LIBF Level 3 Diploma in Financial Studies

(DipFS) – 600 / 8551 / 4

Unit 3: Sustainability of an Individual’s Finances (SIF)

Specimen paper: B
Length of examination: 1 hour

Instructions to learners

1. Open this question paper when instructed to do so.

2. Answer all questions.

3. Use the examination answer sheets provided for your answers. Please do not note
your answers in this booklet, as they will not be recorded.

4. Read the instructions on both sides of the answer sheet carefully.

5. Before you leave the examination room you must hand in all the examination
materials including the answer sheet and question paper.

Information for learners

1. Silent non-programmable (including scientific) calculators are allowed.

This qualification is regulated by the regulatory authorities for England, Wales and Northern Ireland and is
incorporated into the Regulated Qualifications Framework (RQF).
 DipFS Unit 3 – Sustainability of an Individual’s Finances (SIF) Specimen Paper B

Questions begin on page 3

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 DipFS Unit 3 – Sustainability of an Individual’s Finances (SIF) Specimen Paper B

1. When drawing up a budget, which of the following is most likely to be categorised as mandatory
expenditure?

A Mobile phone contract payments.

B Mortgage instalments.

C National Insurance contributions.

D Personal loan repayments.

2. A flexible financial plan is sometimes called a:

A dynamic plan.

B measurable plan.

C realistic plan.

D statistical plan.

3. Hire purchase arrangements are typically offered by:

A banks.

B building societies.

C credit unions.

D retailers.

4. Which of the following can be used to invest in government bonds?

A Investment trusts and OEICs only.

B Investment trusts and unit trusts only.

C OEICs and unit trusts only.

D OEICs, investment trusts and unit trusts.

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 DipFS Unit 3 – Sustainability of an Individual’s Finances (SIF) Specimen Paper B

5. A person's eligibility for the full state pension is based on their:

A income needs.

B income tax record.

C level of personal savings.

D National Insurance contributions record.

6. At what minimum age do people become eligible to claim Attendance Allowance?

A 16.

B 18.

C 60.

D 66.

7. Which of the following is payable to people who have been receiving Statutory Sick Pay (SSP) after
the maximum period?

A ESA.

B JSA.

C PIP.

D SMI.

8. Jamelia works full-time and has earned £200 gross per week for the past year. If she is eligible for
Statutory Maternity Pay, what weekly amount will she initially receive?

A £160.

B £180.

C £190.

D £200.

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 DipFS Unit 3 – Sustainability of an Individual’s Finances (SIF) Specimen Paper B

9. Sonja has a variable-rate mortgage. Which of the following is likely to have the greatest impact on
Sonja's financial situation?

A Declining inflation rates.

B Falling unemployment.

C Increasing property prices.

D Rising interest rates.

10. The Financial Services Compensation Scheme (FSCS) is mainly funded by:

A charges and fees paid by consumers on financial products.

B charitable donations from individuals and companies.

C providers who are members of the scheme.

D UK government and EU grants.

11. Which of the following ways of presenting data is most suitable to be able to easily see trends at a
glance?

A A graph.

B A list.

C A pie chart.

D A table.

12. What is the most likely outcome of higher interest rates on the mortgage market?

A Increased demand for houses and flats.

B Less people with mortgage arrears.

C More new properties built.

D Reduced demand for houses and flats.

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 DipFS Unit 3 – Sustainability of an Individual’s Finances (SIF) Specimen Paper B

13. A perfect market is one where the way in which goods are bought and sold does not need to be:

A identified.

B measured.

C regulated.

D taxed.

14. Which of the following is true of the envelope method of budgeting?

It involves:

A budgeting for every penny.

B dividing income into separate pots.

C keeping all surplus funds in cash.

D the essential use of envelopes.

15. For which of the following people is an improvement in the economy most likely to have a negative
effect?

A Amy, who is looking for a job.

B Chas, who wants to buy his first house.

C Frank, who is looking to sell his house.

D Jess, who is a self-employed artist.

16. For which of the following items of expenditure would using an emergency fund be most
appropriate?

A A car repair bill.

B A day out with friends.

C A personal loan repayment.

D An unexpected meal out.

