Question 1

A complete financial plan consists of budgeting, taxes, financing, and investing.

Accepted Answer

False

Question 2

A financial plan should include estimates of the cost of a long-term goal.

Accepted Answer

A financial plan should include estimates of the cost of a long-term goal so that an individual can save and invest accordingly.

Question 3

If you do not have access to money to cover your cash needs, you may have insufficient liquidity.

Accepted Answer

Insufficient liquidity means you do not have enough readily available cash or assets that can be easily converted to cash to cover your immediate financial obligations.

Question 4

Most Canadians are capable enough to understand and develop a personal financial plan.

Accepted Answer

The answer of Most Canadians are capable enough to understand...

Question 5

Liquidity cannot be enhanced using sound money and credit management.

Accepted Answer

Sound money and credit management can help improve liquidity by promoting financial stability and encouraging responsible borrowing and lending practices. This can reduce the likelihood of liquidity crises and increase market confidence, leading to more liquid markets.

Question 6

An example of an opportunity cost is the cost of tuition while attending college or university instead of the hourly rate you could earn from being employed.

Accepted Answer

Opportunity cost is the value of the next best alternative that must be given up in order to pursue a certain action or choice. In this example, the opportunity cost of attending college or university is the hourly rate of pay one could earn if they were employed instead.

Question 7

The Financial Planning Standards Council (FPSC)is a profit-oriented organization created to benefit the public with regards to financial planning.

Accepted Answer

The Financial Planning Standards Council (FPSC) is a not-for-profit organization that strives to benefit the public through the advancement of professional standards in financial planning.

Question 8

A thorough understanding of this personal finance textbook qualifies you to become a financial adviser.

Accepted Answer

Simply understanding a personal finance textbook does not qualify someone to become a financial adviser. Becoming a financial adviser usually requires obtaining relevant licenses and certifications, as well as building up experience in the field.

Question 9

An understanding of personal finance is necessary to judge the quality of advice that a financial adviser may give.

Accepted Answer

Without a basic understanding of personal finance, it can be difficult to determine whether the advice given by a financial adviser is sound and in your best interest. Knowing about budgeting, saving, investing, and debt management can help you evaluate the recommendations provided by an adviser and make informed decisions about your finances.

Question 10

What you owe minus what you own equals the net assets you have.

Accepted Answer

Net assets are calculated as total assets minus total liabilities, not what you owe minus what you own.

Question 11

Placing exact estimates on the cost of long-term goals is necessary for a financial plan to be successful.

Accepted Answer

While estimating costs is important, flexibility and adaptability are also crucial for a successful financial plan, as long-term goals can be affected by unforeseen changes and circumstances.

Question 12

The per capita debt of Canadians has multiplied by more than five times from $5470 in 1980.

Accepted Answer

According to data from the Bank of Canada, the per capita debt of Canadians was $2,070 in 1980 and had increased to $31,211 by the end of 2020, which is more than five times the amount from 1980.

Question 13

The simple objective of financial planning is to make the best use of your resources to achieve your financial goals.

Accepted Answer

The simple objective of financial planning is to make the best use of your resources to achieve your financial goals.

Question 14

The first step in budgeting is to evaluate your current financial position by looking at your income and expenses.

Accepted Answer

The answer of The first step in budgeting is to...

Question 15

The value of what you own minus the value of what you owe is called your "net assets."

Accepted Answer

The answer of The value of what you own minus...

Question 16

Your budget is influenced by your income, which in turn is influenced by your education and career decisions.

Accepted Answer

Your income is typically higher if you have a higher education and a successful career, which can impact your budget and spending decisions.

Question 17

Financial advisers are in demand because most people lack understanding or are not interested in making their own financial decisions.

Accepted Answer

This statement is true. Many people prefer to outsource their financial planning and decision-making to professionals who have the knowledge and expertise to help them achieve their financial goals. Additionally, navigating the complex world of investments, taxes, and retirement planning can be overwhelming for those without a background in finance.

Question 18

An important step in developing a financial plan is to record specific goals you want to achieve.

Accepted Answer

Recording specific goals is an important part of developing a financial plan as it helps you to focus on what you want to achieve and work towards it.

Question 19

Budgets have to be exact and inflexible to work properly.

Accepted Answer

Budgets should be precise, but they also need to be flexible to allow for unexpected changes or emergencies. A rigid budget can make it challenging to adjust spending and may lead to overspending or inadequate funding for important expenses. It is advisable to create a realistic budget that takes into account any potential adjustments that may be required throughout the budget period.

Question 20

If you do one thing, you usually give up the chance to do something else. This is called "opportunity cost."

Accepted Answer

Opportunity cost refers to the cost of the next best alternative forgone, when we make a choice between two or more options. Therefore, choosing one thing means giving up the opportunity to do something else, which incurs an opportunity cost.

Quiz 1: Overview of a Financial Plan

A complete financial plan consists of budgeting, taxes, financing, and investing.

A financial plan should include estimates of the cost of a long-term goal.

If you do not have access to money to cover your cash needs, you may have insufficient liquidity.

Most Canadians are capable enough to understand and develop a personal financial plan.

Liquidity cannot be enhanced using sound money and credit management.

An example of an opportunity cost is the cost of tuition while attending college or university instead of the hourly rate you could earn from being employed.

The Financial Planning Standards Council (FPSC)is a profit-oriented organization created to benefit the public with regards to financial planning.

A thorough understanding of this personal finance textbook qualifies you to become a financial adviser.

An understanding of personal finance is necessary to judge the quality of advice that a financial adviser may give.

What you owe minus what you own equals the net assets you have.

Placing exact estimates on the cost of long-term goals is necessary for a financial plan to be successful.

The per capita debt of Canadians has multiplied by more than five times from $5470 in 1980.

The simple objective of financial planning is to make the best use of your resources to achieve your financial goals.

The first step in budgeting is to evaluate your current financial position by looking at your income and expenses.

The value of what you own minus the value of what you owe is called your "net assets."

Your budget is influenced by your income, which in turn is influenced by your education and career decisions.

Financial advisers are in demand because most people lack understanding or are not interested in making their own financial decisions.

An important step in developing a financial plan is to record specific goals you want to achieve.

Budgets have to be exact and inflexible to work properly.

If you do one thing, you usually give up the chance to do something else. This is called "opportunity cost."