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You've been waiting all summer and finally it's here: Investor Clinic's seventh annual back-to-school investing and money quiz.
Before we begin, a warning: I've laid a few traps, so proceed with caution.
But, as usual, I've also included a few easier questions. If you're stumped by anything, drop me an e-mail at jheinzl@globeandmail.com and I'll provide an explanation in a future column.
Tip: A calculator will come in handy for certain questions.
Good luck!
1. For the months of August and September, the yield on the five-year Government of Canada bond has averaged about:
a) 0.61 per cent
b) 0.93 per cent
c) 1.21 per cent
d) 1.54 per cent
2. Complete the titles of these four investing classics: The ______ Investor, by Benjamin Graham; One _____ on Wall Street, by Peter Lynch; Stocks for ______, by Jeremy Siegel; A _____ Walk Down Wall Street, by Burton Malkiel
a) Absent-minded; Week; Dummies; Short
b) Intelligent; Up; the Long Run; Random
c) Value; Week; Everyone; Long
d) Skeptical; Week; Life; Wary
3. Company XYZ trades at a price-to-earnings (P/E) multiple of 17. Its earnings yield is:
a) 8.5 per cent
b) 6.5 per cent
c) 5.9 per cent
d) unknown
4. In a non-registered account, Gladys buys 100 shares of Bank of Montreal at $55 and 200 shares at $70. She then sells 200 shares at $80 (and pays the capital gains tax). If she later contributes the remaining 100 shares to her tax-free savings account when the price is $90, she would report a capital gain of:
a) $2,500
b) $3,500
c) $5,500
d) zero
5. In the 20 years from 1997 through 2016, the S&P/TSX composite index recorded ____ annual losses, the most recent in _____. Over the entire period, the annualized total return – including dividends – was ____ per cent.
a) five; 2016; 5.7
b) four; 2014; 10.1
c) four; 2015; 6.6
d) six; 2015; 7.3
6. Dave holds 100 shares of Johnson & Johnson in his TFSA. If J&J declares a quarterly dividend of 84 cents (U.S.), how much will Dave receive if his broker converts U.S. cash at an exchange rate of 80 cents (U.S.) per $1 (Canadian)?
a) $67.20 (Canadian)
b) $89.25 (Canadian)
c) $98.55 (Canadian)
d) $105 (Canadian)
7. After this week's quarter-point increase, the Bank of Canada's overnight rate is:
a) 0.75 per cent
b) 1 per cent
c) 1.25 per cent
d) 1.5 per cent
8. If you receive a return of capital distribution in a non-registered account, the amount is:
a) Declared as regular income
b) Added to the cost base of the units
c) Subtracted from the cost base of the units
d) Taxed as a capital gain in the year received
9. All else being equal, when a stock price rises:
a) The dividend yield falls and the P/E rises
b) The dividend yield and P/E multiple both rise
c) The dividend yield rises and the P/E falls
d) The dividend yield and P/E both fall
10. For the 2017 tax year, the Old Age Security pension recovery tax kicks in at income of ______ and OAS is fully clawed back at income of _______.
a) $66,786; $91,200
b) $70,761; $91,200
c) $72,498; $101,201
d) $74,788; $121,279
11. Which statement is false?
a) The tax rate on capital gains can be higher than the tax rate on dividends
b) Net capital losses can be carried backward or forward indefinitely
c) The tax rate on dividends can be negative
d) The guaranteed income supplement is not taxable
12. On Aug. 23, Royal Bank of Canada raised its quarterly dividend by 4 cents to 91 cents a share, payable on Nov. 24 to shareholders of record on Oct. 26. To receive the dividend an investor would need to buy the shares:
a) On or before Nov. 21
b) On or before Oct 25
c) On or before Oct. 24
d) On or before Oct. 23
13. The management expense ratio (MER) of a mutual fund or exchange-traded fund does not include:
a) Trading costs
b) The management fee
c) Operating expenses
d) Taxes
14. In a non-registered account, Sandra buys 100 shares of Procter & Gamble at $71 (U.S.) when the Canadian dollar is trading at 90 cents (U.S). She later sells the shares for $88 (U.S.) when the loonie is at 75 cents (U.S.). Her capital gain is:
a) $1,888.89 (Canadian)
b) $2,060.61 (Canadian)
c) $2,266.67 (Canadian)
d) $3,844.44 (Canadian)
15. According to Forbes, the world's richest person in 2017 is Bill Gates, with a net worth of $86-billion (U.S.). The next four people on the list, in descending order of wealth, are:
a) Warren Buffett, Jeff Bezos, Amancio Ortega, Mark Zuckerberg
b) Warren Buffett, Mark Zuckerberg, Wang Jianlin, Jeff Bezos
c) Carlos Slim Helu, Warren Buffett, Wang Jianlin, Jeff Bezos
d) Jeff Bezos, Warren Buffett, George Soros, Amancio Ortega
Scroll down for answers!
Answers: 1. d; 2. b; 3. c; 4. a; 5. d; 6. b; 7. b; 8. c; 9. a; 10. d; 11. b; 12. c; 13. a; 14. d; 15. a
John Heinzl