Family Financial Management Exam Practice Tests
Course Introduction
Family Financial Management explores the principles and practices essential for managing personal and family resources effectively. The course covers budgeting, saving, investing, credit use, insurance, retirement planning, and tax strategies tailored to family needs. Students learn to evaluate financial decisions, set financial goals, and develop long-term plans to enhance economic stability and achieve financial well-being within a family context. Emphasis is placed on problem-solving, critical thinking, and adapting financial management techniques to diverse family situations.
Recommended Textbook
Personal Finance 8th Edition by Arthur J. Keown
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17 Chapters
2679 Verified Questions
2679 Flashcards
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Page 2
Chapter 1: The Financial Planning Process
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110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/74527
Sample Questions
Q1) What did the economic downturn that began in 2008 reveal about many Americans' financial concerns? How can you alleviate those concerns in your own personal financial planning?
Answer: Many Americans are not adequately prepared for retirement and have insufficient emergency funds,too much debt,and inadequate health insurance. These concerns can be alleviated with proper financial planning,maintaining a sufficient emergency fund,avoiding excessive debt,and carrying adequate health insurance.
Q2) Annual public school tuition and fees are three times more expensive than private school tuition and fees.
A)True
B)False
Answer: False
Q3) Probably the most important determinant of your future earnings will be
A)your highest level of education obtained.
B)the size of the company where you will work.
C)your seniority with your company.
D)joining a labor union.
Answer: A
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3
Chapter 2: Measuring Your Financial Health and Making a Plan
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) According to the Keown book,the median net worth for American families in which the head of the household is less than 35 years old is below $10,000.
A)True
B)False
Answer: True
Q2) Which financial planning document should you use to measure your current financial condition?
A)Budget
B)Cash budget
C)Balance sheet
D)Income statement
E)Statement of financial ratios
Answer: C
Q3) As long as a financial planner is certified you need not worry about his ability to provide you with the correct financial plan for your situation.
A)True
B)False
Answer: False
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Chapter 3: Understanding and Appreciating the Time Value of Money
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) Rasheed can afford a monthly car payment of $550 for 72 months at an annual interest rate of 7.5 percent.Which of the following is closest to the amount he will be able to borrow for a new car?
A)$3,984
B)$6,550
C)$31,810
D)$49,818
Answer: C
Q2) If he sticks to this plan,Arnold's savings will have grown to approximately ________ by age 62.
A)$116,723
B)$163,987
C)$9,646
D)$1,125,945
Answer: A
Q3) Define an amortized loan and give two common examples.
Answer: An amortized loan is a loan paid off in equal installments.The loan amount is paid back by spreading or amortizing the payments out over a certain time period based on a specific interest rate.Two common examples are auto loans and home mortgages.
Page 5
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Chapter 4: Tax Planning and Strategies
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138 Verified Questions
138 Flashcards
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Sample Questions
Q1) What would be the equivalent taxable yield on a 9% municipal bond if you are in the 28% tax bracket?
A)6.48%
B)7.03%
C)12.5%
D)8.5%
Q2) Your base income tax liability can be determined by
A)using the alternative minimum tax worksheet,aimed at preventing the wealthy from paying little or no taxes.
B)using the IRS tax tables provided in the instruction booklet.
C)using the IRS rate schedules for taxable incomes greater than $100,000.
D)all of the above.
E)none of the above.
Q3) Why are the various tax "credits" such a welcome relief?
Q4) The movement into a higher tax bracket as a result of inflation increasing wages is called
A)bracket climbing.
B)bracket migration.
C)bracket creep.
D)bracket shifting.
6
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Chapter 5: Cash or Liquid Asset Management
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121 Verified Questions
121 Flashcards
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Sample Questions
Q1) All of the following are advantages of MMDA's except
A)federally insured.
B)rates below alternatives.
C)earns interest.
D)check-writing privileges.
Q2) What is the name of an investment company that raises funds from investors,pools the money,and invests in stocks or bonds?
A)Stockbrokerage firm
B)Bond brokerage firm
C)Mutual fund firm
D)Securities fund firm
Q3) Online and mobile banking allows you to do the following
A)access your accounts at any time of day.
B)transfer funds between accounts.
C)pay bills and receive payments online.
D)all of the above.
Q4) List two ways to pay yourself first.
Q5) Is EFT always a good thing? List some potential problems with EFT.
Q6) Briefly describe each of the cash management alternatives discussed in this chapter.
Page 7
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Chapter 6: Using Credit Cards: the Role of Open Credit
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167 Verified Questions
167 Flashcards
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Sample Questions
Q1) Credit card companies send out a whopping 6 billion credit card offers annually-roughly 60 offers per U.S.household!
