Consumer Finance Exam Practice Tests
Course Introduction
Consumer Finance explores the principles and practices surrounding individual financial decision-making, examining how consumers manage their income, spending, saving, and borrowing throughout the life cycle. The course covers topics such as budgeting, credit management, personal loans, mortgages, insurance, retirement planning, and investment options. By analyzing real-world scenarios and current trends, students gain an understanding of the financial products and services available to consumers, the regulatory landscape, and the behavioral factors influencing financial choices. The goal is to equip students with the practical knowledge and analytical skills necessary to make informed personal financial decisions and to evaluate financial information critically.
Recommended Textbook
Personal Financial Planning 13th Edition by Lawrence
J. Gitman
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15 Chapters
2759 Verified Questions
2759 Flashcards
Source URL: https://quizplus.com/study-set/3271 Page 2
Chapter 1: Understanding the Financial Planning Process
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142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/64933
Sample Questions
Q1) Sam and Lele are in their late 20s with 3 young children.Their most important financial planning concerns would probably include all of the following except
A) asset acquisition planning.
B) liability and insurance planning.
C) retirement and estate planning.
D) savings and investment planning.
E) employee benefit planning.
Answer: C
Q2) The Consumer Price Index is a measure of [unemployment | inflation].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Answer: B
Q3) Inflation refers to
A) rising prices.
B) declining interest rates.
C) the opposite of wealth.
D) the opposite of stagflation.
E) declining prices.
Answer: A
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Chapter 2: Using Financial Statements and Budgets
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184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/64934
Sample Questions
Q1) A budget is a detailed statement of what income and expenses occurred over a past period.
A)True
B)False
Answer: False
Q2) A balance sheet shows your financial condition as of the time the statement is prepared.
A)True
B)False
Answer: True
Q3) A cash budget helps you:
A) Monitor and control your finances.
B) Decide how to allocate your income to reach your financial goals.
C) Achieve your long-term financial goals.
D) All of the above.
E) A & B only.
Answer: D
Q4) Construct a balance sheet from the following information.Be sure the format is correct.
Answer: 11ea7cae_7a3b_1eca_806d_2198f3bbff2a_TB3856_00
Page 4
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Chapter 3: Preparing Your Taxes
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200 Verified Questions
200 Flashcards
Source URL: https://quizplus.com/quiz/64935
Sample Questions
Q1) Federal income taxation is [progressive | regressive].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Answer: A
Q2) Opening a traditional IRA would allow you to defer taxes on the earning.
A)True
B)False
Answer: True
Q3) Marginal tax and average tax rate refer to the same thing.
A)True
B)False
Answer: False
Q4) Russ and Lois got married December 30.Since they were single for most of the year,however,they can legally file as married taxpayers in the year of the wedding.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Managing Your Cash and Savings
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193 Verified Questions
193 Flashcards
Source URL: https://quizplus.com/quiz/64936
Sample Questions
Q1) Low interest rates that have persisted since the financial crisis of 2008-09 have been a net benefit to
A) pension funds
B) retirees
C) banks
D) savers
E) Bond investors
Q2) Low interest rates have increased the supply of credit.
A)True
B)False
Q3) If Lois has $2,000 in checking,$50,000 in a money market account,and $75,000 in certificates of deposit (all individual accounts)at her local bank,her accounts would be insured through FDIC for $100,000.
A)True
B)False
Q4) Stop-payment services are easier with electronic funds transfers than with traditional check payments.
A)True
B)False
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Chapter 5: Making Automobile and Housing Decisions
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220 Verified Questions
220 Flashcards
Source URL: https://quizplus.com/quiz/64937
Sample Questions
Q1) A loan-to-value ratio of 90 percent would require a buyer to make a 90% down payment.
A)True
B)False
Q2) The biggest fixed cost of owning a car is [the loan payment | insurance].
A)for the first item
B)for the second item
C)if neither item will correctly complete the
Q3) A condominium or townhome buyer will make monthly mortgage payments as well as pay a fee for services and maintenance of common areas.
A)True
B)False
Q4) In the same geographic area,the cost of a [detached home | condo] will usually be lower.
A)for the first item
B)for the second item
C)if neither item will correctly complete the
Q5) A closed-end automobile lease is the most popular type of lease.
A)True
B)False
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Chapter 6: Using Credit
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178 Verified Questions
178 Flashcards
Source URL: https://quizplus.com/quiz/64938
Sample Questions
Q1) One can lose his home if he does not repay his home equity line of credit.
A)True
B)False
Q2) Interest paid on a [home equity line of credit | credit card] would be deductible if you itemize your deductions on your federal tax return.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) Indebtedness relative to household income decreased due to all but
A) home sales
B) home foreclosures
C) fewer consumer loans
D) consumer loan defaults
E) surge in home mortgage refinancing
Q4) Home equity loans are one of the least expensive forms of consumer credit.
A)True
B)False
Q5) Identity theft is a growing problem that could damage your credit rating.
A)True
B)False
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Chapter 7: Using Consumer Loans
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161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/64939
Sample Questions
Q1) Credit unions lend money to qualified people who are A) employees.
B) members.
C) previous borrowers.
D) policyholders.
E) stockholders.
Q2) Consumer finance companies usually charge lower rates of interest than commercial banks.
A)True
B)False
Q3) If the discount method is used to calculate a finance charge of $250.60 on a $2,400 loan,the amount to be disbursed to the borrower is $2,400.
A)True
B)False
Q4) GMAC is an example of a captive sales finance company.
