Basic Financial Planning
Solved Exam Questions
Course Introduction
Basic Financial Planning introduces students to the fundamental principles and practices essential for managing personal finances effectively. The course covers key topics such as budgeting, saving, investing, credit management, insurance, and retirement planning. Students will learn to set financial goals, develop actionable plans, analyze financial statements, and understand the impacts of taxes and inflation on personal wealth. Through real-life scenarios and hands-on exercises, the course equips learners with practical skills to make informed financial decisions and lay a strong foundation for financial security and independence.
Recommended Textbook
Personal Financial Planning 14th Edition by Randy Billingsley
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15 Chapters
2516 Verified Questions
2516 Flashcards
Source URL: https://quizplus.com/study-set/3416
Page 2
Chapter 1: Understanding the Financial Planning Process
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143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/67829
Sample Questions
Q1) A person making $35,000 and spending $30,800 has an average propensity to consume of 80%.
A)True
B)False
Answer: False
Q2) For most people working in large firms,employee benefits are an important part of their financial planning.
A)True
B)False
Answer: True
Q3) Your level of formal education is a [controllable | noncontrollable] factor that has a considerable effect on your income.
Answer: A
Q4) [Putting money into a retirement fund | Buying a car] would be an example of current consumption.
Answer: B
Q5) Following an economic trough,the economy will often enter a period of [expansion | contraction].
Answer: A
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Chapter 2: Using Financial Statements and Budgets
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166 Verified Questions
166 Flashcards
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Sample Questions
Q1) The personal balance sheet describes a family's wealth
A)at a certain point in tine.
B)as an annual summary.
C)as a time period less than one year.
D)at a future time.
E)none of these
Answer: A
Q2) Jacque's total monthly loan payments are $1,020 while her gross income is $3,000 per month.What is her debt service ratio?
A)34%
B)43%
C)50%
D)75%
E)82%
Answer: A
Q3) Another term sometimes used for net worth is [collateral | equity].
Answer: B
Q4) If your expenses exceed your income,the bottom line of your income/expense statement will show a [surplus | deficit].
Answer: B
Page 4
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Chapter 3: Preparing Your Taxes
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) Tom sold mutual fund shares he had owned 3 years so that he could use the proceeds to return to college.Tom is in the 15% marginal tax bracket and his capital gains from this sale were $11,000.How much tax would Tom owe on those gains?
A)$11,000
B)$3,080
C)$1,650
D)$1,100
E)$0
Answer: E
Q2) The tax year corresponds to the [April 15 filing deadline | calendar year].
Answer: B
Q3) Opening a traditional IRA would allow you to take advantage of tax-free earnings.
A)True
B)False
Answer: False
Q4) When matching social security contributions,employers pay [the same | a lesser] amount of social security taxes as/than the employee.
Answer: A
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Chapter 4: Managing Your Cash and Savings
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175 Verified Questions
175 Flashcards
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Sample Questions
Q1) Which of the following is not a strategy to building your savings?
A)Pay yourself first.
B)Reinvest interest and dividends.
C)Splurge once in a while.
D)Set up a retirement plan.
E)All the above are strategies.
Q2) Another term for the interest paid by credit unions on deposits is dividends.
A)True
B)False
Q3) Savings and loan associations usually offer non-interest bearing checking accounts.
A)True
B)False
Q4) Which of the following accounts has special tax advantages under certain conditions when used to fund qualified college education expenses?
A)Certificate of deposit
B)U.S. Treasury bill
C)Series EE savings bonds
D)Money market mutual fund
E)Regular savings
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Chapter 5: Making Automobile and Housing Decisions
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) Felipe and Suzie want to calculate the difference in monthly payments on a $110,000 home as a result of a $5,000 down payment or a $10,000 down payment.Use your financial calculator to figure the monthly payments,assuming they get a 6.5%,30-year mortgage.
Q2) Which of the following is tax deductible if one itemizes deductions?