A)True
B)False
Q2) Everyone who accessed your credit report within the last seven years appears in an "inquiry" list that appears on your credit report.
A)True
B)False
Q3) ________ is not information generally found in your credit report.
A)Employment information
B)Personal credit history
C)College attended,grades,etc.
D)Your public financial history
E)Past inquiries regarding your credit report
Q4) Only Prestige or Premium credit cards offer a grace period.
A)True
B)False
Q5) Describe four ways to prevent identity theft.
Q6) Briefly describe the three credit card users.
Page 8
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Chapter 7: Student and Consumer Loans: the Role of Planned Borrowing
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) A 529 plan is a tax-advantaged savings plan designed to encourage parents to save for future college costs for their children.The plan comes in two forms: pre-paid tuition plans and college savings plans.
A)True
B)False
Q2) A balloon loan calls for repayment of both interest and principal at regular intervals,with the payment levels set so that the loan expires at a preset date.
A)True
B)False
Q3) If you own a home with a market value of $175,000 and you have an outstanding balance on your mortgage of $60,000,your home equity is
A)$57,500.
B)$97,750.
C)$115,000.
D)$235,000.
Q4) Explain the purpose of a convertible loan.
Q5) How do you know how much debt you can comfortably afford?
Page 9
Q6) Name the advantages and disadvantages of an unsecured loan.
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Chapter 8: The Home and Automobile Decision
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217 Verified Questions
217 Flashcards
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Sample Questions
Q1) A mortgage with an APR higher than normal is a subprime mortgage.
A)True
B)False
Q2) What would the monthly payment be on a $300,000,20 year mortgage with a 4% APR be?
A)$1,432.25
B)$2,245.83
C)$1,817.94
D)$1,765.48
Q3) Private mortgage insurance typically is not needed with a down payment of 20% or larger.Why?
A)Not true,all mortgage loans require PMI.
B)Buyers who have large down payments don't choose the extra insurance.
C)Buyers who invest large down payments are more motivated to make their mortgage payments.
D)All of the above
E)None of the above
Q4) What are the typical sources of mortgages?
Q5) Explain why the 28/36 percent rule is so important to understand.
Q6) What are the common mortgage loan options?
Page 10
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Chapter 9: Life and Health Insurance
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224 Verified Questions
224 Flashcards
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Sample Questions
Q1) The alternative ways that a beneficiary can choose to receive the policy benefits upon the death of the insured are called
A)premium options.
B)settlement options.
C)terminal options.
D)residual options.
E)none of the above.
Q2) A flexible spending account saves you money on qualifying healthcare and childcare expenses.
A)True B)False
Q3) List the required health benefits that health care plans must provide under the Affordable Care Act.
Q4) Term life insurance provides protection for a specified amount of time;typically 1-30 years.
A)True B)False
Q5) List the plans and payment percentages offered in the Health Insurance Marketplace.
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Chapter 10: Property and Liability Insurance
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) A teenage driver crashes her parents' minivan into an office building,causing $85,000 in damage to the building.The automobile liability insurance limits are 100/250/75.How will the damages be allocated between the driver and the insurance company?
A)The driver will be responsible for $85,000.
B)The driver will be responsible for $75,000,the insurance company for $10,000.
C)The driver will be responsible for $10,000,the insurance company for $75,000.
D)The insurance company will be responsible for $85,000.
Q2) ________ auto insurance pays for your losses and the losses suffered by your passengers,while the other driver's insurance would pay for his or her losses.This arrangement is made to keep insurance costs down,especially for settling claims.
A)Comprehensive
B)No-fault
C)Your fault
D)PAP
E)PIP
Q3) An attached garage is covered under Coverage B: Other structures.
A)True
B)False
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Page 12
Chapter 11: Investment Basics
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325 Verified Questions
325 Flashcards
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Sample Questions
Q1) A ________ is an order that specifies a securities trade is to be made only at a certain price or better.
A)day order
B)market order
C)limit order
D)GTC order
E)none of the above
Q2) If you bought a 20-year bond issued by the government,with a par value of $1,000 and an interest rate of 8%.At maturity you will be returned the principal of
A)$80.
B)$500.
C)$800.
D)$1,000.
E)$1,600.
Q3) The real rate of return is the nominal rate of return adjusted for inflation.
A)True
B)False
Q4) Explain the purpose of a brokerage account and the 3 types of brokers.
Q5) Compare and contrast lending and ownership investments.
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Chapter 12: Investing in Stocks
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190 Verified Questions
190 Flashcards
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Sample Questions
Q1) Common stockholders have a superior claim on a company's assets over creditors and bondholders.