A)True
B)False
Q5) Savings and loan associations dominate the consumer loan market. A)True
B)False
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Chapter 8: Insuring Your Life
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157 Verified Questions
157 Flashcards
Source URL: https://quizplus.com/quiz/64940
Sample Questions
Q1) Nonforfeiture rights guarantee that a policy owner will not lose his or her ____.
A) face value.
B) death benefits for survivors.
C) cash value.
D) premium refunds.
E) premium reductions.
Q2) Living benefits would [increase | decrease] the proceeds available for beneficiaries.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) ____ is a common provision in many term policies.
A) A reward clause
B) A renewable clause
C) Cash value
D) A limited clause
E) An arbitration clause
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Chapter 9: Insuring Your Health
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164 Verified Questions
164 Flashcards
Source URL: https://quizplus.com/quiz/64941
Sample Questions
Q1) "Long Term Care" is a term used to describe [nursing home | extended hospital].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q2) Which of the following statements is true about a guaranteed renewable long-term care policy?
A) benefits are taxable.
B) premiums are never tax deductible.
C) the policy is non-cancellable.
D) premiums cannot be increased by the insurer unless they are increased for the entire rating class.
E) premiums cannot increase for any reason.
Q3) Medicare and Medicaid are hospital and physicians coverage,respectively.
A)True
B)False
Q4) You would have a better chance to choose your own doctor with a PPO rather than an HMO.
A)True
B)False
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Chapter 10: Protecting Your Property
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194 Verified Questions
194 Flashcards
Source URL: https://quizplus.com/quiz/64942
Sample Questions
Q1) Property insurance is meant to protect property owners from two basic types of exposures,physical loss of property and loss through depreciation.
A)True
B)False
Q2) The Principle of [Indemnity | Peril] states that the insured may not be compensated by the insurance company in an amount exceeding the insured's economic loss.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) Premium discounts may result from
A) safe driving record and prompt premium payment.
B) good grades and long-term employment.
C) multiple auto ownership and good credit rating.
D) safe driving record and good grades.
E) long-term employment and prompt payment of traffic tickets.
Q4) The most common definition of actual cash value is purchase price less depreciation.
A)True
B)False
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Chapter 11: Investment Planning
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196 Verified Questions
196 Flashcards
Source URL: https://quizplus.com/quiz/64943
Sample Questions
Q1) The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 included several reforms aimed at reforming banks and insurance companies.
A)True
B)False
Q2) The Securities and Exchange Commission sets margin requirements on security purchases.
A)True
B)False
Q3) [Depositing a lump sum and letting it grow | Making monthly deposits to your investment] would be the least costly way to reach a financial goal.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q4) ____ is not a normal brokerage service.
A) Providing investment information
B) Buying and selling securities
C) Managing your portfolio
D) Storing security certificates
E) Providing market quotations
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Chapter 12: Investing in Stocks and Bonds
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194 Verified Questions
194 Flashcards
Source URL: https://quizplus.com/quiz/64944
Sample Questions
Q1) A beta of more than one would be expected of a speculative stock.
A)True
B)False
Q2) [Bond | Common stock] prices would be most affected by interest rate risk.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) Bonds provide for investment return primarily in the form of growth.
A)True
B)False
Q4) You are looking for a guaranteed steady stream of income; you should invest in [stocks | bonds].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q5) Zero coupon bonds will pay interest [at maturity | annually].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q6) Calculate the earnings per share of a company with the following information?
Page 14
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Chapter 13: Investing in Mutual Funds
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174 Verified Questions
174 Flashcards
Source URL: https://quizplus.com/quiz/64945
Sample Questions
Q1) Mutual funds are actually comprised of two or more companies.
A)True
B)False
Q2) There are more closed-end investment companies than there are open-end companies.
A)True
B)False
Q3) In the Wall Street Journal's listing of mutual funds,a "t" after the mutual fund name and before the NAV means that the particular mutual fund has a ____ associated with it.
A) front-end load
B) back-end load
C) 12b-1 fee
D) management fee
E) b and c
Q4) A no-load mutual fund would most likely be sold by [a broker | calling the mutual fund company].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Page 15
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Chapter 14: Planning for Retirement
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225 Verified Questions
225 Flashcards
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Sample Questions
Q1) Danielle puts 8 percent of her paycheck in a 401(k)plan administered by her employer.Danielle earns $55,000 per year and is in the 28 percent tax category.What annual tax savings does she get from her contribution? If her employer matches contributions on the first 5% of her salary dollar for dollar and the second 5% 50 cents on the dollar,how much will her employer put into her account this year?
Q2) The first step in retirement planning is to
A) determine how large a nest egg is required.
B) consider your longevity.
C) define your investment program.
D) determine your income-earning assets.
E) set retirement goals
Q3) Lois,age 67,is receiving social security benefits.She received $25,000 in interest and dividends this year.Her social security benefits [will | will not] be reduced because of these earnings.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
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Page 16
Chapter 15: Preserving Your Estate
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177 Verified Questions
177 Flashcards
Source URL: https://quizplus.com/quiz/64947
Sample Questions
Q1) The [inheritance | pickup estate] tax costs neither the estate or the recipients of the estate anything in addition to the federal estate tax.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q2) A trust that provides continuity and management of asset management and allows assets to bypass probate,but which provides no income or estate tax advantages is a(n)____ trust.
A) revocable living
B) irrevocable living
C) testamentary
D) charitable lead
E) credit shelter
Q3) The probate estate consists of
A) real property
B) personal property
C) regulated by interstate laws if you have no valid will
D) all of the above
E) none of the above
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Page 17