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Investor Clinic

ANSWER KEY: 15 questions to test your investing savvy Add to ...

Find an interactive version of this quiz here.

 

Find the correct answers at the bottom of this page.

1. For calendar 2013, the annual contribution limit for the tax-free savings account (TFSA) rises to:

a) $5,500 from $5,250

b) $5,250 from $5,000

c) $5,750 from $5,250

d) $5,500 from $5,000

2. Assuming your spouse has TFSA contribution room available, you may:

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a) Contribute directly to his or her TFSA

b) Contribute directly to his or her TFSA if you are the registered beneficiary

c) Give him or her money to contribute to his or her TFSA

d) Not fund his or her TFSA in any way

3. On Dec. 28, 2012, Bob sells 100 shares of Research In Motion for a capital loss of $4,500. The portion of the loss he can use to offset capital gains on his 2012 tax return is:

a) Any amount up to and including $4,500

b) 50% of $4,500, or $2,250

c) $4,500

d) 0

4. As of Jan. 1, 2013, the individual income thresholds at which Old Age Security benefits start getting clawed back, and at which they are eliminated entirely, are, respectively:

a) $66,356 and $99,912

b) $67,639 and $102,376

c) $68,919 and $102,376

d) $70,954 and $114,640

5. The individual income thresholds at which Canada Pension Plan benefits start getting clawed back, and at which they are eliminated entirely, are:

a) Thresholds differ by province

b) The CPP clawback depends on assets, not income

c) There are no clawbacks on CPP

d) The same as the OAS thresholds

6. If you own U.S. stocks, you can avoid U.S. withholding tax on the dividends by holding the shares in your:

a) TFSA or RESP

b) TFSA or RRSP

c) RRSP, RRIF or LIRA

d) TFSA, RESP, RRSP, RRIF or LIRA

7. Ignoring taxes, if you invest $200 a month starting one month after your 18th birthday and earn an annualized return of 8 per cent in the stock market, how much money will you have when you turn 65? (calculators permitted)

a) $2,446,232

b) $1,242,475

c) $801,799

d) $211,983

8. Rank the following common shares in descending order of dividend yield: Wal-Mart (WMT), Bank of Montreal (BMO), BCE (BCE), McDonald’s (MCD)

a) BCE, BMO, MCD, WMT

b) MCD, BMO, BCE, WMT

c) BMO, MCD, BCE, WMT

d) BMO, BCE, WMT, MCD

9. Strip bonds, also known as zero-coupon bonds, refer to:

a) Debt issued by strip malls

b) A type of bond favoured by exotic dancers

c) Bonds that make no interest payments and which are purchased at a discount to their maturity value

d) Junk bonds issued by casinos on the Las Vegas strip

10. For the 2012 tax year, when reporting eligible dividend income on your tax return, the dividend amount is “grossed-up” by:

a) 45 per cent

b) 44 per cent

c) 41 per cent

d) 38 per cent

11. Jane has a $200,000 fixed-rate mortgage at 3.5 per cent and her marginal tax rate is 43 per cent. She has $50,000 in cash that she wants to use to either pay down her mortgage or buy a GIC in a non-registered account. What interest rate would the GIC have to pay in order to have the same after-tax return as paying down the mortgage? (calculators permitted)

a) 3.5 per cent

b) 5.33 per cent

c) 6.14 per cent

d) 7 per cent

12. As of Dec. 27, the yield on a 10-year Government of Canada bond was approximately:

a) 1.8 per cent

b) 1.7 per cent

c) 1.6 per cent

d) 2.1 per cent

13. As of Dec. 28, 2012, Doug has accumulated $24,000 in his tax-free savings account and has used all of his contribution room. On the first business day of 2013, he decides to withdraw the entire $24,000. How much money can he immediately re-contribute to his TFSA?

a) $24,000

b) $29,500

c) $5,500

d) $5,000

14. A capital loss can be carried back _______ and carried forward _______.

a) up to five years; up to 10 years

b) up to three years; indefinitely

c) indefinitely; until age 65

d) to the age of 18; until OAS benefits begin

15. The dividend tax credit applies to:

a) Common dividends from Canadian and U.S. corporations

b) Common, but not preferred, dividends from Canadian corporations

c) Common and preferred dividends from Canadian corporations

d) Common and preferred dividends from Canadian and British corporations

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How did you score?

15: Genius

12-14: Well done

8-11: Not bad

1-7: Room for improvement

(Answers: 1:d, 2:c, 3:d, 4:d, 5:c, 6:c, 7:b, 8:a, 9:c, 10:d, 11:c, 12:a, 13:c, 14:b, 15:c)

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