Carina Storm
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Level 2 PERSONAL FINANCE (CeFF) Quiz on Specimen Paper C - Unit 2 - Practices of Managing Money (PMM), created by Carina Storm on 23/03/2019.

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Specimen Paper C - Unit 2 - Practices of Managing Money (PMM)

Specimen Paper C - Unit 2 - Practices of Managing Money (PMM)

Question 1 of 35

1

An account typically used for day-to-day finances is known as a:

Select one of the following:

  • current account

  • deposit account

  • savings account

  • share account

Explanation

Question 2 of 35

1

Savings accounts are mostly offered by:

Select one of the following:

  • building societies

  • insurance companies

  • investment companies

  • mortgage brokers

Explanation

Question 3 of 35

1

A short-term financial plan is normally considered to be anything up to:

Select one of the following:

  • 12 months

  • 24 months

  • 36 months

  • 48 months

Explanation

Question 4 of 35

1

A consequence of failing to budget can be:

Select one of the following:

  • financial pressure points identified

  • important bills remaining unpaid

  • increased levels of savings

  • making the most of your money

Explanation

Question 5 of 35

1

A rise in interest rates would benefit a person with a:

Select one of the following:

  • fixed-rate mortgage

  • fixed-rate savings account

  • variable-rate mortgage

  • variable-rate savings account

Explanation

Question 6 of 35

1

If the pound sterling strengthens against the yen then:

Select one of the following:

  • exports to Japan become more expensive

  • imports from Japan become more expensive

  • interest rates in the UK will fall

  • more tourists will visit the UK from Japan

Explanation

Question 7 of 35

1

Increased consumer spending generally leads to:

Select one of the following:

  • high government borrowing

  • higher levels of employment

  • lower government tax receipts

  • lower personal income

Explanation

Question 8 of 35

1

Which of the following is an electronic payment system specifically used for very high-value payments?

Select one of the following:

  • Bacs

  • CHAPS

  • Faster Payments

  • PayPal

Explanation

Question 9 of 35

1

Value for money is about:

Select one of the following:

  • being able to sway a customer's opinion through advertising

  • getting the best goods for the money available

  • low prices being good value for the customer

  • presenting heavily discounted goods to the customer

Explanation

Question 10 of 35

1

On the majority of goods value added tax (VAT) is charged at:

Select one of the following:

  • 0%

  • 5%

  • 10%

  • 20%

Explanation

Question 11 of 35

1

Which of the following transactions is likely to incur a service charge?

Select one of the following:

  • A face-to-face train ticket purchase

  • An online air-ticket purchase via credit card

  • Children's clothes bought on the high street

  • Food purchased from a supermarket

Explanation

Question 12 of 35

1

Which of the following has the greatest negative impact on a solid foundation for economic growth?

Select one of the following:

  • Excessive borrowing

  • Increased employment

  • Manufacturing output

  • Real earnings

Explanation

Question 13 of 35

1

Which of the following would be classified as a 'good' debt? Borrowing to:

Select one of the following:

  • buy a property

  • buy a smart-phone

  • buy new clothes

  • pay for a holiday

Explanation

Question 14 of 35

1

Which of the following is the best short-term borrowing solution for a person needing to get their car repaired?

Select one of the following:

  • Mortgage

  • Overdraft

  • Personal loan

  • Store card

Explanation

Question 15 of 35

1

Which of the following is an agreement between a person and their creditors, whereby the creditors agree for the person to pay a proportion of their debt over a fixed period?

Select one of the following:

  • Bankruptcy

  • County court judgment

  • Debt relief order

  • Individual voluntary arrangement

Explanation

Question 16 of 35

1

Case Study 1
Jack works full-time at a branch of a nationwide firm of estate agents. He earns a basic salary of £21,000 a year, which works out at £404 gross a week. He also earns commission on each property he sells. This commission is accumulated by the firm and paid out in December each year.
Jack’s flat mate, Emma, is self-employed. She has an annual turnover of £21,000 and keeps a detailed record of all the money that comes into and goes out of her business. Both Jack and Emma are saving for a mortgage deposit, so that they can move out of the flat and each get a place of their own.

Question:
Which of the following numbers that appear on Jack's payslip does the government use to identify him?

Select one of the following:

  • Account number

  • Month number

  • National Insurance number

  • Payroll number

Explanation

Question 17 of 35

1

Case Study 1
Jack works full-time at a branch of a nationwide firm of estate agents. He earns a basic salary of £21,000 a year, which works out at £404 gross a week. He also earns commission on each property he sells. This commission is accumulated by the firm and paid out in December each year.
Jack’s flat mate, Emma, is self-employed. She has an annual turnover of £21,000 and keeps a detailed record of all the money that comes into and goes out of her business. Both Jack and Emma are saving for a mortgage deposit, so that they can move out of the flat and each get a place of their own.

