Exam
Name___________________________________
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1) An understanding of personal finance is necessary to judge the quality of advice that a financial 1)
adviser may give.
Answer: True False
2) From 2000 to 2018, the level of household debt relative to disposable income has decreased from 2)
174.9 percent to 106.9 percent.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
3) What is the process of forecasting future expenses and savings called? 3)
A) Predicting B) Planning C) Forecasting D) Budgeting
Answer: D
4) What is the best way to describe liquidity? 4)
A) Positive cash flow B) Access to ready cash
C) Access to credit D) Effective money management
Answer: B
5) Alex has become stressed by his tight budget and is unwilling to stick to his financial plan. What 5)
action should he take?
A) Re-evaluate his goals B) Establish his goals
C) Implement the best plan D) Revise his plan
Answer: D
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
6) If you have sufficient available credit there is no reason to consider holding liquid cash in an 6)
emergency fund.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
7) Which of the following should first be used to cover any short-term cash deficiencies? 7)
A) A line of credit
B) An interest free loan from family or friends
C) A cashable short-term investment
D) Retirement savings
Answer: C
8) Which of the following is included in risk management? 8)
A) Determining your risk tolerance for investing in the stock market
B) Determining your credit risk for obtaining a $400 000 mortgage
C) Insuring your home
D) Deciding whether to rent or buy your home
Answer: C
1
,ESSAY. Write your answer in the space provided or on a separate sheet of paper.
9) Name the six steps in the financial planning process and give an example of one activity that would occur at
each step.
Answer: Many possibilities but overall cover these topics:
Step 1 Make SMART goals. Establish your financial goals: determine short, medium and long-term
goals.
Step 2 Consider current financial position: Cash flow, budget, balance sheet and net worth. Review
spending habits and cash flow. Make your personal financial statements and budget.
Step 3 Calculate various alternatives to reach the goals. Identify alternate plans. Review different
options that would enable you to reach your various goals successfully
Step 4 Select and implement a plan. Start the required savings, or insurance etc. previously
determined. Be prepared to make specific financial decisions based on your discipline and risk tolerance
and realistic cash flow.
Step 5 Evaluate your plan: monitor the progress of each component of the plan. Check if the plan is
working and you are on track after a few months, and at least once a year.
Step 6 Revise your plan if it is not working out. Or if your circumstances have changed, update your
goals and plans appropriately. Review your willingness to follow the plan and adjust it according to
your current lifestyle.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
10) Which of the following best describes how credit should be used? 10)
A) Credit should be used only when necessary since you must repay borrowed funds with
interest.
B) Credit should be used at any time as long as it can be repaid in full within 90 days.
C) Credit should never be used under any circumstances.
D) Credit should be used at any time as long as you are able to make the minimum monthly
payments.
Answer: A
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
11) The delinquency rate on 90-day non-mortgage debt rose 3.5 percent to 1.12 percent in the first 11)
quarter of 2019.
Answer: True False
12) An example of a 'SMART' goal is: Jack plans to save to buy a car in three years. 12)
Answer: True False
13) During the "education" life stage it is important to establish good investing habits. 13)
Answer: True False
14) FP Canada sets out the steps needed to earn the Certified Financial Planner (CFP) designation. 14)
Answer: True False
15) FP Canada is a profit-oriented organization created to benefit the public with regards to financial 15)
planning.
Answer: True False
2
, 16) An emergency fund contains the portion of savings that you have allocated to long-term needs. 16)
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
17) Alayne is preparing her budget for the first time. At what stage of the financial planning process is 17)
she?
A) Managing her financial resources
B) Establishing financial goals
C) Budgeting and tax planning
D) Considering her current financial situation
Answer: D
18) Which of the following financial planning steps should occur during the "prime earning" life stage? 18)
A) Estate planning
B) Creating a will and power of attorney
C) Paying off all debts
D) Investigate employer-based savings options
Answer: C
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
19) Most people act in a logical fashion when implementing a financial plan. 19)
Answer: True False
20) A good example of a personal financial 'SMART' goal would be planning to purchase a home one 20)
day.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
21) John is in the family and mid-career life stage of financial planning. Which of the following is most 21)
important for John to address?
A) Establishing a credit rating B) The pay yourself first principle
C) Reviewing insurance needs D) Paying off student loans
Answer: C
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
22) If prepared properly, financial plans are set for life and will rarely need to be changed. 22)
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
23) Retirement planning should take place 23)
A) shortly before you retire. B) the day you start your first job.
C) when you retire. D) well before you retire.
