WorksheetsLIBF Financial Capability Unit 2 MCQs 3
Total questions: 35
Worksheet time: 18mins
Name
Class
Date
1.
Which of the following is most likely to apply to people in the mature adult stage of the life cycle?
a)
Their children’s needs take priority.
b)
Their aspirations become irrelevant.
c)
Their aspirations become irrelevant.
d)
They have few needs and wants
2.
Boris, aged 14, hopes to buy a new camera next year and would like to be a lawyer when he leaves school. For Boris, these are respectively a:
a)
want and an aspiration.
b)
want and a want.
c)
need and an aspiration.
d)
need and a want.
3.
Peer pressure is the pressure to buy a product because:
a)
your friends have the same product.
b)
the product is currently being offered at a discount.
c)
most people approve of the product
d)
a well-known celebrity has endorsed the product.
4.
Which of the following is a form of product placement?
a)
A product being mentioned in a TV programme.
b)
An advertisement in a national newspaper.
c)
Running a product trial with a group of customers.
d)
Sponsorship of a local business award.
5.
Which of the following helps people to distinguish between what they consider to be needs and what they consider to be wants?
a)
Values
b)
Attitudes
c)
Beliefs
d)
Perceptions
6.
Budgeting effectively in the short term helps people to achieve long-term financial plans by:
a)
avoiding overspending.
b)
controlling unplanned events.
c)
decreasing mandatory expenditure.
d)
reducing essential expenditure.
7.
The difference between someone’s total assets and their total liabilities is described as their:
a)
net worth.
b)
net value
c)
gross worth
d)
gross value
8.
Which of the following is least likely to be a medium-term goal that someone aged 24 is budgeting for?
a)
leave their children an inheritance.
b)
buy a brand new car in three years’ time.
c)
pay off their student debt.
d)
save a deposit for a rental property.
9.
Which of the following events is typically the easiest to budget for?
a)
Moving house
b)
Divorce
c)
Redundancy
d)
Serious illness
10.
Which of the following items in a financial plan is usually the most flexible?
a)
Savings account payments
b)
Minimum credit card payments
c)
Hire purchase payments.
d)
Council tax payments
11.
Neil has made a disciplined financial plan for the next two years as he wants to be in a better financial position after that time. There is no surplus in his plan at the end of each month. Which of the following actions could negatively impact his plan?
a)
Not making a mandatory payment.
b)
Not making a discretionary payment.
c)
Forgetting an important birthday
d)
Decreased insurance premiums.
12.
Which of the following is most likely to result in the need for someone aged 35 to amend their three-year financial plan?
a)
interest rates.
b)
annuity rates.
c)
demographics.
d)
state pension rate.
13.
Budgeting is often easier for employed people because:
a)
they have a fixed income level
b)
they cannot predict their outgoings.
c)
their outgoings are always high
d)
their income may be irregular
14.
Which of the following combines monthly figures to plan how a large item of expenditure is going to be financed?
a)
Cash flow forecast
b)
Budget
c)
Expenditure
d)
Income
15.
If wages rise more slowly than prices, this will cause:
a)
real earnings to fall.
b)
inflation to decrease.
c)
income tax rates to rise
d)
disposable incomes to increase.
16.
When someone is made redundant, and needs to rebalance their monthly budget, they will usually find it easiest to reduce their:
a)
discretionary expenditure
b)
essential expenditure.
c)
mandatory expenditure.
d)
unexpected expenditure.
17.
Which of the following organisations can provide face-to-face advice and guidance on dealing with debt?
a)
Citizens Advice.
b)
Financial Conduct Authority.
c)
Financial Ombudsman Service
d)
National Debtline.
18.
When applying for a borrowing product a lender can see:
a)
any credit applications the person has made
b)
all their previous debts.
c)
the outstanding balance on all of the person’s borrowing.
d)
the purpose of all credit the person has taken out.
19.
When someone takes out a personal loan to buy a car, the risk to the lender is mainly reflected by the:
a)
interest rate charged.
b)
profit margin.
c)
cost of car insurance.
d)
arrangement fee
20.
Investors buying individual company shares trade off the possibility of high returns by:
a)
accepting a high degree of risk.
b)
accepting low interest rates.
c)
paying high management fees.
d)
paying low transaction charges.
21.
A savings product, when compared with an investment product, is usually:
a)
less risky but may provide a lower return.
b)
less risky and always provides a higher return
c)
more risky and always provides a lower return.
d)
more risky but may provide a higher return
22.
. Paula has invested £100,000 into a unit trust with her bank in the UK. If this bank were to go bankrupt, how much would the Financial Services Compensation Scheme (FSCS) payout to Paula?
a)
85000
b)
Nothing.
c)
50000
d)
100000
23.
People most commonly transfer risk by taking out:
a)
insurance
b)
investments
c)
mortgages
d)
savings prodcuts
24.
Which of the following products is likely to be most attractive to someone who is risk averse?
a)
Premium Bonds
b)
Investment trust
c)
Stocks and shares ISA.
d)
Unit trust.
25.
Ivan, a higher-rate taxpayer, made a taxable gain of £4,000 when he sold his holiday home. Assuming he has used all of his annual tax-free allowance for capital gains tax, how much will he need to pay?
a)
1120
b)
720
c)
800
d)
1600
26.
In the event of a company making profit, preference shares:
a)
provide a fixed percentage rate of dividend
b)
guarantee dividends from the company.
c)
provide dividends that are tax free
d)
provide double dividends
27.
If a National Savings and Investments (NS&I) Children’s Bond is cashed in early, there is a penalty equivalent to:
a)
90 days’ interest.
b)
60 days’ interest.
c)
3% of the amount invested.
d)
2% of the amount invested.
28.
Bonnie has invested £3,240 in a cash ISA during the current tax year. What maximum further amount can she invest in a stocks and shares ISA in the same tax year?
a)
16760
b)
6480
c)
5000
d)
3240
29.
The personal contract purchase method of borrowing is typically used by people buying:
a)
motor vehicles
b)
properties
c)
holidays
d)
stocks and shares
30.
Mikhail wants to buy an insurance product that will enable the outstanding balance of his repayment mortgage to be fully repaid in the event of his death. Which of the following products is most suitable for Mikhail?
a)
Mortgage protection assurance
b)
Payment protection insurance.
c)
Level-term assurance
d)
Income protection insurance.
31.
When someone buys a property using the Ijara method of Islamic home finance, who owns the property when it is first purchased?
a)
The finance provider
b)
The finance provider’s solicitor
c)
The buyer’s solicitor
d)
The buyer
32.
Who is responsible for ensuring that an Islamic investment product is compliant with the principles of Sharia law?
a)
An independent supervisory board
b)
An independent financial adviser
c)
The Financial Conduct Authority
d)
The senior management of the provider
33.
A joint demand means that someone purchases two products which:
a)
complement each other
b)
fulfil the same need
c)
are the same as each other.
d)
achieve different aspirations.
34.
Financial advisers are monitored by the:
a)
Financial Conduct Authority
b)
Prudential Regulation Authority
c)
Financial Ombudsman Service
d)
Financial Services Compensation Scheme
35.
Which of the following statements about a typical price comparison website, is false? Consumers can:
a)
choose from all the providers and products in the marketplace.
b)
access a lot of information easily to help them make a choice
c)
find useful ‘best buy’ tables
d)
save time by finding a lot of information in one place.
100 %