Question:
Emma must complete her self-assessment online tax return by:

Select one of the following:

  • 31 January

  • 5 April

  • 31 July

  • 31 October

Explanation

Question 18 of 35

1

Case Study 1
Jack works full-time at a branch of a nationwide firm of estate agents. He earns a basic salary of £21,000 a year, which works out at £404 gross a week. He also earns commission on each property he sells. This commission is accumulated by the firm and paid out in December each year.
Jack’s flat mate, Emma, is self-employed. She has an annual turnover of £21,000 and keeps a detailed record of all the money that comes into and goes out of her business. Both Jack and Emma are saving for a mortgage deposit, so that they can move out of the flat and each get a place of their own.

Question:
Which of the following are important tax documents that Jack may receive by virtue of being an employee?

Select one of the following:

  • P60 and P45

  • P60 and P90

  • P45 and P75

  • P75 and P90

Explanation

Question 19 of 35

1

Case Study 1
Jack works full-time at a branch of a nationwide firm of estate agents. He earns a basic salary of £21,000 a year, which works out at £404 gross a week. He also earns commission on each property he sells. This commission is accumulated by the firm and paid out in December each year.
Jack’s flat mate, Emma, is self-employed. She has an annual turnover of £21,000 and keeps a detailed record of all the money that comes into and goes out of her business. Both Jack and Emma are saving for a mortgage deposit, so that they can move out of the flat and each get a place of their own.

Question:
Jack's tax code is 1100L. How much annual tax does he pay on his basic salary of £21,000?

Select one of the following:

  • £1,000

  • £2,000

  • £4,000

  • £4,500

Explanation

Question 20 of 35

1

Case Study 2
Sven’s boiler has broken down. The repair company has been unable to fix the problem and has advised him that he needs to have a new one installed. It has quoted him £2,000. Sven has looked online and found that the majority of companies charge around £2,000. He feels that this is a fair price. The repair company has also said that it has an insurance scheme he can join where, if he pays £20 a month, they will come out and sort any problems with the boiler for as long as he remains a member of the scheme. Sven thinks it is a good idea but, as he is already on a tight budget, he is unsure where he can find the extra £20 a month to pay for it. Sven’s main expenditure items are his mortgage payments, household bills, car running costs and gym membership.

Question:
Which of the following items of expenditure could Sven give up to raise funds to join the boiler insurance scheme?

Select one of the following:

  • Car insurance

  • Council tax

  • Gym membership

  • Road tax

Explanation

Question 21 of 35

1

Case Study 2
Sven’s boiler has broken down. The repair company has been unable to fix the problem and has advised him that he needs to have a new one installed. It has quoted him £2,000. Sven has looked online and found that the majority of companies charge around £2,000. He feels that this is a fair price. The repair company has also said that it has an insurance scheme he can join where, if he pays £20 a month, they will come out and sort any problems with the boiler for as long as he remains a member of the scheme. Sven thinks it is a good idea but, as he is already on a tight budget, he is unsure where he can find the extra £20 a month to pay for it. Sven’s main expenditure items are his mortgage payments, household bills, car running costs and gym membership.

Question:
Which of the following would be the ideal solution for paying off Sven's new boiler?

Select one of the following:

  • Emergency fund

  • Overdraft

  • Payday loan

  • Personal loan

Explanation

Question 22 of 35

1

Case Study 2
Sven’s boiler has broken down. The repair company has been unable to fix the problem and has advised him that he needs to have a new one installed. It has quoted him £2,000. Sven has looked online and found that the majority of companies charge around £2,000. He feels that this is a fair price. The repair company has also said that it has an insurance scheme he can join where, if he pays £20 a month, they will come out and sort any problems with the boiler for as long as he remains a member of the scheme. Sven thinks it is a good idea but, as he is already on a tight budget, he is unsure where he can find the extra £20 a month to pay for it. Sven’s main expenditure items are his mortgage payments, household bills, car running costs and gym membership.

Question:
If Sven decided to borrow to fund his boiler purchase, which of the following products would take the most out of his monthly budget?

Select one of the following:

  • Credit card

  • Overdraft

  • Payday loan

  • Personal loan

Explanation

Question 23 of 35

1

Case Study 2
Sven’s boiler has broken down. The repair company has been unable to fix the problem and has advised him that he needs to have a new one installed. It has quoted him £2,000. Sven has looked online and found that the majority of companies charge around £2,000. He feels that this is a fair price. The repair company has also said that it has an insurance scheme he can join where, if he pays £20 a month, they will come out and sort any problems with the boiler for as long as he remains a member of the scheme. Sven thinks it is a good idea but, as he is already on a tight budget, he is unsure where he can find the extra £20 a month to pay for it. Sven’s main expenditure items are his mortgage payments, household bills, car running costs and gym membership.

