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WorksheetsLIBF Financial Capability Unit 2 MCQs 1
Total questions: 35
Worksheet time: 18mins
Name
Class
Date
1.
Which of the following is an example of a 'want'?
a)
Jewellery
b)
Food
c)
Shelter
d)
Water
2.
Which of the following is an example of an aspiration?
a)
Getting a good job.
b)
Buying some new trainers.
c)
Going to the cinema.
d)
Obtaining the latest mobile phone.
3.
An investment, when compared to a savings product, is generally:
a)
more risky but can bring in a higher return.
b)
less risky but always brings in a lower return.
c)
less risky but can bring in a higher return.
d)
more risky but always brings in a lower return.
4.
Advertising can carry:
a)
both explicit and implicit messages.
b)
explicit messages only.
c)
implicit messages only.
d)
neither explicit nor implicit messages.
5.
Which of the following helps people to decide their general approach to financial matters?
a)
Values
b)
Perceptions
c)
Beliefs
d)
Attitudes
6.
A budget is a personal financial plan that usually covers a period of:
a)
one month
b)
four weeks
c)
three months
d)
six months
7.
The table below shows a family's budget. Calculate the disposable income.
a)
345
b)
-345
c)
2467
d)
2861
8.
The main purpose of a budget, as part of a financial plan, is to:
a)
avoid getting into financial difficulties.
b)
discover the best deals in the marketplace.
c)
ensure that there is always a positive balance.
d)
guarantee that there will be no financial difficulties.
9.
Opportunity cost can be defined as the:
a)
cost of something in terms of what has to be given up to achieve it.
b)
cost of something in terms of what it would have cost without any inflation.
c)
difference in cost between something bought in the UK and the same thing bought in another European country.
d)
difference in cost between something bought new and something bought second-hand.
10.
Which of the following is not an example of a significant life-changing event?
a)
A car failing an MOT.
b)
A divorce.
c)
A high return on an investment.
d)
Career change.
11.
Which of the following financial products is the most appropriate for someone to use as ‘rainy day’ money?
a)
Instant access savings account.
b)
Authorised overdraft.
c)
Notice savings account.
d)
Personal loan.
12.
Medium-term and long-term financial planning is carried out because people want to achieve their:
a)
aspiratioins
b)
needs
c)
perceptions
d)
wants
13.
James, aged 35, is buying his first property for £150,000. The mortgage would usually be repaid over a period of:
a)
25 years
b)
10 years
c)
15 years
d)
40 years
14.
Gethin and Nia are both in their twenties and would like to start planning for their retirement. At what age should they start putting money aside towards their retirement planning?
a)
As soon as possible.
b)
30
c)
40
d)
50
15.
When considering returns in savings accounts, the ‘real’ return takes into account the interest rate and:
a)
inflation.
b)
environmental factors.
c)
the state of the economy.
d)
values.
16.
In the UK, a number of benefits have been replaced by a single monthly payment for some people who are out of work or on a low income. This is known as:
a)
Universal Credit.
b)
Basic Credit
c)
Standard Credit
d)
Uniform Credit
17.
Which of the following organisations can best provide advice and guidance to an individual dealing with personal debt?
a)
Money Advice Service
b)
Financial Ombudsman Service
c)
Building Societies Association
d)
British Bankers’ Association
18.
Which of the following best describes a financial footprint? It is a record of:
a)
all of a person’s financial transactions
b)
all of a person's credit cards
c)
the National Insurance contributions a person pays.
d)
the pay increases a person receives at work.
19.
The relationship between risk and reward is based on the idea of:
a)
high reward/high risk.
b)
high reward/low risk.
c)
low reward/high risk.
d)
no reward/high risk.
20.
Which of the following financial products carries the lowest risk?
a)
Premium Bonds.
b)
Investment trusts
c)
Shares in a company.
d)
Unit trusts
21.
Which of the following factors is applicable to an investment trust but not a unit trust?
a)
Allowed to borrow money.
b)
Collective investment
c)
Invests in shares of other companies.
d)
Open ended.
22.
People who are willing to borrow money in order to buy a property are best described as having:
a)
an average degree of risk tolerance
b)
a high degree of risk tolerance
c)
a very low degree of risk tolerance.
d)
a zero level of risk tolerance.
23.
When a person passes risk to someone else, for instance by taking out an insurance policy, this is known as risk:
a)
transfer
b)
acceptance
c)
avoidance
d)
removal
24.
Ranesh and Geeta have two small children and want to put some money aside each month for their future. They are both risk tolerant. Which of the following are they most likely to choose?
a)
Unit trust
b)
Cash ISA
c)
Notice savings account.
d)
Premium Bonds
25.
Which of the following is not an investment product?
a)
A notice account.
b)
A stocks and shares ISA.
c)
Corporate bonds.
d)
Property.
26.
Which of the following taxes might be paid when an individual sells a valuable painting?
a)
Capital gains tax.
b)
Corporation tax.
c)
ncome tax
d)
Value added tax
27.
Which of the following is covered up to £85,000 by the Financial Services Compensation Scheme?
a)
Bank deposits.
b)
Compulsory insurance.
c)
Pensions.
d)
Non-compulsory insurance.
28.
What is the annual adult ISA allowance for paying into a stocks and shares ISA or a cash ISA?
a)
Any combination not exceeding £20,000.
b)
£20,000 into a stocks and shares ISA only
c)
£20,000 into a cash ISA only.
d)
£10,000 maximum into each product.
29.
When borrowing money to buy a property, the ratio of the money borrowed to what the property is worth is known as the:
a)
Loan-to-value (LTV).
b)
Loan-to-income (LTI).
c)
Annual percentage rate (APR).
d)
Annual equivalent rate (AER).
30.
Hire purchase agreements are regulated by the:
a)
Consumer Rights Act.
b)
Financial Services Act.
c)
Financial Services and Markets Act.
d)
Trade Descriptions Act.
31.
Under which law is it forbidden to borrow or lend money for interest?
a)
Sharia law
b)
Murabaha law.
c)
Ijara law
d)
Common law
32.
What is meant by a halal investment? It must:
a)
be ethical.
b)
be at least 50% based in the UK.
c)
make a profit.
d)
pay out dividends twice a year.
33.
. Derived demand is where a financial product is demanded because it enables people to:
a)
achieve their wants
b)
avoid getting into debt
c)
keep ahead of inflation.
d)
take early retirement.
34.
Which of the following is not available from the Money Advice Service?
a)
Recommendation of a suitable provider.
b)
Impartial and unbiased information and advice.
c)
Face-to-face advice at a number of centres
d)
A free online financial health check.
35.
A financial adviser who can only recommend certain types of product from one provider, or a limited number of providers, is called:
a)
a restricted adviser.
b)
a limited adviser.
c)
a tied adviser.
d)
an independent adviser.
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