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 DipFS Unit 3 – Sustainability of an Individual’s Finances (SIF) Specimen Paper B

17. Which of the following online financial planning tools is offered free of charge to consumers?

A Goodbudget.

B Moneydance.

C Money Dashboard.

D You Need a Budget.

18. Which of the following describes the sacrifice that is involved when things change for an individual?

A Alternative cost.

B Offset cost.

C Opportunity cost.

D Social cost.

19. Which of the following will be of most help to people seeking to arrange a debt management plan?

A MoneyHelper.

B National Debtline.

C Payplan.

D The Money Charity.

20. John is aged 65. In determining his eligibility for state benefits, how many hours must he work per
week, as a minimum, to be treated as working full-time?

A 8.

B 16.

C 24.

D 30.

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 DipFS Unit 3 – Sustainability of an Individual’s Finances (SIF) Specimen Paper B

21. The 'triple lock guarantee' means that pensioners:

A can purchase the same representative basket of goods as they did the previous year.

B can retire at the age of 66.

C must have 35 qualifying years to get a full pension.

D will be paying more for their purchases in 'real terms' from year to year.

22. Why is the interest rate on a personal loan usually higher than the interest rate on a mortgage?

Because:

A mortgage borrowing is typically for a larger amount than personal loans.

B mortgage borrowing is typically over a longer term than a personal loan.

C personal loans are open-ended and have no set term.

D personal loans are typically unsecured and mortgage borrowing is secured.

23. Which of the following is true of credit cards when used for purchases only?

A An interest-free period is always available.

B Borrowers can miss a monthly payment if they wish.

C Interest is payable from the date of each transaction.

D The debt must be repaid in full each month.

24. A fixed-rate mortgage is most suitable for someone who thinks that interest rates will:

A fall slowly with time.

B fall sharply and then gradually increase.

C rise with time.

D stay the same.

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 DipFS Unit 3 – Sustainability of an Individual’s Finances (SIF) Specimen Paper B

25. Which of the following debt management solutions does not have legal and administrative fees?

A Bankruptcy.

B Debt relief order.

C Individual voluntary arrangement.

D Informal payment plan.

26. Under a debt management plan, to whom does the debtor make monthly payments?

A An official receiver.

B Each of the creditors.

C The county court.

D The debt management plan provider.

27. The International Monetary Fund (IMF) has stated that the major factors in the development of
globalisation have been advances in ICT and:

A increased competition.

B increased trade liberalisation.

C reduced communication.

D reduced exchange rates.

28. The global financial crisis that began in 2007 resulted from problems that occurred first in which
country?

A Greece.

B Spain.

C UK.

D US.

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 DipFS Unit 3 – Sustainability of an Individual’s Finances (SIF) Specimen Paper B

29. Which of the following activities of an investment fund management company is most likely to be
outsourced?

A Fund management.

B Insurance underwriting.

C Payroll operation.

D Sales and marketing.

30. An increase in economic growth in world emerging markets can cause which of the following
problems for established economies?

A A decrease of house prices.

B A decrease of inflation.

C An increase of earnings for individuals.

D An increase of global commodity prices.

31. Countries that have adopted the euro as their currency have their interest rates set by:

A the EU Commission.

B the European Central Bank.

C the International Monetary Fund.

D their individual central banks.

32. Bitcoin is:

A a virtual currency.

B an electronic wallet.

C an online payment system.

D legal tender.

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 DipFS Unit 3 – Sustainability of an Individual’s Finances (SIF) Specimen Paper B

33. Sacha bought a property for £200,000 and used the Help to Buy: equity loan. What minimum
deposit amount did he need?

A £10,000.

B £20,000.

C £30,000.

D £40,000.

34. Changes in regulation means that independent financial advisers who provide advice on investment
products no longer receive:

A access to personal details.

B commission.

C fees.

D stamp duty.

35. Jerome is a director of a bank and receives a bonus of £100,000. Under the Capital Requirements
Directive (CRD) IV, how much of it, if any, must be paid in the form of shares?

A Nil.

B £25,000.

C £50,000.

D £100,000.

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 DipFS Unit 3 – Sustainability of an Individual’s Finances (SIF) Specimen Paper B

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