Question:
If Sven decides to borrow, his best course of action if interest rates rise in the near future will be to cut back:

Select one of the following:

  • his working hours

  • on his discretionary spending

  • on his loan repayments

  • on his mandatory spending

Explanation

Question 24 of 35

1

Case Study 3
Shalik is in debt to his credit card company. He has an outstanding balance of £3,000. The variable interest rate on his card is 20%. The minimum monthly payment required each month is 3% of the balance. Unfortunately, Shalik’s monthly outgoings exceed his income to the extent that he constantly has to use his overdraft. He is therefore struggling to afford even the minimum repayment on his credit card, and has not made any payments at all for the last three months.
So far, he has ignored the letters from the credit card company asking him to get in touch to talk about the missed repayments. Shalik owns his own flat, which is currently worth £150,000.

Question:
How much interest is due on Shalik's monthly credit card repayment?

Select one of the following:

  • £4.17

  • £5.00

  • £41.67

  • £50.00

Explanation

Question 25 of 35

1

Case Study 3
Shalik is in debt to his credit card company. He has an outstanding balance of £3,000. The variable interest rate on his card is 20%. The minimum monthly payment required each month is 3% of the balance. Unfortunately, Shalik’s monthly outgoings exceed his income to the extent that he constantly has to use his overdraft. He is therefore struggling to afford even the minimum repayment on his credit card, and has not made any payments at all for the last three months.
So far, he has ignored the letters from the credit card company asking him to get in touch to talk about the missed repayments. Shalik owns his own flat, which is currently worth £150,000.

Question:
What effect is not making the minimum repayments going to have on Shalik's budget?

Select one of the following:

  • It will decrease his budget deficit

  • It will decrease his budget surplus

  • It will increase his budget deficit

  • It will increase his budget surplus

Explanation

Question 26 of 35

1

Case Study 3
Shalik is in debt to his credit card company. He has an outstanding balance of £3,000. The variable interest rate on his card is 20%. The minimum monthly payment required each month is 3% of the balance. Unfortunately, Shalik’s monthly outgoings exceed his income to the extent that he constantly has to use his overdraft. He is therefore struggling to afford even the minimum repayment on his credit card, and has not made any payments at all for the last three months.
So far, he has ignored the letters from the credit card company asking him to get in touch to talk about the missed repayments. Shalik owns his own flat, which is currently worth £150,000.

Question:
What step should Shalik now take regarding the missed payments? He should:

Select one of the following:

  • contact the credit card company to see how it wants him to proceed

  • cut up the card and return it to the credit card company

  • ignore the letters from the credit card company

  • just make payments whenever he can and not worry about the ones already missed

Explanation

Question 27 of 35

1

Case Study 3
Shalik is in debt to his credit card company. He has an outstanding balance of £3,000. The variable interest rate on his card is 20%. The minimum monthly payment required each month is 3% of the balance. Unfortunately, Shalik’s monthly outgoings exceed his income to the extent that he constantly has to use his overdraft. He is therefore struggling to afford even the minimum repayment on his credit card, and has not made any payments at all for the last three months.
So far, he has ignored the letters from the credit card company asking him to get in touch to talk about the missed repayments. Shalik owns his own flat, which is currently worth £150,000.

Question:
If the credit card company resorts to applying for a county court judgment, who decides how much Shalik's repayments will be?

Select one of the following:

  • The court only

  • The court and Shalik jointly

  • The lender only

  • The lender and the court jointly

Explanation

Question 28 of 35

1

Case Study 4
Alfie is about to buy his first home. He has had his offer on a one-bedroomed flat accepted and a lender has agreed to give him the mortgage he requires. He saw a financial adviser to discuss the products he might need to ensure he will not lose the flat if he is unable to make his monthly mortgage payments for any reason. He was pleased when the adviser told him that she could recommend products from the whole of the market, so she would be able to shop around to get him a good price as well as the best cover available.
Alfie has received a bill for the adviser's services that he needs to pay within the next 14 days. Alfie does not like using the internet; he likes being able to talk to someone at the bank when he needs to. Given his long working hours, he often ends up doing his banking in the evening.

Question:
What sort of a financial adviser did Alfie go to see?