A)Principal, interest, property taxes, and homeowner's insurance
B)Principal, interest, and property taxes
C)Principal and interest
D)Interest, property taxes, and homeowner's insurance
E)Interest and property taxes
Q3) When refinancing your mortgage,you should consider
A)the interest rates of the old and new mortgages.
B)the years you expect to remain in the home.
C)any prepayment penalties on the old mortgage.
D)closing costs of the new mortgage.
E)all of these.
Q4) The interest rate is likely to be lower on a 6-year auto loan than on a 3-year auto loan
A)True
B)False
Page 7
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Chapter 6: Using Credit
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) The Wage Earner Plan requires debtors to give up most of their assets.
A)True
B)False
Q2) If the information on your credit report is in dispute,you are entitled to A)correct it.
B)sue.
C)erase it.
D)supply your own explanation about the dispute.
E)withdraw from the credit bureau.
Q3) Theresa is a bit of a spendthrift.She has trouble saying no when it comes to buying things.Which of the following cards would keep her out of debt?
A)debit
B)credit
C)affinity
D)rebate
E)prestige
Q4) After the Credit Card Act of 2009 was passed,late payments dropped but defaults increased.
A)True
B)False
Page 8
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Chapter 7: Using Consumer Loans
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) To qualify for a Perkins loan,you must
A)demonstrate financial need.
B)visit the financial institution.
C)apply through your parents.
D)all of the above
E)a and c only
Q2) Installment loans using the simple interest method
A)have the highest finance charges of any method.
B)have interest charged only on the monthly loan balance.
C)do not have balloon payments.
D)have a lower APR than the stated interest rate.
E)have a higher APR than the stated interest rate.
Q3) The average annual cost of a college education at a state school is about $33,000. A)True
B)False
Q4) A chattel mortgage is a legal claim that gives lenders the right to liquidate specific personal property to satisfy their claims in the event of default.
A)True
B)False
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Chapter 8: Insuring Your Life
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) The waiver-of-premium benefit excuses premium payment while the insured is experiencing short-term illness.
A)True
B)False
Q2) Group life insurance is often provided as a fringe benefit by employers.
A)True
B)False
Q3) Universal life insurance is
A)a deferred premium payment policy.
B)primarily sold to college students.
C)a combined investment plan and insurance policy.
D)a provision for a secondary beneficiary.
E)all of the above.
Q4) Universal life insurance is often suitable for single college students since the cost is quite low.
A)True
B)False
Q5) The majority of term policies have a [level | decreasing] face value.
Q6) The policyholder assumes the investment risk with [whole life | variable life] insurance.
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Chapter 9: Insuring Your Health
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) With a managed care plan,an insurance company may not be involved.
A)True
B)False
Q2) "Long-term care" is a term used to describe [nursing home | extended hospital].
Q3) A group HMO employs a group of doctors to provide healthcare services to members in a central facility.
A)True
B)False
Q4) Premiums for workers' compensation are paid by [employees | employers].
Q5) HSAs are funded solely by employers,while HRAs are funded solely by employees.
A)True
B)False
Q6) Advances in medical technology,prescriptions drugs,and treatments have substantially reduced health care costs in recent decades.
A)True
B)False
Q7) When there is a co-insurance or participation clause in a health insurance policy,the amount the insurance will pay is computed [before | after] the deductible is paid.
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Chapter 10: Protecting Your Property
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168 Verified Questions
168 Flashcards
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Sample Questions
Q1) HO-4 and HO-6 are for renters and owners of condominiums,respectively.
A)True
B)False
Q2) Careful drivers have limited need for liability protection,because they are not likely to be at fault in an accident.
A)True
B)False
Q3) Which of the following losses is most likely to be covered under your auto liability insurance?
A)a legal bill incurred by your insurer defending you from a claim related to an accident caused by your negligence.
B)a medical bill for your injuries related to an accident that you caused.
C)a medical bill for injuries to a passenger in your car arising from an accident in which you were not at fault.
D)an auto shop bill for repairs of a car you own due to an accident caused by your negligence.
E)an auto repair bill for repairs to the car of a driver who negligently caused an accident with you.
