LIBF Financial Capability Unit 2 MCQs 2

Which of the following is most likely to apply to people in the 'old age' stage of the life cycle?

• Their safety and security are particularly important to them.
• Their need for material luxuries increases.
• They are responsible for their children’s needs.
• They aspire to buy a property.

Keira, aged 26, has rent to pay and would like to travel to Portugal in six months’ time. For Keira, these are respectively:

• a need and a want.
• a need and an aspiration.
• a want and a want.
• a want and an aspiration.

Public relations is a form of promotion known as:

• below-the-line expenditure.
• below-the-line income.
• above-the-line income.
• above-the-line expenditure.

People typically buy financial products because the products:

• enable needs, wants and aspirations to be achieved.
• always have an intrinsic value that people appreciate
• ensure unexpected events do not occur.
• guarantee a good income.

The feedback effect refers to the fact that people’s attitudes affect the:

• outcome of events.
• values they promote.
• goals they set
• belief of others

Julie has decided to take out a life insurance policy, costing £200 per month over the next 15 years, to provide a lump sum payout for her family in the event of her death. Which of the following is the most important action Julie must continue to do for the next 15 years?

• Short-term budgeting to ensure affordability of the policy.
• Reduce non-essential spending.
• Check interest rate changes from the Bank of England.
• Be aware of inflation changes.

Pauline has total assets of £220,000 and total liabilities of £70,000. Her net worth is therefore:

• 150000
• 70000
• 220000
• 290000

Failing to make mortgage repayments has more serious consequences than failing to make personal loan repayments because:

• with mortgage arrears the home can be repossessed
• with personal loans the repayments are always higher
• mortgage arrears stay on a credit file permanently
• goods bought using a personal loan will be repossessed

The most appropriate and realistic way to avoid getting into financial difficulties is to:

• complete and adhere to a budget
• avoid any discretionary expenditure
• ensure income rises in line with inflation
• reduce mandatory outgoings

Faisil has built into his five-year financial plan the negative effect of potential interest rate rises. This is because he has a:

• discounted mortgage
• decreasing term assurance policy
• fixed-rate personal loan
• variable-rate cash ISA