Select one of the following:

  • A multi-tied adviser

  • A restricted adviser

  • A single-tied adviser

  • An independent financial adviser

Explanation

Question 29 of 35

1

Case Study 4
Alfie is about to buy his first home. He has had his offer on a one-bedroomed flat accepted and a lender has agreed to give him the mortgage he requires. He saw a financial adviser to discuss the products he might need to ensure he will not lose the flat if he is unable to make his monthly mortgage payments for any reason. He was pleased when the adviser told him that she could recommend products from the whole of the market, so she would be able to shop around to get him a good price as well as the best cover available.
Alfie has received a bill for the adviser's services that he needs to pay within the next 14 days. Alfie does not like using the internet; he likes being able to talk to someone at the bank when he needs to. Given his long working hours, he often ends up doing his banking in the evening.

Question:
What immediate financial need does Alfie have?

Select one of the following:

  • Inheritance tax planning

  • Protecting his income

  • Saving for retirement

  • School fees planning

Explanation

Question 30 of 35

1

Case Study 4
Alfie is about to buy his first home. He has had his offer on a one-bedroomed flat accepted and a lender has agreed to give him the mortgage he requires. He saw a financial adviser to discuss the products he might need to ensure he will not lose the flat if he is unable to make his monthly mortgage payments for any reason. He was pleased when the adviser told him that she could recommend products from the whole of the market, so she would be able to shop around to get him a good price as well as the best cover available.
Alfie has received a bill for the adviser's services that he needs to pay within the next 14 days. Alfie does not like using the internet; he likes being able to talk to someone at the bank when he needs to. Given his long working hours, he often ends up doing his banking in the evening.

Question:
Which of the following types of banking is most likely to appeal to Alfie?

Select one of the following:

  • Branch

  • Mobile

  • Online

  • Telephone

Explanation

Question 31 of 35

1

Case Study 4
Alfie is about to buy his first home. He has had his offer on a one-bedroomed flat accepted and a lender has agreed to give him the mortgage he requires. He saw a financial adviser to discuss the products he might need to ensure he will not lose the flat if he is unable to make his monthly mortgage payments for any reason. He was pleased when the adviser told him that she could recommend products from the whole of the market, so she would be able to shop around to get him a good price as well as the best cover available.
Alfie has received a bill for the adviser's services that he needs to pay within the next 14 days. Alfie does not like using the internet; he likes being able to talk to someone at the bank when he needs to. Given his long working hours, he often ends up doing his banking in the evening.

Question:
Which of the following payment methods would take the longest to reach Alfie's financial adviser's business account?

Select one of the following:

  • Bacs payment

  • Cheque

  • Debit card

  • Faster Payment

Explanation

Question 32 of 35

1

Case Study 5
Geoff, aged 57, has been made redundant from his life-long job at the local printer factory. He was known for his strong work ethic and for never taking a sick day in his career. Geoff did not expect to be made redundant at his age, and although he received a fairly large redundancy payment, with which he paid off his debts, he is now struggling to balance his budget each month.
He wants to resolve this situation, and ideally have enough money left over each month to top up his pension provision.

Question:
Which of the following personal circumstances makes it harder for Geoff to get a new job?

Select one of the following:

  • His age

  • His level of experience

  • His state of health

  • His work ethic

Explanation

Question 33 of 35

1

Case Study 5
Geoff, aged 57, has been made redundant from his life-long job at the local printer factory. He was known for his strong work ethic and for never taking a sick day in his career. Geoff did not expect to be made redundant at his age, and although he received a fairly large redundancy payment, with which he paid off his debts, he is now struggling to balance his budget each month.
He wants to resolve this situation, and ideally have enough money left over each month to top up his pension provision.

Question:
At what stage of the life cycle is Geoff?

Select one of the following:

  • Late middle age

  • Mature adult

  • Old age

  • Young adult

Explanation

Question 34 of 35

1

Case Study 5
Geoff, aged 57, has been made redundant from his life-long job at the local printer factory. He was known for his strong work ethic and for never taking a sick day in his career. Geoff did not expect to be made redundant at his age, and although he received a fairly large redundancy payment, with which he paid off his debts, he is now struggling to balance his budget each month.
He wants to resolve this situation, and ideally have enough money left over each month to top up his pension provision.

Question:
Which of the following actions would have the least impact on Geoff's budget?

Select one of the following:

  • Cutting back on his discretionary expenditure

  • Reducing his bills as far as he can

  • Reducing the cost of his borrowings

  • Shopping around

Explanation

Question 35 of 35

1

Case Study 5
Geoff, aged 57, has been made redundant from his life-long job at the local printer factory. He was known for his strong work ethic and for never taking a sick day in his career. Geoff did not expect to be made redundant at his age, and although he received a fairly large redundancy payment, with which he paid off his debts, he is now struggling to balance his budget each month.
He wants to resolve this situation, and ideally have enough money left over each month to top up his pension provision.

Question:
What does Geoff need in order to make savings each month into his pension?

Select one of the following:

  • A budget deficit

  • A budget surplus

  • A job

  • Taxable income

Explanation

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