Financial Management
Investment Planning
Risk Management & Insurance
Tax Planning
Retirement Planning
Estate Planning
100
This statement compares a person's assets and liabilities at a single point in time to determine their overall financial position
Net worth statement or balance sheet
100
What is the difference between APR and EAR, and why do lenders usually advertise APR?
APR does not include compounding, but EAR does. Lenders advertise APR because it looks lower
100
This type of insurance is designed to replace a portion of earned income if an individual becomes unable to work due to illness or injury
What is disability insurance?
100
This type of tax rate applies only to the next dollar of income earned and is central to most personal income tax planning decisions
Marginal tax rate? (MTR)
100
This registered plan allows tax-deductible contributions and tax-deferred growth, with withdrawals fully taxable as income
RRSP (Registered Retirement Savings Plan)?
100
This legal document allows an individual to name beneficiaries and direct the distribution of assets upon death
What is a will?
200
This term describes an asset that can quickly and easily be converted into cash with little or no loss in value
Liquidity
200
This risk-adjusted performance measure evaluates excess return per unit of total volatility and is commonly used to compare portfolio efficiency
What is the Sharpe Ratio?
200
This principle of insurance underwriting helps prevent individuals from profiting from a loss and requires a financial or economic interest in the insured life or property
What is insurable interest / Principle of Indemnity
200
This tax planning strategy involves shifting income to a lower-taxed family member, but is restricted by Canada's attribution rules.
Income splitting?
200
This retirement risk refers to the danger that poor market returns early in retirement can permanently reduce the sustainability of withdrawals
Sequence-of-returns risk?
200
This estate planning tool can help bypass probate, provide liquidity at death, and create a tax-efficient transfer of wealth to beneficiaries
What is life insurance?
300
What is the Gross Debt Service Formula?
Why is it important and when is it used practically?
GDS: Principal + Interest + Taxes + Heat
Importance: To understand your ability to take on new debt.
Common use: Mortgage pre-approval and qualification
300
If inflation is 2.5% per year, what is 1 dollar worth in real terms after 10 years?
What does this tell you about wealth preservation?
You need to at least be making 2.5% per year in this case to maintain your wealth. "Earning" 2.5% on a GIC doesn't make your wealthier - it just keeps you from becoming poorer.
300
A brain surgeon is thinking of buying disability insurance. Name three characteristics of the policy that you need to decide on.
Own vs Any
Benefit amount which should be based off his NET income, since insurance is paid tax free
Elimination period
Riders of any kind, like partial disability.
300
Explain the superficial loss rule and how investors work around it.
Rule: If you sell an investment at a loss and you or an affiliated person buy the same or identical security within 30 days before or after the sale and still own it 30 days after, the capital loss is denied for tax purposes. Instead, it’s added to the cost base of the repurchased security (loss is deferred).
Work-arounds:
• Wait 31+ days after sale before repurchasing the same security.
• Buy a similar but not identical security (e.g., sector ETF vs same ETF).
• Avoid repurchases by you or related accounts (spouse, controlled corp) within the window.
Core purpose: Prevents harvesting a loss without meaningful change in ownership.
300
Explain what type of investor would prefer a Defined benefit pension vs a Defined contribution pension.
Optional add on: Which one has significantly decreased in number? Why?
A defined benefit pension is preferred by an investor who values a guaranteed, predictable lifetime income with the employer bearing investment risk.
A defined contribution pension is preferred by an investor who values control, flexibility, and portability of their individual retirement savings and is willing to bear investment risk themselves.
300
Is a trust in Canada taxable? If so, generally speaking, what federal tax rate are they charged?
Trusts are taxed at the highest personal marginal tax rate. In Canada, at the federal level, this is 33%.
Reflect: Why don't people just keep their money in a trust and forever defer taxes?