FIN Multiple Choice Questions
Personal financial planning
Financial independence means …
[1] great wealth. [2] you are dependent on the state for a pension. [3] you are dependent on family members to survive financially. [4] you are able to survive financially on your own investments after retirement. [5] you do not have to continue working after retirement.
Which of the following statements are correct?
(a) Personal financial management is the field of study that affects all people. (b) Personal financial management is the field of study that affects investors and brokers mainly. (c) Personal financial skills are probably the most important life skills one can possess. (d) Persons with this knowledge and skills can also “transfer” it to their children.
[1] a and b [2] a and c [3] a, b and d [4] a, c and d [5] d only
Which one of the following statements is correct?
[1] Career planning does not form part of personal financial planning. [2] Estate planning does not form part of personal financial planning. [3] Income tax planning does not form part of personal financial planning. [4] Personal financial planning includes retirement planning. [5] Emigration planning does not form part of personal financial planning.
Which of the following statements are correct?
(a) Fewer than one out of ten people retire financially independent. (b) Maximum profit is the long-term goal of personal financial management. (c) The long-term goal of personal financial management is financial independence at retirement.
[1] a only [2] b only [3] a and b [4] a and c [5] a, b and c
Which one of the following statements is correct?
[1] Personal financial planning does not include business planning. [2] People’s financial priorities remain the same through the planning cycle. [3] Knowledge is not a prerequisite for personal financial planning. [4] People confuse investments with personal financial planning. [5] Emigration planning does not form part of personal financial planning.
Which of the following statements is/are correct
(a)One out of three people retire financially independent
(b)Personal financial management includes health care planning
(c)The long-term goal of personal financial management is financial independence at retirement
[1] a only [2] b and c [3] a and b [4] a and c [5] a, b and c
Which of the following statement is/are correct? The secret to personal financial management and planning is to be aware of the many factors that may influence your ______at the present time or in the future
(a)Personal financial situation positively
(b)Personal financial situation negatively
(c)Personal financial situation positively or negatively
(d)Retirement positively
(e)Investments positively
1] a only [2] b only [3] c only [4] b and d [5] b and e
Which one of the following statements is correct?
[1] Whithin the same financial planning cycle, people’s priorities and preferences are exactly the same [2] Within the same financial planning cycle, people’s priorities and preferences will not change according to their current individual circumstances [3] Our financial priorities stay the same as we move through the personal financial planning cycle [4] Personal financial planning has to do with what the world’s richest people have done [5] Our financial priorities change as we move through the perusal financial planning cycle
Which of the following statements are correct? Personal financial planning is becoming increasingly complex, for the following reasons
(a)Changing global economic conditions
(b)Dishonest business partners
(c)The high divorce rate
(d)An increase in personal wealth
(e)The high unemployment rate
[1] a, b and c [2] a, d and e [3] b, c, and d [4] d and e [5] a, b, c, d and e
Which of the following statements are correct?
(a)People confuse personal financial planning with investment planning
(b)Investment planning is more important than personal financial planning
(c)Personal financial management education increases personal wealth
(d)The primary objective of an enterprise is financial independence after retirement
[1] a and b [2] a and c [3] b and c [4] b and d [5] c and d
The measurement and assessment of personal financial performance
Which of the following principles are involved in drawing up a budget?
(a) Involvement of family members (b) A proper administrative system (c) Good communication (d) A realistic budget
[1] a and b [2] a, b and c [3] a, b and d [4] b and d [5] all of the above
Which of the following are limitations of a personal budget?
(a)You need a household record system in order to draw up you budget
(b) A budget is the solution to all financial problems.
(c)The success of the budget depends on people.
(d)A budget is the solution to all financial problems
[1] a only [2] a and b [3] a, b and c [4] a, b and d [5] c and d
Which of the following are limitations of a personal budget?
(a) A budget is based on assumptions. (b) A budget is the solution to all financial problems. (c) The success of the budget depends on people. (d) A budget is based on forecasts.
[1] a only [2] a and b [3] a, b and c [4] a, b and d [5] a, c and d
Which of the following are advantages of a personal budget?
(a) A budget is based on assumptions. (b) A budget is not the solution to all financial problems. (c) A budget improves financial discipline. (d) A budget reduces financial conflict.
