(Find an interactive version of this quiz here.)
Frosh week is over. Time to hit the books.
And what better way to kick off the fall semester than with the third annual Investor Clinic back-to-school quiz? The questions cover a range of investing and personal finance topics, and they vary in difficulty from easy to challenging.
If you're stumped by any of the questions, drop me a line and I'll discuss some of the answers in a future column. Good luck!
1. According to Warren Buffett, "probably the best investment that most people could make" is:
a) a paid-off home
b) Berkshire Hathaway stock
c) a low-cost index fund
d) an education
2. Which of the following is not an option for your RRSP in the year that you turn 71?
a) transfer the funds to a spouse or dependant
b) convert the RRSP to a RRIF
c) purchase an annuity
d) withdraw the funds and pay tax
3. As of Sept. 6, the yield on a 10-year Government of Canada bond was approximately:
a) 2.15 per cent
b) 2.75 per cent
c) 3.15 per cent
d) 3.45 per cent
4. In investing, a "beta" of more than 1 means a stock is:
a) overpriced
b) more volatile than the market
c) trading above its 52-week moving average
d) flashing a technical "buy" signal
5. Dorothy is 25 years old and has contributed a total of $3,000 to her tax-free savings account. Her TFSA is now worth $3,800. As of Jan. 1, 2014, the maximum she could contribute would be:
a) $5,500
b) $26,000
c) $27,200
d) $28,000
6. Dave has a fixed-rate mortgage at 4 per cent and a marginal tax rate of 40 per cent. If he buys a $10,000 GIC in a non-registered account, what interest rate would the GIC have to pay in order to match the after-tax return of paying down his mortgage with the $10,000 instead?
a) 4.1 per cent
b) 5.3 per cent
c) 6.7 per cent
d) 8.8 per cent
7. For 2013, an individual can have up to _______ of income before the Old Age Security clawback kicks in:
a) $66,789
b) $68,990
c) $70,954
d) $114,793
8. The age at which a person can start collecting OAS benefits is currently 65. It will increase to _____ by Jan. 1 ______.
a) 67; 2023
b) 67; 2029
c) 69; 2023
d) 69; 2029
9. Rank the following stocks in ascending order of yield: RioCan REIT (REI.UN); Tim Hortons (THI); Telus (T); Apple (AAPL).
a) THI, AAPL, T, REI.UN
b) AAPL, THI, T, REI.UN
c) AAPL, T, THI, REI.UN
d) THI, AAPL, REI.UN, T
10. Which of the following is not covered by Canada Deposit
Insurance Corp.?
a) Deposits up to $100,000 (Canadian) at CDIC member institutions
b) 10-year guaranteed investment certificates
c) U.S. dollar deposits up to $100,000 at Canadian banks
d) b and c
11. When an investor receives "return of capital," the amount:
a) reduces the person's tax bill, dollar for dollar
b) is added to the adjusted cost base of the investment
c) is subtracted from the adjusted cost base of the investment
d) indicates that the investment is losing money
12. You can avoid withholding tax on U.S. dividends by holding the shares in a:
a) TFSA or RESP
b) RRSP or RRIF
c) dividend reinvestment plan
d) all of the above
13. According to ratesupermarket.ca, as of Sept. 6, the top interest rate available on a five-year, $5,000 GIC was:
a) 2.8 per cent
b) 2.9 per cent
c) 3.1 per cent
d) 3.3 per cent
14. For the 10 years ended Aug. 31 – a period that included the global financial crisis of 2008-09 – the S&P/TSX composite index posted an annualized total return, including dividends, of approximately:
a) 3 per cent
b) 5 per cent
c) 6 per cent
d) 8 per cent
15. Which of the following statements is false?
a) RRSP contributions must be claimed in the year they are made
b) It is possible to have a negative tax rate on dividends
c) Capital gains are taxed at half the rate of regular income
d) Canada Pension Plan benefits are taxable
(Scroll down for answers)
Answers:
1 c. 2 a. 3 b. 4 b. 5 d. 6 c. 7 c. 8 b. 9 a. 10 d. 11 c. 12 b. 13 c. 14 d. 15 a.
John Heinzl