Financial Counseling Final Exam
Course Introduction
Financial Counseling provides students with foundational knowledge and practical skills necessary to assist individuals and families in managing their financial resources effectively. The course covers essential topics such as budgeting, debt management, credit analysis, savings strategies, retirement planning, and risk management. Emphasis is placed on understanding client behavior, applying communication techniques, and utilizing financial tools to develop personalized financial plans. Students also explore ethical considerations and regulations relevant to financial counseling, preparing them for professional roles in advising clients toward financial stability and long-term well-being.
Recommended Textbook
Personal Financial Planning 14th Edition by Randy Billingsley
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15 Chapters
2516 Verified Questions
2516 Flashcards
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Page 2
Chapter 1: Understanding the Financial Planning Process
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) Decreasing taxes stimulates the economy.
A)True
B)False
Answer: True
Q2) Government controls consumers and businesses by regulation and taxation.
A)True
B)False
Answer: True
Q3) Two key indicators of economic activity in the United States are production levels and [employment levels | cost of living].
Answer: A
Q4) The financial crisis of 2008 and 2009 is best characterized as a A)recession.
B)depression.
C)downturn.
D)business trough.
E)meltdown.
Answer: A
Q5) The average [self employed | retired] household has higher income.
Answer: A
Page 3
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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 best place to keep a budget is in a safe deposit box.
A)True
B)False
Answer: False
Q2) A charge made on your credit card becomes a liability as soon as the charge is incurred.
A)True
B)False
Answer: True
Q3) A cash budget should help you to
A)achieve your short-term financial goals.
B)implement disciplined spending.
C)eliminate needless spending.
D)allocate funds to savings and investments.
E)do all of these.
Answer: E
Q4) Four categories,accounting for 75% of consumer spending,include [entertainment | food].
Answer: B
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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) For those under the age of 65,medical and dental expenses may be included as itemized deductions
A)when they exceed 5% of adjusted gross income.
B)up to a maximum of $7,500 per individual per tax year.
C)only if they do not exceed 7% of gross income.
D)only in the amount in excess of 10% of adjusted gross income.
E)under all circumstances.
Answer: D
Q2) As a single taxpayer with no dependents,one is generally eligible to file as "head of household."
A)True
B)False
Answer: False
Q3) Christy lives with her dog,Tex,who is dependent on her for support.She [can | cannot] use the Head of Household filing status.
Answer: B
Q4) Usually a married couple will pay less income tax if they file [jointly | separately].
Answer: A
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Chapter 4: Managing Your Cash and Savings
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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) Treasury bills are sold at a discount of their maturity value.
A)True
B)False
Q3) Savings and loan associations usually offer non-interest bearing checking accounts. A)True
B)False
Q4) Internet-only banks typically pay lower interest rates on savings than traditional banks.
A)True B)False
Q5) Another term for the interest paid by credit unions on deposits is dividends. A)True
B)False
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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) The interest rates and monthly mortgage payments will not change over the life of your mortgage if you have a(n)
A)reverse-annuity mortgage.
B)fixed-rate mortgage.
C)adjustable rate mortgage.
D)rollover mortgage.
E)graduated-payment mortgage.
Q2) An increase in the "rent ratio" indicates that renting is more affordable relative to housing prices.
A)True
B)False
Q3) As a homeowner,the federal government may allow you to deduct interest expenses and taxes paid on the property.
A)True
B)False
Q4) 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.
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Chapter 6: Using Credit
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155 Flashcards
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Sample Questions
Q1) For someone with a good credit rating,lenders will typically lend up to 100% of equity in a home using a home equity credit line.
A)True
B)False
Q2) ____ cards offer the cardholder a way to contribute to a worthy cause,sometimes described as "painless philanthropy."
A)Reward
B)Debit
C)Credit
D)Affinity
E)Rebate
Q3) Unsecured lines of credit are easy to use and often use some form of collateral as default protection.
A)True
B)False
Q4) Debit cards look like credit cards,but they work like checks.
A)True
B)False
Q5) An example of open account credit would be a bank [debit | credit] card.
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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) Student loans are made by banks and other financial institutions,but students apply for these loans through their universities.
A)True
B)False
Q2) 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
Q3) College costs have been escalating faster than the overall rate of inflation.
A)True
B)False
Q4) Life insurance loans could involve a tax penalty if certain conditions are not met.
A)True
B)False
Q5) GMAC is an example of a captive finance company.
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) If a loss is certain to occur,there is [a | no] risk.
Q2) Low-load whole life policies grow cash values more quickly than traditional whole life policies.
A)True
B)False
Q3) Policy dividends paid on participating policies are a return of unused premium based upon the claims experience of the insurance company.
A)True
B)False
Q4) Guaranteed renewable term insurance allows you to renew the policy for another term without qualifying medically.
A)True
B)False
Q5) If your insurance policy promises to pay death benefits only if you die during a specified time,you have [term | whole] life insurance.
Q6) A life insurance agent who takes her profession seriously is likely to have earned the [CPCU | CLU] professional certification.
Q7) Smoking [will | will not] be a factor in determining life insurance premiums.
Page 10
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Chapter 9: Insuring Your Health
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148 Flashcards
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Sample Questions
Q1) The United States spends about ___ the average of other rich economies on health care.
