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WorksheetsLIBF Financial Capability Unit 2 MCQs 2
Total questions: 35
Worksheet time: 18mins
Name
Class
Date
1.
Which of the following is most likely to apply to people in the 'old age' stage of the life cycle?
a)
Their safety and security are particularly important to them.
b)
Their need for material luxuries increases.
c)
They are responsible for their children’s needs.
d)
They aspire to buy a property.
2.
Keira, aged 26, has rent to pay and would like to travel to Portugal in six months’ time. For Keira, these are respectively:
a)
a need and a want.
b)
a need and an aspiration.
c)
a want and a want.
d)
a want and an aspiration.
3.
Public relations is a form of promotion known as:
a)
below-the-line expenditure.
b)
below-the-line income.
c)
above-the-line income.
d)
above-the-line expenditure.
4.
People typically buy financial products because the products:
a)
enable needs, wants and aspirations to be achieved.
b)
always have an intrinsic value that people appreciate
c)
ensure unexpected events do not occur.
d)
guarantee a good income.
5.
The feedback effect refers to the fact that people’s attitudes affect the:
a)
outcome of events.
b)
values they promote.
c)
goals they set
d)
belief of others
6.
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?
a)
Short-term budgeting to ensure affordability of the policy.
b)
Reduce non-essential spending.
c)
Check interest rate changes from the Bank of England.
d)
Be aware of inflation changes.
7.
Pauline has total assets of £220,000 and total liabilities of £70,000. Her net worth is therefore:
a)
150000
b)
70000
c)
220000
d)
290000
8.
Failing to make mortgage repayments has more serious consequences than failing to make personal loan repayments because:
a)
with mortgage arrears the home can be repossessed
b)
with personal loans the repayments are always higher
c)
mortgage arrears stay on a credit file permanently
d)
goods bought using a personal loan will be repossessed
9.
The most appropriate and realistic way to avoid getting into financial difficulties is to:
a)
complete and adhere to a budget
b)
avoid any discretionary expenditure
c)
ensure income rises in line with inflation
d)
reduce mandatory outgoings
10.
Faisil has built into his five-year financial plan the negative effect of potential interest rate rises. This is because he has a:
a)
discounted mortgage
b)
decreasing term assurance policy
c)
fixed-rate personal loan
d)
variable-rate cash ISA
11.
Oracle wants to buy a new TV and wants to add flexibility into her financial plan. Which of the following borrowing products would provide some flexibility in repayments without additional charges?
a)
Credit card
b)
Debit card.
c)
Payday loan
d)
Personal loan
12.
Why is it important to monitor progress against a budget throughout a month? To:
a)
reduce the chances of overspending.
b)
save time at the end of the month.
c)
avoid any discretionary expenditure
d)
amend the timescale of the plan if necessary
13.
Cerys can borrow 85% of the cost of her first home, which she hopes to buy for £110,000 in three years’ time. If she already has £7,500 saved, calculate the minimum amount she will need to save per month to be able to pay her deposit.
a)
250
b)
209
c)
459
d)
750
14.
Borrowing to buy an item usually costs more than the price of the item overall. This is because:
a)
interest is payable
b)
all items go down in price overtime
c)
of the rate of inflation.
d)
the expenditure wasn’t planned
15.
Suki cannot be forced to sell her personal assets if her business gets into financial difficulty. This is because:
a)
her business is a limited company
b)
her mother is in partnership with her
c)
she operates as a sole trader
d)
she has more than ten employees
16.
In completing his financial plan, Marcus has taken into account his regular Personal Independence Payments. He is entitled to these because he is:
a)
disabled
b)
unemployed
c)
a non-resident
d)
retired
17.
Which of the following organisations provides the online Debt Remedy tool?
a)
StepChange Debt Charity
b)
National Debtline.
c)
Equifax
d)
Citizens Advice
18.
Experian is a:
a)
credit reference agency
b)
debt helpline
c)
national charity
d)
secured loan provider
19.
People who want better returns from their investments typically need to:
a)
accept a higher level of risk
b)
expect increased charges
c)
invest for a short period
d)
select safer products
20.
Which of the following represents the main risk for someone investing in a unit trust? The risk that:
a)
the value of their investment may fall
b)
they may pay tax if their investment rises.
c)
other investments may perform better
d)
access to their money may be limited
21.
A stocks and shares ISA, when compared to an instant-access savings account, is:
a)
more risky but may bring in a higher return.
b)
more risky and usually brings in a lower return
c)
less risky but may bring in a higher return
d)
less risky and could bring in a lower return
22.
Desmond wants to invest money but considers himself risk averse. Which of the following products is most suitable for him?
a)
Unit trust.
b)
Premium Bonds.
c)
OEICs
d)
Investment trusts
23.
In the UK, which of the following is not normally a factor that would influence an investor’s attitude to risk for investment purposes?
a)
Their geographical location
b)
Their personality
c)
The stage of the life cycle they are in.
d)
The amount of money they have available
24.
Which of the following products is unsuitable for someone who is risk averse?
a)
Investment trust.
b)
Cash ISA
c)
Premium Bonds
d)
Savings account
25.
The two rates of capital gains tax that apply in the current tax year for individuals on the sale of residential property are:
a)
18% and 28%
b)
10% and 20%
c)
20% and 40%
d)
28% and 45%
26.
Which of the following should people factor into their financial plans with regard to annuities?
a)
Inflation
b)
Capital growth
c)
Interest rates.
d)
Investment returns
27.
Which of the following is an advantage of investing in a cash ISA?
a)
The interest is tax free
b)
There are low fees
c)
They allow unlimited deposits
d)
They have variable interest rates
28.
A friendly society is a:
a)
mutual organisation
b)
national charity
c)
public limited company
d)
type of bank
29.
An offset mortgage involves linking a mortgage account to:
a)
a savings account.
b)
a credit card
c)
a stocks and shares ISA
d)
an insurance policy
30.
Some people get a student loan to help cover their university tuition fees, which are currently set at a maximum of:
a)
9250
b)
9000
c)
9750
d)
9500
31.
When someone buys a property using the Murabaha method of Islamic home finance, the property is initially bought by the finance provider then sold to the borrower:
a)
immediately at a higher price
b)
immediately at a discount.
c)
at the end of the term at a higher price.
d)
at the end of the term at a discount
32.
Under Sharia law an investment is not permissible if it is:
a)
speculative
b)
UK based
c)
charitable
d)
ethical
33.
Taking out a loan to be able to afford to buy a new car is an example of:
a)
derived demand
b)
competitive demand
c)
joint demand
d)
opportunity demand
34.
Which of the following statements about National Debtline is false?
a)
It covers Great Britain and Northern Ireland
b)
A self-help pack is available
c)
Specialist advice is available
d)
The service is free of charge
35.
Obtaining advice from which of the following may involve the payment of a fee?
a)
A restricted adviser
b)
Citizens Advice
c)
StepChange Debt Charity
d)
The Money Advice Service
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