Carina Storm
Quiz by , created more than 1 year ago

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

481
0
0
Carina Storm
Created by Carina Storm about 5 years ago
Close

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

Question 1 of 35

1

Where would be the best place to keep money for an emergency fund?

Select one of the following:

  • In a long-term fixed deposit account

  • In a safe place at home

  • In an instant-access savings account

  • With an adviser

Explanation

Question 2 of 35

1

The best person to get impartial financial advice from would be:

Select one of the following:

  • a building society adviser

  • a friend or family member

  • a solicitor

  • an independent financial adviser

Explanation

Question 3 of 35

1

Planning can be undertaken for the short, medium or long term. What period of time would be classified as 'medium term'?

Select one of the following:

  • 1 to 12 months

  • 1 to 5 years

  • 7 to 15 years

  • 10 to 20 years

Explanation

Question 4 of 35

1

Which of the following is the most accurate definition of budgeting?

Select one of the following:

  • Borrowing money from the bank

  • Checking your bank statement regularly

  • Estimating money coming in and going out over a period of time

  • Using online banking to track transactions

Explanation

Question 5 of 35

1

Tom has a fixed-rate loan. If interest rates go up, what will be the immediate impact, if anything, on Tom's loan repayments? They will:

Select one of the following:

  • fall by the rate of inflation

  • go up

  • reduce, but rise over time

  • remain unchanged

Explanation

Question 6 of 35

1

A weakening in UK pound sterling would lead to:

Select one of the following:

  • a boost in the UK's economy

  • cheaper imports

  • more expensive exports

  • reduced production in the UK

Explanation

Question 7 of 35

1

In terms of the impact of personal spending on the economy, which of the following statements is true? Increased personal spending generally creates:

Select one of the following:

  • higher levels of unemployment

  • increased company profits

  • lower receipts for the government

  • reduced personal income

Explanation

Question 8 of 35

1

Where would you find a 'card security code'?

Select one of the following:

  • Along the bottom of a cheque

  • In the top right-hand corner of a cheque

  • On the back of a debit card

  • On the front of a debit card

Explanation

Question 9 of 35

1

What is someone looking for if they want to make sure they are getting the best goods for the cash they have available?

Select one of the following:

  • The longest guarantees

  • The lowest-priced deals

  • The most expensive goods

  • Value for money

Explanation

Question 10 of 35

1

When purchasing tickets online for a theatre show, what hidden charges might apply? The:

Select one of the following:

  • cost of a programme at the theatre

  • drinks during the interval at the show

  • face value of the ticket

  • online booking fee

Explanation

Question 11 of 35

1

Which of the following is the easiest and most effective way to shop around?

Select one of the following:

  • Reading the adverts in a local newspaper

  • Spending the afternoon in a large department store

  • Using price-comparison websites

  • Visiting the town centre for the day

Explanation

Question 12 of 35

1

Which of the following measures could a government take to help reduce personal spending?

Select one of the following:

  • A combination of raising taxes and cutting government spending

  • Cutting government spending

  • Neither cutting government spending nor raising

  • Raising taxes

Explanation

Question 13 of 35

1

An example of a 'good' debt is:

Select one of the following:

  • a mortgage to buy a house

  • a payday loan

  • using a credit card to pay for a holiday

  • using an overdraft to buy clothes for a night out

Explanation

Question 14 of 35

1

When would an overdraft be useful?

Select one of the following:

  • To buy a property

  • To buy an expensive item such as a car

  • When extra money is needed for a short period of time

  • Where extra money is required over a long period

Explanation

Question 15 of 35

1

Which of the following can be issued to an individual who is unable to pay a debt to another individual or company?

Select one of the following:

  • County court judgment

  • Debt confirmation receipt

  • Legal repayment instruction

  • Repayment request notice

Explanation

Question 16 of 35

1

Case Study 1
Viren has a full-time job with a bank in London. He has been studying part-time for a degree in accounting and finance, which he is confident will help him to achieve his career aspirations. He has a total annual gross salary of £31,000 which is paid directly by his employer at the end of each calendar month. His tax code is 1100L.
While he has enjoyed working for the bank and has learned a lot, he is keen to leave and broaden his experience. In addition, he would like to get more involved with helping small businesses to grow. He has therefore decided to leave the bank and become a self-employed business consultant. He has handed in his notice at work and will leave the bank in one month’s time.

