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Personal Finance (MCS 2100) - Practice Quizzes
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All of the multiple choice questions that arised during weekly quizzes in MCS 2100 - Personal Finance, taught at the University of Guelph. All typed notes.
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MCS 2100 - QuizzesQuiz 1
1. When Lou and Nancy bought their house 3 years ago they had an interest rate of 5.3%. When they
renewed their mortgage the interest rate had increased to 7.4%. What type of risk does this represent?
a) Liquidity risk
b) Interest rate risk
c) Product risk
d) Inflation risk
2. The Compeaus are planning to go on a cruise in 6 months time. What type of goal is this?
a) Short-term
b) Intermediate
c) Long-term
3. People who are in the age range of 35 to 55 are most concerned with
a) Retirement savings
b) House down payment
c) Managing their assets
d) Paying off their mortgage
4. A _____ is a specific plan for spending.
a) Budget
b) Balance sheet
c) Cash flow statement
d) Bank statement
5. Pam and John have the following assets and liabilities:
Assets:
Bank account: $4,000
House: $150,000
Canada Savings Bonds: $5,000
Liabilities:
Credit Cards: $6,000
One year loan: $7,000
Mortgage: $85,000
Which statement about their current ratio is correct?
a) The ratio is good because their assets are greater than their debts.
b) The ratio is not good because they do not have enough liquid assets to cover their short-term
debts.
c) The ratio is good because they have enough liquid assets for emergencies.
, d) The ratio is not good because their long-term debts are higher than their short-term debts.
6. A financial plan
a) is static
b) is short-term
c) changes as needs change
d) is only needed by wealthy people
7. The final step in the financial planning process is to
a) Create a financial plan of action
b) Develop financial goals
c) Re-evaluate and revise your actions
d) Implement your financial plan
8. The life cycle stage one is in will have the greatest effect on one’s
a) Financial goals
b) Opportunity costs
c) Liquidity costs
d) Accessibility of funds
9. Financial strategies refer to
a) The process of predicting your future financial situation
b) Courses of action to achieve financial goals
c) Resources an individual has available for investing
d) Ideas or principles that are considered correct, desirable, or important
10. Don has prepared a budget for himself. His expenses are greater than his income. Which of the
following expenses would you suggest would be easiest for him to reduce his spending on?
a) Utilities
b) Rent
c) Entertainment
d) Car operation expenses
11. Emergency funds need to balance
a) The ability to access funds when needed with making the funds unavailable for
non-emergencies
b) The interest rate with the accessibility of the funds
c) The financial goals with the interest rate
d) The financial goals with making the funds unavailable for non-emergencies
12. Giles has collected the following numbers about his finances. Use the appropriate numbers to
calculate his net worth, and cash surplus or deficit.
, Bank Account $1,500
Canada Savings Bonds $5,000
Monthly income $6,000
House $125,000
Car $10,000
Mortgage $95,000
Car Loan $5,000
Monthly mortgage payments $1,200
Food expenses $650/month
Entertainment $250/month
Household expenses $225/month
Car expenses $650/month
Other expenses $2,500/month
a) $40,300 net worth; 800 cash surplus
b) $41,500 net worth; 525 cash surplus
c) $46,300 net worth; 1,500 cash surplus
d) $47,500 net worth; 525 cash surplus
e) $141,500 net worth; 1,800 cash deficit
13. A personal cash flow statement presents
a) A projection for spending
b) Income and payments
c) Assets and liabilities
d) Amounts owed to others
14. What effect will an increase in the GDP have on the economy?
a) Greater number of jobs
b) Decrease in money supply
c) Lower interest rates
d) Decreased consumer spending
15. Interest rates in Canada are currently
a) Low
b) Decreasing
c) High
d) Medium
16. Shirley purchased a 3 year GIC. The face value of the GIC is $5,000.00. The GIC has an interest
rate of 10% compounded annually. How much will the GIC be worth when it matures?
a) $3,756.57
b) $5,500.00
c) $6,500.00
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