A)half
B)the same as
C)twice
D)three times
E)four times
Q2) Bob and Barbara Castle are each 39 years old and have sought your advice with regard to their financial affairs.Bob is a school administrator making $75,000 per year and Barbara is not employed outside of the home.The Castles' net worth is approximately $190,000.They have three kids,ages 6,10,and 14.You have determined that the Castles currently have adequate life,health,auto,and homeowner's insurance.Which of the following forms of insurance is likely to fulfill their highest-priority remaining risk-management need?
A)supplemental major medical insurance
B)disability income insurance
C)critical illness insurance
D)long-term care insurance
E)additional life insurance
Q3) The Medicare coinsurance payment is usually [10% | 20%].
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Chapter 10: Protecting Your Property
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Sample Questions
Q1) A person need not be occupying an automobile when the accidental injury occurs to be eligible for benefits from a PAP.
A)True
B)False
Q2) Your auto liability insurance shows bodily injury limits of $100,000/$300,000.This means
A)$100,000 would be paid to the people in your automobile and the $300,000 to passengers in the other car.
B)$100,000 is the limit per individual with $300,000 divided equally between the remaining passengers.
C)$100,000 is the limit per individual with a $300,000 limit per accident.
D)$100,000 is the limit per individual with $300,000 being paid to the driver of the other car.
E)none of the above.
Q3) The "other-insurance clause" helps prevent the violation of the principle of indemnity.
A)True
B)False
Q4) An insurance adjustor is working for the [insurance company | claimant].
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Chapter 11: Investment Planning
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162 Flashcards
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Sample Questions
Q1) The Securities Investors Protection Corporation would make payment to you if [the corporation in which you bought stock | the brokerage firm holding your stock] went bankrupt.
Q2) Retirees often choose investments offering [stable current income | high appreciation value].
Q3) Assume that the price of ABC common stock fell in a short period of time from $105 to $84.Which of the following investors probably made the most money?
A)Abe took a long position in 1,000 shares of ABC.
B)Bert took a short position in 1,000 shares of ABC.
C)Carrie kept her money in CDs at the bank.
D)Darren shorted 2,000 shares of ABC using a margin loan.
E)Earl used a margin loan to finance a 2000-share long position in ABC.
Q4) A portfolio is a collection of investment vehicles assembled to meet an investment goal.
A)True
B)False
Q5) [Investing | Speculating] is viewed as a short-term activity that involves the buying and selling of securities in which future value and expected return are highly uncertain.
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Chapter 12: Investing in Stocks and Bonds
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184 Flashcards
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Sample Questions
Q1) Municipal bonds can be attractive investments,despite their lower interest rate,since their interest income is exempt from federal income tax.
A)True
B)False
Q2) Past returns on an investment are [an indication | a guarantee] of future returns.
Q3) Individuals invest in preferred stock for its high [current income | potential gain].
Q4) Junk bonds have higher risk and similar returns to investment grade bonds.
A)True
B)False
Q5) By holding stock in 5 companies,you are reducing [market | business] risk.
Q6) Municipal bonds are exempt from [income tax | capital gains tax].
Q7) [Bond | Common stock] prices would be most affected by interest rate risk.
Q8) Which of the following bond ratings would be for junk bonds?
A)BBB
B)A
C)BB
D)AAA
E)AA
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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) A mutual fund's price per share will increase if its underlying holdings increase in value.
A)True
B)False
Q2) The primary investment objective of bond funds is income.
A)True
B)False
Q3) All no-load funds charge an upfront fee to purchase shares of a mutual fund.
A)True
B)False
Q4) Exchange-traded mutual funds are actually closed-end mutual funds.
A)True
B)False
Q5) Index funds have provided competitive rates of return because
A)their costs are lower than other stock funds.
B)it is difficult to outperform the market.
C)they have very low turnover rates.
D)they are tax efficient.
E)all of these.
Q6) [Both load and no-load | Only no-load] funds can charge a redemption fee.
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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 is not a common mistake people make when planning for retirement?
A)Starting too late
B)Putting away too little
C)Assuming too much risk
D)Having too little when reaching retirement
E)None of these
Q2) The employee contributions limits for 401(k)plans are the same as those for 403(b)and 457 plans.
A)True
B)False
Q3) An annuity is only as good as the insurance company that stands behind it.
A)True
B)False
Q4) Keogh and SEP plans provide tax-deferred methods for the self-employed to save for their retirement.
A)True
B)False
Q5) With an IRA,the [account owner | institution] is the trustee.
Q6) Most people invest their retirement funds too [aggressively | conservatively].
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Chapter 15: Preserving Your Estate
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177 Flashcards
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Sample Questions
Q1) Probate property includes only real property.
A)True
B)False
Q2) A letter of last instruction might provide directions for
A)location of the will.
B)legal and accounting services.
C)explanation of the actions taken in the will.
D)suggestions on how to divide personal property.
E)all of these.
Q3) Custodial accounts are used to protect the property of minor children.
A)True
B)False
Q4) Gift tax liability could be incurred on which of the following transactions?
A)Providing rent-free apartment for mother
B)1,000 hours of babysitting for grandchild
C)Son's deposit into husband-wife joint checking account
D)Setting up a revocable trust
E)$35,000 given to son
Q5) In most states,a valid will [must be written | can be oral or written].
Q6) If a gift tax has to be paid,the [giver | recipient] of the gift will pay it.
Page 17
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