[1] a only [2] a and b [3] a, b and c [4] b and d [5] c and d
Which of the following principles is/are involved in drawing up a budget?
(a) Involvement of an accountant (b) Risk and return (c) Monthly income and expenses (d) A realistic budget
[1] a and b [2] a and c [3] a, b and d [4] c and d [5] d only
Which of the following statements is/are correct? The personal financial budget …
(a) is a plan that is expressed in financial terms. (b) assists one in measuring and assessing the household’s financial performance. (c) is therefore a control mechanism. (d) helps to achieve personal financial goals.
[1] a and b [2] a and c [3] a, b, c and d [4] b and d [5] c and d
Which one of the following statements is correct?
[1] Within the same financial planning cycle, people’s priorities and preferences are exactly the same. [2] Within the same financial planning cycle, people’s priorities and preferences will not change according to their current individual circumstances. [3] Our financial priorities stay the same as we move through the personal financial planning cycle. [4] Personal financial planning has to do with what the world’s richest people have done. [5] Our financial priorities change as we move through the personal financial planning cycle.
Which of the following statements is/are correct?
(a) a budget is the solution to all financial problems. (b) budgeted figures are based on forecasts. (c) a budget indicates how and when the stated objectives can be achieved. (d) forecasts refer to those periods in the future that must be budgeted for.
[1] a only [2] b only [3] b and c [4] b, c and d [5] d only
Which of the following statements are correct?
(a)A personal budget is a plan in non-financial terms
(b)A person’s financial performance can be determined from the income statement
(c)Budgeted figures too conative ( the result) income estimated too high
(d)Budgeted figures too optimistic (the result) income estimated too low
(e)Budgeted figures too optimistic (the result) expenditure estimated too low
[1] a and b [2] b, c and d [3] b and e [4] c and d [5] d and e
Which of the following statements is/are correct?
(a)Over budgeting means estimating expenses too high
(b)Over budgeting and under budgeting are both useless and negative
(c)Under budgeting means estimating income too low
(d)Over budgeting means estimating income too high and expenses too low
[1] a only [2] a and b [3] a and c [4] b and c [5] b and d
The time value of money
You purchase a dwelling for R950 000 and finance the purchase by way of a R800 000 mortgage bond. The mortgage bond interest rate is 15% per year and the bond period is 20 years. You wish to calculate the following: The monthly mortgage bond instalment
[1] R9 900.74 [2] R9 998.80 [3] R10 158.20 [4] R10 500.36 [5] R10 534.32
The new mortgage bond instalment if interest rates rise to 16% per year.
[1] R10 345.80 [2] R10 894.42 [3] R11 130.05 [4] R11 637.04 [5] R11 905.33
The new mortgage bond instalment should you have to extend the mortgage bond period to 30 years as a result of a cash flow problem.
[1] R10 737.55 [2] R10 758.06 [3] R11 200.56 [4] R11 588.22 [5] R12 053.10
The amount of capital amortized by the 150th instalment.
[1] R420.55 [2] R460.28 [3] R493.23 [4] R657.65 [5] R2 500.00
The amount of interest amortized by the 150th instalment.
[1] R 1 000.21 [2] R 3 000.50 [3] R 7 000.23 [4] R 9 575.31 [5] R10 100.41
A newly married couple intends saving enough money over the next three years to be able to pay a 30% deposit on a house which now costs R110 000. Property prices are expected to rise by 9% per year over the next three years. How much should the couple save at the end of every month at 14% nominal interest to achieve their goal?