Answer: D
3
Name___________________________________
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1) An understanding of personal finance is necessary to judge the quality of advice that a financial 1)
adviser may give.
Answer: True False
2) From 2000 to 2018, the level of household debt relative to disposable income has decreased from 2)
174.9 percent to 106.9 percent.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
3) What is the process of forecasting future expenses and savings called? 3)
A) Predicting B) Planning C) Forecasting D) Budgeting
Answer: D
4) What is the best way to describe liquidity? 4)
A) Positive cash flow B) Access to ready cash
C) Access to credit D) Effective money management
Answer: B
5) Alex has become stressed by his tight budget and is unwilling to stick to his financial plan. What 5)
action should he take?
A) Re-evaluate his goals B) Establish his goals
C) Implement the best plan D) Revise his plan
Answer: D
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
6) If you have sufficient available credit there is no reason to consider holding liquid cash in an 6)
emergency fund.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
7) Which of the following should first be used to cover any short-term cash deficiencies? 7)
A) A line of credit
B) An interest free loan from family or friends
C) A cashable short-term investment
D) Retirement savings
Answer: C
8) Which of the following is included in risk management? 8)
A) Determining your risk tolerance for investing in the stock market
B) Determining your credit risk for obtaining a $400 000 mortgage
C) Insuring your home
D) Deciding whether to rent or buy your home
Answer: C
1
,ESSAY. Write your answer in the space provided or on a separate sheet of paper.
9) Name the six steps in the financial planning process and give an example of one activity that would occur at
each step.
Answer: Many possibilities but overall cover these topics:
Step 1 Make SMART goals. Establish your financial goals: determine short, medium and long-term
goals.
Step 2 Consider current financial position: Cash flow, budget, balance sheet and net worth. Review
spending habits and cash flow. Make your personal financial statements and budget.
Step 3 Calculate various alternatives to reach the goals. Identify alternate plans. Review different
options that would enable you to reach your various goals successfully
Step 4 Select and implement a plan. Start the required savings, or insurance etc. previously
determined. Be prepared to make specific financial decisions based on your discipline and risk tolerance
and realistic cash flow.
Step 5 Evaluate your plan: monitor the progress of each component of the plan. Check if the plan is
working and you are on track after a few months, and at least once a year.
Step 6 Revise your plan if it is not working out. Or if your circumstances have changed, update your
goals and plans appropriately. Review your willingness to follow the plan and adjust it according to
your current lifestyle.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
10) Which of the following best describes how credit should be used? 10)
A) Credit should be used only when necessary since you must repay borrowed funds with
interest.
B) Credit should be used at any time as long as it can be repaid in full within 90 days.
C) Credit should never be used under any circumstances.
D) Credit should be used at any time as long as you are able to make the minimum monthly
payments.
Answer: A
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
11) The delinquency rate on 90-day non-mortgage debt rose 3.5 percent to 1.12 percent in the first 11)
quarter of 2019.
Answer: True False
12) An example of a 'SMART' goal is: Jack plans to save to buy a car in three years. 12)
Answer: True False
13) During the "education" life stage it is important to establish good investing habits. 13)
Answer: True False
14) FP Canada sets out the steps needed to earn the Certified Financial Planner (CFP) designation. 14)
Answer: True False
15) FP Canada is a profit-oriented organization created to benefit the public with regards to financial 15)
planning.
Answer: True False
2
, 16) An emergency fund contains the portion of savings that you have allocated to long-term needs. 16)
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
17) Alayne is preparing her budget for the first time. At what stage of the financial planning process is 17)
she?
A) Managing her financial resources
B) Establishing financial goals
C) Budgeting and tax planning
D) Considering her current financial situation
Answer: D
18) Which of the following financial planning steps should occur during the "prime earning" life stage? 18)
A) Estate planning
B) Creating a will and power of attorney
C) Paying off all debts
D) Investigate employer-based savings options
Answer: C
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
19) Most people act in a logical fashion when implementing a financial plan. 19)
Answer: True False
20) A good example of a personal financial 'SMART' goal would be planning to purchase a home one 20)
day.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
21) John is in the family and mid-career life stage of financial planning. Which of the following is most 21)
important for John to address?
A) Establishing a credit rating B) The pay yourself first principle
C) Reviewing insurance needs D) Paying off student loans
Answer: C
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
22) If prepared properly, financial plans are set for life and will rarely need to be changed. 22)
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
23) Retirement planning should take place 23)
A) shortly before you retire. B) the day you start your first job.
C) when you retire. D) well before you retire.
Answer: D
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