Q4) [Most | Few] tenants carry renters insurance.
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Chapter 11: Investment Planning
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162 Verified Questions
162 Flashcards
Source URL: https://quizplus.com/quiz/67839
Sample Questions
Q1) According to recent legislation,under the FDIC each brokerage account is insured up to $250,000.
A)True
B)False
Q2) In terms of market capitalization,Apple is the largest company in the world.
A)True
B)False
Q3) The [primary | secondary] market is where new securities are sold to the public.
Q4) Investments with high current income typically have [high | low] potential capital appreciation.
Q5) A short sale transaction will be profitable when prices are falling.
A)True
B)False
Q6) During a bear market,security prices generally
A)hold value
B)rapidly increase in value
C)remain neutral
D)decline in value
E)consolidate in value
Q7) The [DJIA | S&P Index] is based on 500 different stocks.
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Chapter 12: Investing in Stocks and Bonds
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184 Verified Questions
184 Flashcards
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Sample Questions
Q1) There is an inverse relationship between bond prices and market interest rates.
A)True
B)False
Q2) Dividend income and stock appreciation represent the elements of total return for a stock investment.
A)True
B)False
Q3) Convertible preferred stock can be exchanged for common stock.
A)True
B)False
Q4) Advantages of common stock investments include
A)guaranteed dividend income.
B)potential for high return
C)liquidity.
D)b and c
E)a, b, and c
Q5) [Market | Business] risk results from the behavior of investors that may cause security prices to fluctuate.
Q6) Stocks of stable,older companies are called [earnings | blue chip] stocks.
Q7) Stock dividends represent [taxable | nontaxable] income.
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Chapter 13: Investing in Mutual Funds
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) Open-ended mutual funds companies buy their shares back from investors at NAV.
A)True
B)False
Q2) Value funds typically invest in stocks that do not pay dividends and have a high price/earnings ratio.
A)True
B)False
Q3) [?Appreciation | ?Depreciation] gives the property owner an allowance for the decline in the physical condition of real estate over time.
Q4) You [could | could not] switch your investments from your Fidelity income fund to another Fidelity fund by making a phone call.
Q5) More people invest in mutual funds than in any other type of investment product. A)True
B)False
Q6) A real estate investment trust that invests only in mortgages is called an equity trust. A)True
B)False
Q7) Value funds look for stocks with relatively [high | low] dividend yields.
Page 15
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Chapter 14: Planning for Retirement
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205 Verified Questions
205 Flashcards
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Sample Questions
Q1) Which of the following has accounted for a growing amount of total retirement income?
A)Social Security
B)401(k)
C)Personal savings
D)Earned income
E)Real estate investing
Q2) You would most likely purchase an annuity from a bank.
A)True
B)False
Q3) Employees of state and local governments cannot participate in the Social Security system.
A)True
B)False
Q4) The current trend in retirement plans is toward contributory plans.
A)True
B)False
Q5) A cash-balance [does | does not] guarantee a minimum rate of return.
Q6) Under a defined contribution pension plan,an employee [is | is not] able to estimate what his pension payment would be upon retirement.
Page 16
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Chapter 15: Preserving Your Estate
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177 Verified Questions
177 Flashcards
Source URL: https://quizplus.com/quiz/67843
Sample Questions
Q1) A testamentary trust is established in a will.
A)True
B)False
Q2) If you want to create a living trust that provides tax advantages,you will need to establish [a revocable | an irrevocable] trust.
Q3) [Married | Unmarried] couples have the greater need for estate planning.
Q4) The appointment clause in a will determines the county that will have legal jurisdiction.
A)True
B)False
Q5) Minors can handle large sums of money and property.
A)True
B)False
Q6) You would create a [living | testamentary] trust to be used during your lifetime.
Q7) In most states,a valid will [must be written | can be oral or written].
Q8) If you have a small estate,you should [contact an attorney | write your will yourself].
Q9) Funeral instructions should be included in a [letter of instructions | your will].
Page 17
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