Question

7) Sandra invested $10,000 in a Tax-Free Savings Account (TFSA) last year and it has a value of $12,000 today. She also invested $10,000 in a Registered Retirement Savings Account (RRSP) last year and it has a value of $15,000 today. With the market uncertainty today, Sandra decides to withdraw the entire amounts from both accounts. On what amounts will Sandra need to pay tax on? a) Only on the initial $20,000 invested in each account b) On the total amount withdrawn (ie $27,000) which includes the growth from each account c) On the $5,000 growth in the Registered Retirement Savings Account d) On the $15,000 withdrawn from the Registered Retirement Savings Account e) There is no tax to be paid 8) Leslie has invested in a diversified portfolio. His bonds will pay_ his Canadian common stocks will pay_ his foreign stocks will pay __ his real estate holdings will earn __ upon the sale, and his preferred shares will pay a) interest, dividends, dividends, capital gains, dividends b) dividends, interest, dividends, capital gains, interest c) interest, dividends, dividends, capital gains, interest d) interest, interest, capital gains, capital gains, dividends e) dividends, dividends, dividends, interest, capital gains 9) In March 2019, Denise purchased 2,000 shares at $24.50/share in the company called Vaccine Inc. During this one-year period, she received $2.35/share in dividends. Despite the great returns, Denise decided to sell her shares today (March 23, 2020) when they hit $34/share as she needed money for tuition. What was Denise's investment return during the one year that she held the shares? a) 48.37% b) 27.64% c) 36.45% d) 41.11% e) 38.20% 10) If you die without a Will the court will always appoint a family member to distribute your estate according to the laws of your province. a) True b) False

Answer 1

7. Tax- Free Savings Account is tax sheltered whereas Registered Retirement Savings Account is not and an increase in the value of fund does require tax to be paid where there is a withdrawal. Hence, Sandra will not be rquired to pay tax on the gains that the investments have made from the Registered Retirement Savings Account.

The answer is option d.

8. Bonds pay interest, whereas you can make capital gains or losses on account of selling of assets and stocks earn dividends and not interest.

Hence, his bonds will pay interest, his Canadian common stocks will pay dividends, his foreign stocks will pay dividends, his real estate holdings will earn capital gains upon the sale,and his preffered shares will pay dividends.

Hence, the answer is option a

9. Investment made by Denise = $ 24.50 *2000 = $49000

Dividend recieved by Denise = $ 2.35*2000 = $4700

Sale amount by Denise= $34*2000= $68000

Total Return made by Denise= Profit + Dividend = $68000-$49000+4700 = $23700

Hence, Return made by Denise = Return/Cost*100 = 23700/49000*100 = 48.37%

The answer is option a.