[1] R601,03 [2] R652,71 [3] R706,04 [4] R729,47 [5] R962,03
Credit planning
The goals of the Credit Act (nr 34 of 2005) are
(a)To protect the consumers of credit against reckless lending practices by the providers of credit
(b)To prevent over-indebtedness by the consumer of credit
(c)To protect the payment history of consumers
(d)To inform consumers about the cost of credit
[1]a only [2] a and b [3] a, b and c [4] a, b, c and d [5] a, b and d
the Credit Act will help consumers to
(a)Obtain more credit
(b)Make informed borrowing decisions
(c)Escape the debt jail
(d)Prevent negative marketing practices by the suppliers of credit
[1] a and b [2] and c [3] a, b and c [4] b, c and d [5] c and d
Which one of the following statements is true? The National Consumer Tribunal
[1] listen to consumers’ complaints about credit providers [2] order the release of a consumers’ personal information to other consumers [3] order the release of a consumers’ personal information to employers [4] listen to credit suppliers’ complaints [5] listen to consumers’ complaints about the availability of credit
Which one of the following statements is true? A credit bureau
[1]helps consumers to obtain credit [2] accumulates information about credit providers [3] supplies credit to banks [4] accumulated information about the credit history of consumers [5] handles queries on behalf of the National Credit Regulator
Which one of the following statements is correct? Consider the following actions instead of surrendering an endowment policy
[1] Cede the policy to a friend [2] Ask the insurance company to repay the invested premiums to you [3] Cede the policy within two years prior to your liquidation, insolvency or sequestration [4] decrease the annual escalation rate [5] stop paying the premiums
Which of the following statements is correct? (Debt counselling)
[1] The Financial Services Board endorses the debt counselling process [2] A debt counsellor must register you (the applicant) with the credit provider [3] If you are married, only the one spouse needs to be registered [4] Upon registration you receive immediate protection against your creditors [5] All debt repayment has to be rearranged within 12 months
Estate planning
Which one of the following statements is/re correct? Strategies to reduce the value of your estate may include
(a)Lending money to your spouse
(b)Buying further fixed assets in the name of your children
(c)Donating money to your spouse.
(d)Taking out a life policy
[1] a only [2] a and b [3] b and c [4] b and d [5] a, b, c and d
Which one of the following statements is correct?
[1] A will presupposes elementary estate planning [2] The codicil enable you to administer your spouse’s estate [3] A will presupposes comprehensive estate planning [4] People mainly create a company to save on transfer duty [5] A testamentary trust is created during the lifetime of the testator/testatrix
Which one of the following statements is correct?
[1] Habitatio refers to the right to sublet a certain property [2] Habitatio refers to the right use a certain property for you subsistence [3] Fideicommissum is a testamentary bequest to a person on condition that the bequest goes to another person after that person’s death [4] Usufruct may not include the rent from a building [5] Massing takes place when two or more people draw up a joint partnership
To implement the estate plan means to
(a)Identify the assets of the estate
(b)Select the estate planning techniques
(c)Draw up the will, insurance and investment documents
[1] a only [2] a and b [3] b only [4] b and c [5] c only
The number of steps during the administration of an estate depend on
(a)The estimated value of the estate
(b)The number of your dependants
(c)Whether the estate is solvent/insolvent
[1] a only [2] a and b [3] a and c [4] b and c [5] a, b and c
Which of the following statements is/are correct regarding the legal requirements for setting up a trust?
(a)The donation agreement must be contained in a written will
(b)An obligation must arise to administer the assets on behalf of the trust
(c)Property rights must be maintained by the donor
(d)The trust assets must be transferred legally from the founder to the beneficiaries
(e)An obligation must arise to administer the assets on behalf of the children
[1] a only [2] b only [3] b, c and d [4] b, d and e [5] none of the above
Which one of the following statements is correct? Strategies to reduce the value of your estate include
1] selling property to your heirs. [2] buying property in your own name. [3] donating R100 000 to your child. [4] selling property to the government [5] cancelling the payments of your short term insurance policy.
Which of the following statement is/are correct?
(a)A life policy will increase your standard of living
(b)Take out a life policy as soon as you invest in financial assets
(c)Take out a life policy to decrease the size of your estate
(d)People with large estates should bequeath their life policies to other people
(e)People with fixed property should not bequeath life policies to other people
[1] a only [2] a and b [3] b only [4] c, d and e [5] e only
Which one of the following statements is correct?
[1] A testamentary trust enables you after your death to pay estate duty, among other things, out of the proceeds of a life insurance policy. [2] A will presupposes comprehensive estate planning. [3] Assets with no capital growth are usually placed in a trust. [4] People mainly create a company to save on transfer duty. [5] The power of assumption enables you to administer your own estate.
Which one of the following statements is correct?