Question:
In his current job at the bank, what class of National Insurance contributions would Viren make?

Select one of the following:

  • Class 1

  • Class 2

  • Class 3

  • Class 4

Explanation

Question 17 of 35

1

Case Study 1
Viren has a full-time job with a bank in London. He has been studying part-time for a degree in accounting and finance, which he is confident will help him to achieve his career aspirations. He has a total annual gross salary of £31,000 which is paid directly by his employer at the end of each calendar month. His tax code is 1100L.
While he has enjoyed working for the bank and has learned a lot, he is keen to leave and broaden his experience. In addition, he would like to get more involved with helping small businesses to grow. He has therefore decided to leave the bank and become a self-employed business consultant. He has handed in his notice at work and will leave the bank in one month’s time.

Question:
When Viren becomes self-employed, his tax year will run between which two dates?

Select one of the following:

  • 1 January one year to 31 December the same year

  • 31 January one year to 30 January the next year

  • 6 April one year to 5 April the next year

  • 1 July one year to 30 June the next year

Explanation

Question 18 of 35

1

Case Study 1
Viren has a full-time job with a bank in London. He has been studying part-time for a degree in accounting and finance, which he is confident will help him to achieve his career aspirations. He has a total annual gross salary of £31,000 which is paid directly by his employer at the end of each calendar month. His tax code is 1100L.
While he has enjoyed working for the bank and has learned a lot, he is keen to leave and broaden his experience. In addition, he would like to get more involved with helping small businesses to grow. He has therefore decided to leave the bank and become a self-employed business consultant. He has handed in his notice at work and will leave the bank in one month’s time.

Question:
When Viren leaves his current job he will receive a:

Select one of the following:

  • P15

  • P45

  • P60

  • P90

Explanation

Question 19 of 35

1

Case Study 1
Viren has a full-time job with a bank in London. He has been studying part-time for a degree in accounting and finance, which he is confident will help him to achieve his career aspirations. He has a total annual gross salary of £31,000 which is paid directly by his employer at the end of each calendar month. His tax code is 1100L.
While he has enjoyed working for the bank and has learned a lot, he is keen to leave and broaden his experience. In addition, he would like to get more involved with helping small businesses to grow. He has therefore decided to leave the bank and become a self-employed business consultant. He has handed in his notice at work and will leave the bank in one month’s time.

Question:
How much of Viren's current annual salary is subject to income tax?

Select one of the following:

  • £15,000

  • £20,000

  • £25,000

  • £30,000

Explanation

Question 20 of 35

1

Case Study 2
Christina and Derek need to buy a new car to commute each day. They have seen a car costing £9,000 but have yet to decide how to fund it. The choices available to them are:
 Using their joint credit card (variable interest rate 18.9%), making minimum repayments each month.
 Taking up the dealer’s offer of a fixed-rate personal loan at 9.9% over 5 years.
 Borrowing the money, interest-free, from Derek’s parents.
 Using their emergency fund.
Christina and Derek also have a mortgage, which has just come to the end of its fixed rate. The current variable rate is 4.69%. They are concerned about how future interest rate rises might impact on their mortgage payments and on any car loan payments they might have. In addition, Derek has an outstanding student loan and Christina has an outstanding balance on her store card, which she uses to buy clothes.

Question:
Which of the following represents the most costly way for Christina and Derek to buy their new car?

Select one of the following:

  • The dealer's loan

  • The loan from Derek's parents

  • Their existing savings

  • Their joint credit card

Explanation

Question 21 of 35

1

Case Study 2
Christina and Derek need to buy a new car to commute each day. They have seen a car costing £9,000 but have yet to decide how to fund it. The choices available to them are:
 Using their joint credit card (variable interest rate 18.9%), making minimum repayments each month.
 Taking up the dealer’s offer of a fixed-rate personal loan at 9.9% over 5 years.
 Borrowing the money, interest-free, from Derek’s parents.
 Using their emergency fund.
Christina and Derek also have a mortgage, which has just come to the end of its fixed rate. The current variable rate is 4.69%. They are concerned about how future interest rate rises might impact on their mortgage payments and on any car loan payments they might have. In addition, Derek has an outstanding student loan and Christina has an outstanding balance on her store card, which she uses to buy clothes.

