Quiz 2
Question 1
The prime interest rate is
1 / 1 point
a) set by the Bank of Canada.
b) the interest rate used for unsecured loans.
c) the interest rate on Canada Bonds.
d) the interest rate the financial institutions charge their best customers.
Question 2
The fewest financial services would probably be offered by a(n)
1 / 1 point
credit union.
trust company.
chartered bank.
investment company.
Question 3
The rate of return on a savings account may also be referred to as
1 / 1 point
yield.
compounding.
liquidity.
equity.
Question 4
The savings plan that is likely to have a set rate of return is a
1 / 1 point
money market account.
guaranteed investment certificate.
debit card account.
money market fund.
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Question 5
A personal cheque with guaranteed payment is a
1 / 1 point
certified cheque.
bank draft.
cashier's cheque.
money order.
Question 6
The effective annual rate (EAR) formula is used to
1 / 1 point
take inflation into account.
calculate the nominal rate of return.
incorporate compounding.
determine your real rate of return.
Question 7
The best method of comparing credit cost is to use the
1 / 1 point
time value of money.
effective annual cost.
declining balance method.
add-on and adjusted balance method.
1 / 1 point
Question 8
Some creditors add finance charges after subtracting payments made during the billing period.
This is called the
previous balance method.
average daily balance method.
adjusted balance method.
annual percentage rate method.
Question 9
Consumer credit counselling services
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1 / 1 point
2
are nonprofit organizations that help families with severe financial difficulties.
extend consolidation loans.
sell credit insurance.
are lending institutions.
1 / 1 point
Question 10
Most lending institutions believe that an individual or family can afford to spend about _____
percent of their gross income on housing costs.
20
30
40
50
Question 11
A _____________ allows a person to borrow on the paid-up value of a home.
1 / 1 point
conventional mortgage
vendor-take-back mortgage
home equity line of credit
second mortgage
After-tax return
1 / 1 point
Question 12
What is the after-tax return if the interest rate is 4% on a GIC and you have a MTR of 31.15% ?
1.25%
2.75%
3.12%
Installment loan payment
0 / 1 point
Question 13
John took out a $15,000 loan for 3 years with an 8% annual interest rate. What is the monthly
loan payment?
416
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470
525
747
Question 14
The major difference between a term deposit and a GIC is
1 / 1 point
the length of time to maturity.
the size of the minimum deposit required.
the accessibility of the funds.
the eligibility for CDIC insurance
1 / 1 point
Question 15
Peter needs to reconcile his chequing account. His chequing account record shows a balance of
$1681.45 and his bank statement shows a balance of $1753.23. His account earned interest of
$.03, had bank fees of $6.25 and there is a cheque for $78 that has not cleared. What is the
balance of his chequing account after the reconciliation? (use following format $#,###.##)
Answer: $1,675.23
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