[1] Habitatio refers to the right to rent a certain property. [2] An interest in property may not include the income from a building. [3] Massing is a testamentary bequest to a person on condition that the bequest goes to another person after that person’s death. [4] Usufruct may include the rent from a farm. [5] Habitatio takes place when two or more people draw up a joint partnership.
Which of the following statements is an example of an estate planning pitfall?
(a) insufficient capital for transferring the estate. (b) notminimising the transfer costs of the estate. (c) having children who are unemployed. (d) insufficient liquid/financial assets for transferring the estate. (e) not protecting the assets of the estate.
[1] a only [2] a and b [3] a, b, c and d [4] b, c and d [5] b, d and e
Which one of the following statements is correct?
[1] Estate planning presupposes a large estate. [2] A right of first refusal enables you to invest in shares. [3] Assets with no capital growth are usually placed in a will. [4] People mainly create a trust to save the cost of drawing up a will. [5] A trust inter vivos is created during the lifetime of the founder.
Which one of the following statements is correct? Strategies to reduce the value of your estate include …
[1] buying property from your heirs. [2] buying property in your own name. [3] donating R20 000 to your child. [4] having no investments in shares. [5] cancelling the payments of your short term insurance policy.
Which of the following statements is/are correct?
(a) A life policy can be used to pay estate duty. (b) A life policy cannot be ceded to a bank. (c) A life policy can only be used after your death. (d) A life policy cannot be used for business planning. (e) A life policy can be used as part of a divorce settlement.
[1] a only [2] a and b [3] a and c [4] a, b, d and e [5] a and e
Which one of the following statements is correct? Estate planning includes the following
[1] an investment is unit trust [2] an investment is a life insurance policy [3] taking out short-term insurance [4] drawing up a legal and valid will [5] all of the above
Which one of the following statements is correct?
[1] Habitatio refers to the right to rent a certain property [2] Usufruct may not include the income from a building [3] Fideicommissum is a testamentary bequest to a person on condition that the bequest goes to another person after that person’s death [4] Habitatio may include the rent from a farm [5] Massing takes place when two or more people draw up a joint partnership
Which one of the following statements is an example of an estate planning pitfall?
[1] insufficient capital for transferring the estate [2] having an updated will [3] insufficient liquid assets for transferring your estate [4] having children working for someone else [5] not having a trust
Which one of the following statements is correct?
[1] Estate planning presupposes an employer-employee relationship [2] A right of the first refusal enables you to administer your own estate [3] Assets with no capital growth are usually placed in a trust [4] People mainly create a trust to save on estate duty [5] A testamentary trust is created during the lifetime of the founder
Some of the purposes of an antenuptial contract are
(a)To determine what the two parties possess at the time of the marriage
(b)To determine how assets will be accumulated for the rest of their married live
(c)To help the executor with the administration of the estate of a deceased spouse.
(d)To help the attorney to establish what each spouse is entitled to claim in the case of a divorce
(e)To protect the innocent spouse against the law in the case of a divorce
[1] a only [2] a and b [3] a, b, c, d and e [4] b, c, and d [5] c, d, and e
Which one of the following statements is correct?
{1] You can draw up your own antenuptialcontrant [2] The accrual system was introduced to end past discrimination against men [3] You divorce settlement depends on your specific matrimonial property regime as well as divorce laws only [4] Handling money is the main reason why people so much marital conflict [5] Older people regard an antenuptial contract as an emotional document (a declaration of love).
Which one of the following statements is correct?
[1] Your lifestyle has no influence on your money matters [2] Each type of lifestyle requires unique personal financial planning form individuals [3] A cohabitation agreement will protect an engaged person [4] Breaking off an engagement has no financial consequences [5] An antenuptial contract is useless because of the low rate of divorce
Which of the following statements is correct?
[1] A marriage in community of property means that assets and liabilities will be divided according to your divorce settlement
[2] The matrimonial property regime you choose will determine whether you need the approval of your spouse to perform certain actions [3] When you marry out of community of property with exclusion of the accrual system, the exclusion of the accrual system should be stipulated in your antenuptial contract [4] The inclusion of the accrual system will prevent many hidden financial problems for both parties [5] Do not become involved in the planning of your children’s antenuptial contracts when they get married