Question:
If interest rates increase, what will be the impact on Christina and Derek's budget?

Select one of the following:

  • A decrease in monthly mortgage repayments and therefore more spending money

  • An increase in monthly mortgage repayments and therefore an increase in spending money

  • An increase in monthly mortgage repayments and therefore less spending money

  • No impact on monthly mortgage repayments or spending money

Explanation

Question 22 of 35

1

Case Study 2
Christina and Derek need to buy a new car to commute each day. They have seen a car costing £9,000 but have yet to decide how to fund it. The choices available to them are:
 Using their joint credit card (variable interest rate 18.9%), making minimum repayments each month.
 Taking up the dealer’s offer of a fixed-rate personal loan at 9.9% over 5 years.
 Borrowing the money, interest-free, from Derek’s parents.
 Using their emergency fund.
Christina and Derek also have a mortgage, which has just come to the end of its fixed rate. The current variable rate is 4.69%. They are concerned about how future interest rate rises might impact on their mortgage payments and on any car loan payments they might have. In addition, Derek has an outstanding student loan and Christina has an outstanding balance on her store card, which she uses to buy clothes.

Question:
Which of Derek and Christina's debts would be classified as a 'bad' debt?

Select one of the following:

  • Christina's outstanding store card balance

  • Derek's student loan

  • The proposed car loan

  • Their mortgage

Explanation

Question 23 of 35

1

Case Study 2
Christina and Derek need to buy a new car to commute each day. They have seen a car costing £9,000 but have yet to decide how to fund it. The choices available to them are:
 Using their joint credit card (variable interest rate 18.9%), making minimum repayments each month.
 Taking up the dealer’s offer of a fixed-rate personal loan at 9.9% over 5 years.
 Borrowing the money, interest-free, from Derek’s parents.
 Using their emergency fund.
Christina and Derek also have a mortgage, which has just come to the end of its fixed rate. The current variable rate is 4.69%. They are concerned about how future interest rate rises might impact on their mortgage payments and on any car loan payments they might have. In addition, Derek has an outstanding student loan and Christina has an outstanding balance on her store card, which she uses to buy clothes.

Question:
If consumer spending slows down overall, how will this benefit Derek and Christina? It is likely to lead to:

Select one of the following:

  • economic growth

  • higher inflation

  • higher interest rates

  • lower interest rates

Explanation

Question 24 of 35

1

Case Study 3
Max, aged 49, lives in a rented flat ten miles away from the university where he works. There is no public transport and Max needs his car to travel to and from work each day. Max had debt problems after losing his previous job in 2009 due to the financial crisis, but has managed to avoid borrowing money for the last four years. As a result, his credit rating is now satisfactory and he has access to a £150 overdraft facility with his bank. He has no savings and has only £120 in his bank account.
Max is due to receive his monthly salary into his account in two weeks’ time, but his car has just broken down and will cost £340 to repair. The garage has offered to lend him a car while the repairs are carried out.

Question:
Which of the following represents the cost to Max of borrowing money using his overdraft?

Select one of the following:

  • Inflation

  • Interest

  • Principle

  • Repayments

Explanation

Question 25 of 35

1

Case Study 3
Max, aged 49, lives in a rented flat ten miles away from the university where he works. There is no public transport and Max needs his car to travel to and from work each day. Max had debt problems after losing his previous job in 2009 due to the financial crisis, but has managed to avoid borrowing money for the last four years. As a result, his credit rating is now satisfactory and he has access to a £150 overdraft facility with his bank. He has no savings and has only £120 in his bank account.
Max is due to receive his monthly salary into his account in two weeks’ time, but his car has just broken down and will cost £340 to repair. The garage has offered to lend him a car while the repairs are carried out.

Question:
Max uses his overdraft to pay for the car repairs, what will he have to do in future months?