A)True
B)False
Q2) Using the stock valuation formula calculate the value of a share of stock if it is expected to pay $15 in dividends,in addition the dividends are expected to grow at a rate of 8 percent forever,and the investor's required rate of return is 10 percent.
A)$6.50
B)$750
C)$12.00
D)$14.50
Q3) Compared to other investment options,we can safely say that investing in stocks
A)has equal risk.
B)has greater risk.
C)has less risk.
D)is not worth the risk.
Q4) You cannot benefit from capital appreciation until you actually sell your stock.
A)True
B)False
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Chapter 13: Investing in Bonds and Other Alternatives
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) A bond's yield is always exactly the same as its coupon interest rate.
A)True
B)False
Q2) The interest rate carried on agency bonds,such as FNMA and FHLB,is ________ the interest rate on Treasury bonds.
A)higher than B)lower than C)usually the same as D)at most half that of E)none of the above
Q3) Which of the following starts off with the highest risk bond and ends with the lowest risk bond?
A)Municipal,Corporate,Treasury,Junk
B)Corporate,Junk,Treasury,Municipal
C)Junk,Corporate,Municipal,Treasury
D)Corporate,Junk,Municipal,Treasury
Q4) If you are the owners of a share of preferred stock then you have voting rights.
A)True
B)False
Q5) Your friend wants you to seriously consider investing in bonds like she did.Why?
Page 15
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Chapter
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) A balanced mutual fund is aimed at investors who want
A)steady income to live on.
B)moderate growth in capital.
C)moderate stability in their investments.
D)all of the above.
E)none of the above.
Q2) Compare the investment vehicles and tax treatment of tax-exempt and government securities money market mutual funds.
Q3) Explain how sales loads and fund expenses can negatively impact your return on investment in a mutual fund.
Q4) Because mutual funds trade in such large quantities,they pay far more in terms of commissions.
A)True
B)False
Q5) Which of the following statements is true regarding mutual fund load charges?
A)Load funds perform better than no-load funds.
B)Back-end load funds perform better than no-load funds.
C)Load funds perform more poorly than back-end load funds.
D)No-load funds perform just as well as load funds.
E)None of the above
Page 16
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Chapter 15: Retirement Planning
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158 Verified Questions
158 Flashcards
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Sample Questions
Q1) Annuity payments will adjust for inflation over the years of retirement.
A)True
B)False
Q2) Compare and contrast the defined-contribution plans.
Q3) A 401(k)plan is a tax-deferred retirement savings plan in which employees of private corporations may contribute a portion of their wages up to a maximum amount set by law.
A)True
B)False
Q4) You should take advantage of any matching your company is willing to do for your 401(k).
A)True
B)False
Q5) The Roth IRA does not require that distributions begin by age 70 1/2.
A)True
B)False
Q6) Contributions to a traditional IRA are always tax deductible.
A)True
B)False
Q7) Discuss the basic considerations when facing retirement.
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Chapter 16: Estate Planning: Saving Your Heirs Money and Headaches
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Provide a description of the basic features and clauses found in a will.What might invalidate your will?
Q2) What is the name for a document that provides for someone to act in your place for legal and financial matters in the event that you become mentally incapacitated?
A)Specific power of attorney
B)Revocable power of attorney
C)Incapacitated power of attorney
D)Durable power of attorney
E)None of the above
Q3) A ________ gives the individual establishing the trust the ability to direct income from the trust to his or her spouse over the spouse's life,and then to whomever else the individual wants the funds to go.
A)Q-TIP trust
B)sprinkling trust
C)family trust
D)living trust
Q4) Make a list of ways to avoid probate.
Q5) What should you do once your will has been drawn up?
Q6) Describe the typical funeral and administrative expenses.
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Chapter 17: Financial Life Eventsfitting the Pieces Together
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85 Flashcards
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Sample Questions
Q1) According to the Keown book,the average student debt is more than ________.In addition,according to a recent Fidelity survey,total student debt-including credit card debt and personal and family loans-tops ________.
A)$9,000;$15,000
B)$19,000;$25,000
C)$29,000;$35,000
D)$39,000;$45,000
Q2) Which of the following is considered to be a key element to effective debt management?
A)Know and understand the costs of debt.
B)Complete a budget: always spend more than you earn.
C)Take the largest possible loan you can obtain.
D)Accept credit whenever it is offered.
E)None of the above
Q3) Why is discussing personal finances with your significant other so important prior to getting married?
Q4) Your potential income sources should be evaluated prior to having children.
A)True
B)False
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