Multiple Choice:

1.) Tara bought a condo. She paid 22% down and is going to make payments for 20 years
a.) The amortization period is 5 years

2.) Which of the following would be a safe investment for a fairly conservative investor?
a.) None of the above

3.) Which of the following sources of retirement income generates the least amount of tax
payable if all of them are invested in GICs?
a.) TFSA

4.) Before purchasing a home insurance policy, you must ask yourself which two questions?
a.) What risks will be covered? AND how much will policy cost.

5.) It is possible to lower one’s investment risk exposure without sacrificing one’s expected
return on investment by using the strategy of diversification?
a.) True

6.) Despite the growing number of marriage breakdowns changing demographics and
reduced family sizes, the diagnosis of financial requirements has not really altered since
calculations remain the same on an individual basis.
a.) False

7.) The beneficiary of an RRSP has three (3) choices: withdraw and pay tax, roll over into a
RRIF by age 71 and/or buy one or more annuities. A combination of all three (3) choices
is not possible.
a.) True

8.) A person wishes to purchase a $90,000 house. He has $20,000 in savings for a down
payment, yet he cannot obtain a first mortgage of $70,000 from any financial institution.
Why not?
a.) All of the above

9.) Which of the following is not legally binding even if is appropriately signed and dated
a.) All are legally binding

10.) Retirement planning is:

a.) Summarized by “how much have you got now?, how much will you need at
retirement?, and how do you get from there to there”.

11.) Conventional sources such as banks and finance companies use debt service
ratios when evaluating loan applications
a.) True
12.) The dividend tax credit has been established to
a.) Neutralize the effect of double taxation on dividends

13.) Which of the following is not true about contributions to pension plans?
a.) Employee and employer contributions are always equal

14.) Alistar’s bank manager tells him he can get sound well-rounded financial
planning advice free from the bank because he has his RRSPs at the bank. What is the
best advice to give him?
a.) Fee-only investment advisors get paid based on the size of your portfolio so their
advice

15.) If a taxpayer withdraws an RRSP for spending purposes, the entire amount is
taxable but the differential treatments of capital gains and dividends may apply.
a.) False

16.) Which of the following are the most contentious parts of separation agreements
(in priority order)
a.) Access to children and division of property

17.) Higher levels of human capital require more life and disability insurance because
there is more to lose
a.) True

18.) Personal risk management is:

a.) A 5-stage process: identity, evaluate, control, finance and monitor

19.) Many financial experts advise that you should buy term life insurance for
protection and “invest the difference” between term and whole life premiums, rather than
buying whole life insurance
a.) False

20.) The face value of a bond is

a.) The amount that the issuer has promised to pay on the maturity date

21.) Which of the following statements is not true? A deductible in home insurance
a.) Protects against inflation

22.) It is wise for a CFP licensee to aid the client in all his or her affairs, even if these
matters are outside the scope of the engagement
a.) False
23.) If you are saving for retirement a long time in the future and you do not need
income from the investment, now a growth mutual fund with low dividends is more tax
efficient
a.) True
24.) Last year, Simon contributed $4000 to a spousal RRSP for his wife, Anne. This
year, Anne withdrew $2000 from the plan. If Simon’s marginal tax rate is 43% and
Anne’s marginal rate is 27%, how much tax must be paid on the withdrawn amount?
a.) 860 (2000 x 0.43 = 860)

25.) Which of the following equations best represents the simple model of financial
planning? Financial goal (at time n) equals
a.) Existing savings +investment income + earnings - consumption + investment income
on annual

26.) Which of the following statements is not correct?

a.) All of the above are true

27.) Which of the following is the correct order for the first steps in financial planning?
a.) Determine goals, collect information, diagnose the current situation, and prepare a
detailed analysis

28.) Adjustments to accommodate individual tax situations require the calculation of

cash flows in after-tax dollars and their discounting using an after-tax discount rate.
a.) True

29.) Dan has heard that his required investing knowledge is reduced due to the
efficient market hypothesis. Which of the following is not an implication he can rely on.
a.) Stocks are fairly valued over time.