplation of marriage
What should be included in a will? - Answer Estate, Value Assets, Valuables, and other
owned properties
What are the duties of an executor? - Answer 1. Take Preliminary Steps
2. Protect Estate Asset
3. Assemble Inventory, and Value Assets
4. Obtain Probate from Court
5. Administer Estate
6. Distribute Estate
, How are the estates of someone who has no will settled? You should know the general rules for
intestate succession. - Answer If you fail to prepare a will, the province which you legally
reside steps in and controls the distribution of your estate (Intestate Succession). In Ontario:
If you die this is how it is broken up:
1. Spouse and no children: All to spouse
2. Children only: All to children
3. Spouse and one child: 200,000 to spouse and rest split equally
4. Spouse and children: 200,000 to spouse, 1/3 remainder to spouse, 2/3 to children
5. Spose and relatives: All to spouse
6. No spouse or child: Closet next of kin
When would a testamentary trust be used? - Answer Established by your will and becomes
effective upon your death. A valuable trust if your beneficiaries are inexperienced in financial
matters
1. Assets are protected from the beneficiary's creditors
2.Inheritances are not subject to subject to division
What is probate? Should it be recommended?and what are probate taxes? - Answer A
probate is the term of a legal process where a will is reviewed to determine if it is valid and
authentic. "Validates wills and makes sure debts are paid" executor is responsible for making
sure it goes through a probate.
Normally costs 3-5% of your estate, although complicating factors like businesses can increase
costs.
What is the difference between joint tenancy and tenancy in common. - Answer A joint
tenancy stops value of shared assets from being transferred into the will
Ex/ If you and your wife own a home in joint tenancy, when you die your wife receives complete
ownership of the house. But if you own a house with tenants in common, the tenants have the
right to dispose of their interest in the joint property at death (would be on will)
What is categorized as true no-fault automobile insurance? Is fault still determined? What type
of system does Ontario have? - Answer Fault is determined in every incident for the purpose
of premium calculation. No-fault insurance allows you to collect payment from your insurance
company for bodily injury, and to claim for damage to your own automobile no matter who is at
fault in the accident. However, if you are at fault, your insurance premiums may increase.
What are the main types of automobile insurance? What types of claims do each of these
cover? - Answer Types of Coverages:
with All Correct Answers (2025-2026)
Updated.
6 steps of financial planning process - Answer 1. Develop Financial Goals=
2. Determine your current financial situation=
3. Identify alternative courses or action=
4. Evaluate alternatives=
5. Create and Implement a Financial action plan=
6. Re-evalulate and revise the plan=
Economic and Product Risk - Answer 1. Interest Rate Risk
2. Inflation Risk
3. Liquidity Risk
4. Product Risk
Personal Risks - Answer 1. Risk of Death
2. Risk of Income loss
3. Health Risk
4. Asset and Liability Risk
4 main characteristics of useful financial goal - Answer 1. Financial goals should be realistic
2. Financial goals should be stated in specific measurable terms
3. Have a time Frame
4. Should indicate the type of action to be taken
What are examples of typical tax deductions? Who benefits most from deductions? - Answer
Usually deductions are income related. Union dues, professional memberships, moving
expenses, pension plans, child care expenses etc. Income earners in the top tax brackets see the
most benefit. This is because deductions reduce the amount of income that is taxed at the top
rate.
What are typical tax credits? What are tax credits applied against? Do any tax payers benefit
more than others from tax credits - Answer Typical tax credits are the personal amount, age
amount, tuition and education, medical expenses, charitable donations, political party
donations and dividend tax credit. Items allowed for tax credits are typically multiplied by a tax
rate (15% in the text, could be changing by year) and then this number is used to reduce taxes
,payable. Everyone benefits equally from tax credits because everyone uses the same tax rate for
them.
Tax Deferral Techniques - Answer 1. RRSP= Registered Retirement Savings Plan, put a small
amount of each pay check away and it will not be taxed until ti is removed from the RRSP.
2. RPP= Registered Pension Plan, employer contributes a small amount on your behalf
3. IPP= Individual Pension Plan, optimal for people over 53, making over 100,000 or Owners of a
company
4.DPSP= Deferred Profit Sharing Plan, similar to RPP, your employer makes contributions and
you are only taxed when you receive the funds. However you are not allowed to contribute to
the plan
Purpose and Income Splitting Techniques - Answer Tax payers try to move income to spouses
or children that are in lower tax brackets to reduce the the taxed amount.
Some Strategies:
1. Making contributions to a spousals RRSP
2. Having the higher income earner pay living costs and the lower income earner invest
3. Splitting your CPP with your spouse
4. Transferring assets that will be used to make business income as business income attributable
What happens to an existing will upon marriage? What can be done to avoid the problems this
poses? - Answer If you marry after you have made a will, the will is revoked automatically
unless one of the following:
1. The will indicates an intent that it not be revoked by a subsequent marriage
2. The will was drafted under circumstances indicating that it was in contemplation of marriage
What should be included in a will? - Answer Estate, Value Assets, Valuables, and other
owned properties
What are the duties of an executor? - Answer 1. Take Preliminary Steps
2. Protect Estate Asset
3. Assemble Inventory, and Value Assets
4. Obtain Probate from Court
5. Administer Estate
6. Distribute Estate
, How are the estates of someone who has no will settled? You should know the general rules for
intestate succession. - Answer If you fail to prepare a will, the province which you legally
reside steps in and controls the distribution of your estate (Intestate Succession). In Ontario:
If you die this is how it is broken up:
1. Spouse and no children: All to spouse
2. Children only: All to children
3. Spouse and one child: 200,000 to spouse and rest split equally
4. Spouse and children: 200,000 to spouse, 1/3 remainder to spouse, 2/3 to children
5. Spose and relatives: All to spouse
6. No spouse or child: Closet next of kin
When would a testamentary trust be used? - Answer Established by your will and becomes
effective upon your death. A valuable trust if your beneficiaries are inexperienced in financial
matters
1. Assets are protected from the beneficiary's creditors
2.Inheritances are not subject to subject to division
What is probate? Should it be recommended?and what are probate taxes? - Answer A
probate is the term of a legal process where a will is reviewed to determine if it is valid and
authentic. "Validates wills and makes sure debts are paid" executor is responsible for making
sure it goes through a probate.
Normally costs 3-5% of your estate, although complicating factors like businesses can increase
costs.
What is the difference between joint tenancy and tenancy in common. - Answer A joint
tenancy stops value of shared assets from being transferred into the will
Ex/ If you and your wife own a home in joint tenancy, when you die your wife receives complete
ownership of the house. But if you own a house with tenants in common, the tenants have the
right to dispose of their interest in the joint property at death (would be on will)
What is categorized as true no-fault automobile insurance? Is fault still determined? What type
of system does Ontario have? - Answer Fault is determined in every incident for the purpose
of premium calculation. No-fault insurance allows you to collect payment from your insurance
company for bodily injury, and to claim for damage to your own automobile no matter who is at
fault in the accident. However, if you are at fault, your insurance premiums may increase.
What are the main types of automobile insurance? What types of claims do each of these
cover? - Answer Types of Coverages:
