Personal Finance Quiz

Question 1

At what life stage does it become important to concentrate on reducing personal debt to zero?

a)Early career
b)Family and mid-career
c)Prime earning
d)Early retirement

Question 2

Gilles and Catherine, both recent university graduates, are building their first financial plan.   Their most important goal is to purchase a house in 4 years.  Their plan calls for a 50% saving ratio to accumulate the $150,000 down payment by investing in term deposits.  Which element of developing SMART goals have they not met?

a)The goal is not measurable.
b)The goal is not time bound.
c)The goal is not realistic.
d)The goal lacks an action plan.

Question 3

Ricardo is aware that he should save as much as possible early in his career while his personal responsibilities are minimal.  Therefore he has adopted an aggressive savings plan – put aside $1,500 in his TFSA at the beginning of each month for a year.  (He has never contributed to a TFSA and has sufficient contribution room.)  Ricardo’s savings are expected to earn 2% per annum, compounded semi-annually and he will make his first contribution 6 months from today.  How much will he have in his TFSA in 2 years’ time if no further contributions are made?

a)$18,195
b)$18,377
c)$18,407
d)$18,502



Question 4

Chlo is planning for her 15 year-old daughter’s university education.  She estimates that 1 year of university would cost $15,000 in today’s dollars, but will rise with the rate of inflation of 2% year over year.  How much would Chlo need to have accumulated by the time her daughter starts university at the age of 19 provided she attends university for 3 years and will receive funds at the beginning of each year?  Assume an investment rate of 3.6%, compounded monthly.

a)$41,896
b)$43,775
c)$47,932
d)$49,689

Question 5

Anton borrows $25,000 to purchase a car.  His loan will be amortized over 5 years at a rate of 4.8%, compounded monthly.  How much of the loan will he have paid off after 2 years?

a)$1,872
b)$9,351
c)$11,223
d)$15,649