Select one of the following:

  • Decrease his discretionary spending

  • Decrease his mandatory expenditure

  • Increase his discretionary spending

  • Increase his mandatory expenditure

Explanation

Question 26 of 35

1

Case Study 3
Max, aged 49, lives in a rented flat ten miles away from the university where he works. There is no public transport and Max needs his car to travel to and from work each day. Max had debt problems after losing his previous job in 2009 due to the financial crisis, but has managed to avoid borrowing money for the last four years. As a result, his credit rating is now satisfactory and he has access to a £150 overdraft facility with his bank. He has no savings and has only £120 in his bank account.
Max is due to receive his monthly salary into his account in two weeks’ time, but his car has just broken down and will cost £340 to repair. The garage has offered to lend him a car while the repairs are carried out.

Question:
The financial crisis of 2009 was partially caused by too many people:

Select one of the following:

  • being employed in the manufacturing sector

  • being employed in the service sector

  • borrowing money at low interest rates

  • emigrating overseas

Explanation

Question 27 of 35

1

Case Study 3
Max, aged 49, lives in a rented flat ten miles away from the university where he works. There is no public transport and Max needs his car to travel to and from work each day. Max had debt problems after losing his previous job in 2009 due to the financial crisis, but has managed to avoid borrowing money for the last four years. As a result, his credit rating is now satisfactory and he has access to a £150 overdraft facility with his bank. He has no savings and has only £120 in his bank account.
Max is due to receive his monthly salary into his account in two weeks’ time, but his car has just broken down and will cost £340 to repair. The garage has offered to lend him a car while the repairs are carried out.

Question:
Max exceeds his authorised overdraft without first agreeing it with the bank. The immediate consequence of this will be:

Select one of the following:

  • his car being repossessed by bailiffs

  • Max applying for a bankruptcy order

  • Max incurring extra fees and charges from the bank

  • the bank applying for a debt relief order

Explanation

Question 28 of 35

1

Case Study 4
After 35 years of continuous employment, Alan has stopped working and is now reliant on the state pension and a small private pension for his income. While he is in good overall health, his hearing deteriorated in recent years and he is now deaf. He has always been a good financial planner and is very cautious. For many years he has managed to put some money aside each month in case anything goes wrong at home unexpectedly.
As Alan lives in an isolated area, he is grateful that he has managed to keep pace with changes in technology, and he enjoys Skyping his children. If something can be done via the internet then that is his preference. He would now like to learn how to use an online budget planner and wonders where he could find one.

Question:
Which government-appointed body can offer Alan online tools to help him plan his finances?

Select one of the following:

  • Financial Conduct Authority

  • Financial Services Compensation Scheme

  • Money Advice Service

  • StepChange Debt Charity

Explanation

Question 29 of 35

1

Case Study 4
After 35 years of continuous employment, Alan has stopped working and is now reliant on the state pension and a small private pension for his income. While he is in good overall health, his hearing deteriorated in recent years and he is now deaf. He has always been a good financial planner and is very cautious. For many years he has managed to put some money aside each month in case anything goes wrong at home unexpectedly.
As Alan lives in an isolated area, he is grateful that he has managed to keep pace with changes in technology, and he enjoys Skyping his children. If something can be done via the internet then that is his preference. He would now like to learn how to use an online budget planner and wonders where he could find one.

Question:
At which stage of the personal life cycle is Alan?

Select one of the following:

  • Mature adult

  • Middle age

  • Old age

  • Young adult

Explanation

Question 30 of 35

1

Case Study 4
After 35 years of continuous employment, Alan has stopped working and is now reliant on the state pension and a small private pension for his income. While he is in good overall health, his hearing deteriorated in recent years and he is now deaf. He has always been a good financial planner and is very cautious. For many years he has managed to put some money aside each month in case anything goes wrong at home unexpectedly.
As Alan lives in an isolated area, he is grateful that he has managed to keep pace with changes in technology, and he enjoys Skyping his children. If something can be done via the internet then that is his preference. He would now like to learn how to use an online budget planner and wonders where he could find one.

Question:
Given his circumstances, which of the following methods of banking is Alan likely to prefer?

