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INVESTING

Take our New Year's investing and money quiz

With 2017 almost upon us, John Heinzl puts your knowledge of money matters to the test

You've been waiting all year, and finally it's here: Investor Clinic's annual New Year's quiz.

Because it's the holidays and I'm feeling charitable, I've included some relatively easy questions. But I've also thrown in a few tough ones.

You'll need investing knowledge – and perhaps a bit of luck – to score perfect. Drop me a line if you're stumped by any of the answers and I'll discuss them in a future column.

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So sharpen your pencil, grab a calculator and let the quiz begin.

1 Through Dec. 28, the best- and worst-performing stocks on the S&P/TSX composite index for 2016 were:
a. Teck Resources; Valeant Pharmaceuticals
b. First Quantum Minerals; DH Corp.
c. Pan American Silver; Just Energy
d. First Quantum Minerals; Empire Co.

Answer: a.

2 Wilma lives in British Columbia and has 2016 taxable income of $45,000. Her marginal tax rate on eligible dividends is:
a. 21.6 per cent
b. 18.3 per cent
c. 4.4 per cent
d. Negative 3.2 per cent

Answer: d.

3 When a security distributes return of capital (ROC), for tax purposes you are required to:
a. Add it to your income
b. Add it to your adjusted cost base
c. Subtract it from your adjusted cost base
d. File a form T3731 with Canada Revenue Agency

Answer: c.

4 If an investment posts a total return of 30 per cent over five years, the annual compound rate of return is:
a. 6.00 per cent
b. 5.39 per cent
c. 4.85 per cent
d. 3.93 per cent

Answer: b.

5 Which of the following statements regarding tax-free savings accounts is true?
a. TFSA contributions are tax-deductible
b. TFSA withdrawals are added to income
c. TFSA withdrawals are immediately added back to contribution room
d. None of the above

Answer: d.

6 On Dec. 14 the Federal Reserve raised its benchmark interest rate by a ________ to a range of _________.
a. Half point; 0.75 to 1 per cent
b. Quarter point; 0.5 to 0.75 per cent
c. Quarter point; 0.25 to 0.5 per cent
d. Quarter point; 0.75 to 1 per cent

Answer: b.

7 Acme Anvil Co. has a trailing price-to-earnings multiple of 21. Its earnings yield is:
a. Unknown based on information provided
b. 12/21 or about 57 per cent
c. About 4.8 per cent
d. About 2.1 per cent

Answer: c.

8 Shares of Bertha’s Burgers fell 25 per cent after quarterly earnings missed expectations, and then dropped 10 per cent the next day when an analyst downgraded the stock. The shares would have to rise by about _______ to get back to where they were prior to the earnings announcement.
a. 41 per cent
b. 48 per cent
c. 50 per cent
d. 35 per cent

Answer: b.

9 For 2016, a person can have up to _______ of net world income before the Old Age Security clawback kicks in, and OAS is fully clawed back at income of ________.
a. $67,451; $115,858
b. $69,793; $115,858
c. $72,451; $117,989
d. $73,756; $119,615

Answer: d.

10 Which of the following statements is false?
a. Reinvested distributions raise your adjusted cost base
b. In-kind RRIF withdrawals are taxable
c. Dividends are paid out of pre-tax earnings
d. A stock split does not generate wealth

Answer: c.

11 Justin buys 100 shares of U.S.-based Big Oil Corp. for $75 (U.S.) each when the Canadian dollar is trading at 98 cents (U.S.). He later sells the shares at $68 (U.S.) each when the loonie is at 75 cents (U.S.) His total capital loss, or gain, in Canadian dollars, is:
a. Capital loss of $700
b. Capital loss of $933.33
c. Capital gain of $714.29
d. Capital gain of $1413.61

Answer: d.

12 Which of the following is not an option for your RRSP in the year that you turn 71?
a. Convert the RRSP to a RRIF
b. Purchase an annuity
c. Transfer shares tax-free to a younger spouse's RRSP
d. Withdraw all the funds and pay tax

Answer: c.

13 There is no withholding tax on U.S. dividends in a:
a. RRSP or RRIF
b. Registered education savings plan
c. Tax-free savings account
d. All of the above

Answer: a.

14 Which of the following companies was not removed from the S&P/TSX composite index in 2016?
a. Concordia International
b. Avigilon
c. BlackBerry
d. Performance Sports Group

Answer: c.

15 Fred buys 100 shares of Slate Rock and Gravel Co. for $45 each. He later buys 200 shares at $75 each. Finally, he sells 100 shares at $80 each. His adjusted cost base per share on his remaining 200 shares is:
a. $67
b. $65
c. $57.50
d. $52.50

Answer: b.

How did you do?

Answer all of the questions to see your result
Nicely done! Your money is in safe hands.
Not too bad. Want to try again?
Not so good. Want to try again?

Follow John Heinzl on Twitter: @JohnHeinzl


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