FINA 200 STUDY TEST QUESTIONS
WITH CORRECT ANSWERS
What is the grace period in a life insurance policy?
Similar to the grace period on your credit card, you get a monthly break from paying
interest.
It is the period when you are changing from one life insurance policy to another.
Age is the primary driver for the cost of life insurance, the grace period is a discounted
rate on premiums from age 50 to 60.
It refers to the period when the policy has lapsed and can be reinstated.
It refers to the portion of life insurance that covers funeral expenses. - Answer-It refers
to the period when the policy has lapsed and can be reinstated.
In which situations would a spousal trust be appropriate?
I. To leave the surviving spouse a life interest, while ensuring assets
transfer to children of a first marriage.
II. To provide the surviving spouse with financial guidance.
III. To avoid probate on the deceased's estate.
a) I and II, only.
b) I and III, only.
c) II and III, only.
d) I, II and III. - Answer-a) I and II, only.
Janice spends a total of $1,500 a month to cover all living expenses. Which of the
following would represent the appropriate emergency fund?
$1,500 to $4,500
$3,000 to $7,500
$4,500 to $9,000
$5,000 to $10,000 - Answer-$4,500 to $9,000
Jennifer owns only one bank stock that is listed on the Toronto Stock Exchange. What
types of risk are embodied in her investment?
I. Market.
II. Business.
III. Interest rate.
, a) I and II, only.
b) II and III, only.
c) I and III, only.
d) I, II and III. - Answer-a) I and II, only.
The "prime" rate is ___________________________.
the lending rate banks charge their most creditworthy clients
the yield on 91-day treasury bills
the yield on 30-year government bonds
None of the above. - Answer-the lending rate banks charge their most creditworthy
clients
Which of the following are examples of open-end credit?
I Home mortgages
II Overdraft protection
III Credit cards
IV Installment loans
III only
II and III only
I and IV only
All are examples of open-end credit. - Answer-II and III only
A maximum 5-year plan for paying creditors all or a portion of outstanding debt is
referred to as a consumer ________________________.
bankruptcy
proposal
consolidation
counseling - Answer-proposal
If you are diagnosed with a life-threatening illness and expect to incur high medical
costs before you die, which type of insurance would provide money for your final
medical costs?
Life insurance
Critical illness insurance
Professional insurance
House insurance - Answer-Critical illness insurance
Which of the following permits you to deduct the contributions you make from your
income to arrive at Net Income on your personal income tax return?
Registered Retirement Savings Plan (RRSP).
WITH CORRECT ANSWERS
What is the grace period in a life insurance policy?
Similar to the grace period on your credit card, you get a monthly break from paying
interest.
It is the period when you are changing from one life insurance policy to another.
Age is the primary driver for the cost of life insurance, the grace period is a discounted
rate on premiums from age 50 to 60.
It refers to the period when the policy has lapsed and can be reinstated.
It refers to the portion of life insurance that covers funeral expenses. - Answer-It refers
to the period when the policy has lapsed and can be reinstated.
In which situations would a spousal trust be appropriate?
I. To leave the surviving spouse a life interest, while ensuring assets
transfer to children of a first marriage.
II. To provide the surviving spouse with financial guidance.
III. To avoid probate on the deceased's estate.
a) I and II, only.
b) I and III, only.
c) II and III, only.
d) I, II and III. - Answer-a) I and II, only.
Janice spends a total of $1,500 a month to cover all living expenses. Which of the
following would represent the appropriate emergency fund?
$1,500 to $4,500
$3,000 to $7,500
$4,500 to $9,000
$5,000 to $10,000 - Answer-$4,500 to $9,000
Jennifer owns only one bank stock that is listed on the Toronto Stock Exchange. What
types of risk are embodied in her investment?
I. Market.
II. Business.
III. Interest rate.
, a) I and II, only.
b) II and III, only.
c) I and III, only.
d) I, II and III. - Answer-a) I and II, only.
The "prime" rate is ___________________________.
the lending rate banks charge their most creditworthy clients
the yield on 91-day treasury bills
the yield on 30-year government bonds
None of the above. - Answer-the lending rate banks charge their most creditworthy
clients
Which of the following are examples of open-end credit?
I Home mortgages
II Overdraft protection
III Credit cards
IV Installment loans
III only
II and III only
I and IV only
All are examples of open-end credit. - Answer-II and III only
A maximum 5-year plan for paying creditors all or a portion of outstanding debt is
referred to as a consumer ________________________.
bankruptcy
proposal
consolidation
counseling - Answer-proposal
If you are diagnosed with a life-threatening illness and expect to incur high medical
costs before you die, which type of insurance would provide money for your final
medical costs?
Life insurance
Critical illness insurance
Professional insurance
House insurance - Answer-Critical illness insurance
Which of the following permits you to deduct the contributions you make from your
income to arrive at Net Income on your personal income tax return?
Registered Retirement Savings Plan (RRSP).