Select one of the following:

  • Branch-based banking

  • Online banking

  • Postal banking

  • Telephone banking

Explanation

Question 31 of 35

1

Case Study 4
After 35 years of continuous employment, Alan has stopped working and is now reliant on the state pension and a small private pension for his income. While he is in good overall health, his hearing deteriorated in recent years and he is now deaf. He has always been a good financial planner and is very cautious. For many years he has managed to put some money aside each month in case anything goes wrong at home unexpectedly.
As Alan lives in an isolated area, he is grateful that he has managed to keep pace with changes in technology, and he enjoys Skyping his children. If something can be done via the internet then that is his preference. He would now like to learn how to use an online budget planner and wonders where he could find one.

Question:
Alan's electricity bill varies considerably each month. Which is the most convenient payment method for him to use to pay the bill?

Select one of the following:

  • Cash

  • Cheque

  • Direct debit

  • Standing order

Explanation

Question 32 of 35

1

Case Study 5
Suzi, a full-time student, has just celebrated her 21st birthday. For her birthday she received £1,000 cash, which she plans to use to buy a new coat, some shoes and sunglasses. Suzi's parents had hoped that she would save at least some of the money, but Suzi wants to treat herself as it is a special birthday.
Suzi’s parents are more than a little concerned about Suzi’s finances in general, as she tends to have more money going out each month than she has coming in. Suzi is interested in fashion and is always reading magazines featuring the latest brands and trends, but she understands the importance of shopping around and hopes to have at least a little money left over.

Question:
Which of the following factors most shapes Suzi's spending habits?

Select one of the following:

  • Anticipated changes in interest rates

  • Government predictions for inflation

  • Suzi's own attitude towards money

  • Suzi's parents' attitudes towards money

Explanation

Question 33 of 35

1

Case Study 5
Suzi, a full-time student, has just celebrated her 21st birthday. For her birthday she received £1,000 cash, which she plans to use to buy a new coat, some shoes and sunglasses. Suzi's parents had hoped that she would save at least some of the money, but Suzi wants to treat herself as it is a special birthday.
Suzi’s parents are more than a little concerned about Suzi’s finances in general, as she tends to have more money going out each month than she has coming in. Suzi is interested in fashion and is always reading magazines featuring the latest brands and trends, but she understands the importance of shopping around and hopes to have at least a little money left over.

Question:
At Suzi's stage of the personal life cycle, which of the following is likely to be of most importance to her?

Select one of the following:

  • Protecting her income in the event of death

  • Protecting her income in the event of illness

  • Saving for retirement

  • The need for independence and her own space

Explanation

Question 34 of 35

1

Case Study 5
Suzi, a full-time student, has just celebrated her 21st birthday. For her birthday she received £1,000 cash, which she plans to use to buy a new coat, some shoes and sunglasses. Suzi's parents had hoped that she would save at least some of the money, but Suzi wants to treat herself as it is a special birthday.
Suzi’s parents are more than a little concerned about Suzi’s finances in general, as she tends to have more money going out each month than she has coming in. Suzi is interested in fashion and is always reading magazines featuring the latest brands and trends, but she understands the importance of shopping around and hopes to have at least a little money left over.

Question:
Suzi's approach of shopping around could help her avoid:

Select one of the following:

  • a budget deficit

  • a budget surplus

  • a credit rating

  • value added tax

Explanation

Question 35 of 35

1

Case Study 5
Suzi, a full-time student, has just celebrated her 21st birthday. For her birthday she received £1,000 cash, which she plans to use to buy a new coat, some shoes and sunglasses. Suzi's parents had hoped that she would save at least some of the money, but Suzi wants to treat herself as it is a special birthday.
Suzi’s parents are more than a little concerned about Suzi’s finances in general, as she tends to have more money going out each month than she has coming in. Suzi is interested in fashion and is always reading magazines featuring the latest brands and trends, but she understands the importance of shopping around and hopes to have at least a little money left over.

Question:
Cutting back on what type of expenditure would be the most effective way for Suzi to deal with any budget deficit?

Select one of the following:

  • Compulsory

  • Discretionary

  • Essential

  • Mandatory

Explanation

Previous
Next