Course Introduction
Financial Decision Making
Test Questions
Financial Decision Making equips students with essential tools and frameworks to analyze and make effective financial decisions in both personal and organizational contexts. The course covers fundamental concepts including time value of money, risk and return, valuation of financial assets, capital budgeting, cost of capital, and financial statement analysis. Through theoretical learning and practical case studies, students develop skills to evaluate investment opportunities, assess financing alternatives, and understand the implications of financial decisions on organizational performance and value creation. This course prepares students to approach complex financial scenarios with confidence and strategic insight.
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
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Sample Questions
Q1) Businesses are a key part of the circular flow of income that sustains our free enterprise system.
A)True
B)False
Answer: True
Q2) Financial planning [does | does not] guarantee a sound financial future.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Answer: B
Q3) What policies can the government utilize to help stabilize the economy?
A) Price stabilization policy
B) Monetary policy
C) Fiscal policy
D) b and c
E) a,b,and c
Answer: D
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Page 3
Chapter 2: Using Financial Statements and Budgets
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184 Verified Questions
184 Flashcards
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Sample Questions
Q1) One should quickly make important financial decisions soon after a financial shock,such as death or divorce.
A)True
B)False
Answer: False
Q2) A budget will have value only if it is actually used and [records are kept of actual income/expenses | spending never deviates from the budgeted amount].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Answer: A
Q3) A [house | certificate of deposit] is an example of a tangible asset.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Answer: A
Q4) Jean and Jim have liquid assets of $3,600 and other assets of $42,800.Their total liabilities equal $26,000.What is their net worth?
Answer: 11ea7cae_7a3a_f7b7_806d_ef13091f7204_TB3856_00
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Chapter 3: Preparing Your Taxes
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200 Verified Questions
200 Flashcards
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Sample Questions
Q1) Major software providers have online versions for preparing federal taxes which is [free to all tax filers | free to qualified tax filers].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Answer: B
Q2) You should itemize deductions when total itemized deductions exceed the standard deduction.
A)True
B)False Answer: True
Q3) Social security taxes are deducted from all wages and salaries earned in a year.
A)True
B)False Answer: False
Q4) If you are married,you can legally file a single tax return.
A)True
B)False Answer: False
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Chapter 4: Managing Your Cash and Savings
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193 Verified Questions
193 Flashcards
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Sample Questions
Q1) Series EE Savings bonds are now called Patriot Bonds.
A)True
B)False
Q2) 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) US EE savings bonds
D) money market mutual fund
E) passbook savings
Q3) A passbook savings account may be a useful tool in managing everyday household transactions.
A)True
B)False
Q4) An asset management account is likely to require a minimum investment of at least [$1,000 | $5,000].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
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Chapter 5: Making Automobile and Housing Decisions
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220 Verified Questions
220 Flashcards
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Sample Questions
Q1) Most new car warranties cover a minimum of the first 36,000 miles or 3 years of ownership.
A)True
B)False
Q2) Balloon payment mortgages generally must be refinanced.
A)True
B)False
Q3) A lender will generally require mortgage insurance if the down payment is less than 20 percent.
A)True
B)False
Q4) [Lessor | Lessee] is another term for landlord.
A)for the first item
B)for the second item
C)if neither item will correctly complete the
Q5) An increase in the "rent ratio" indicates that renting is more affordable relative to housing prices.
A)True
B)False
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Chapter 6: Using Credit
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178 Verified Questions
178 Flashcards
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Sample Questions
Q1) Being late on credit payments only 2-3 times per year pay label you a "late payer" in your credit file.
A)True
B)False
Q2) Unsecured lines of credit are easy to use and often use some form of collateral as default protection.
A)True
B)False
Q3) Lindsey has a job with monthly take-home pay of $3,500.Using the suggested maximum debt safety ratio,what maximum debt burden per month can she assume?
Q4) Chapter 7 bankruptcy will typically
A) eliminate most debt obligations.
B) require monthly payments to a bankruptcy trustee.
C) stay on one's credit record up to 10 years.
D) a and c
E) a,b,and c
Q5) Debit cards look like credit cards,but they work like checks.
A)True
B)False
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Chapter 7: Using Consumer Loans
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) A personal consumer loan could be used to
A) consolidate several loans into one.
B) purchase a car.
C) cover a temporary cash shortfall.
D) buy a mobile home.
E) do all these things.
Q2) College costs have been escalating,but not as rapidly as the overall rate of inflation.
A)True
B)False
Q3) A finance company uses the discount method of calculating interest.The loan principal is $5,000,the interest rate is 10%,and repayment is expected in two years.You will receive [$5,000 | $4,000] from the lender.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q4) Variable rate loans are desirable if interest rates are expected to fall in the future.
A)True
B)False
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Chapter 8: Insuring Your Life
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157 Verified Questions
157 Flashcards
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Sample Questions
Q1) The underwriting function is designed to be sure that premiums are based on A) income levels.
B) the value of the loss.
C) the value of the gain.
D) the chance of loss.
E) expense levels.
Q2) What is it called when an insured sells an interest in the life insurance policy to an investor,who then becomes the policy's beneficiary?
A) Participating policy
B) Living benefit rider
C) Viatical settlement
D) Guaranteed purchase option
E) None of the above
Q3) People share losses through [loss control | insurance].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q4) Underwriters can predict whether or not you will suffer a loss this year.
A)True
B)False
Page 10
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Chapter 9: Insuring Your Health
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) One complaint about HMOs in the past,as compared to traditional indemnity plans,is that [the cost was expensive | the care was not available for major illnesses | members couldn't always choose their physicians].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q2) Disability insurance is designed to [replace some of your income | pay medical bills] when you are disabled.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) When you are hospitalized for surgical care,surgical expense coverage will pay the hospital bill.
A)True
B)False
Q4) Medicare Advantage policies require payment from the policyholder in the form of a deductible.
A)True B)False
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Chapter 10: Protecting Your Property
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194 Verified Questions
194 Flashcards
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Sample Questions
Q1) If you are sued,the liability portion of your property insurance [must | has no obligation to] defend you.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q2) Section II of a homeowner's insurance policy covers personal property and personal liability.
A)True
B)False
Q3) Liability claims may result from alleged negligent acts.
A)True
B)False
Q4) An insurance adjustor is working for the [insurance company | claimant].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q5) Uninsured motorist insurance is quite [expensive | inexpensive].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Page 12
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Chapter 11: Investment Planning
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196 Verified Questions
196 Flashcards
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Sample Questions
Q1) The [broker | dealer] market is made up of both the NASDAQ market and the OTC market.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q2) Long-term securities are traded in the primary market.
A)True
B)False
Q3) A collection of investments is called
A) a letter of exposure.
B) a diversification.
C) a grouping.
D) an envelope.
E) a portfolio.
Q4) If you want to set a specific price in your order,you will use a [market | limit] order.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
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Chapter 12: Investing in Stocks and Bonds
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194 Verified Questions
194 Flashcards
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Sample Questions
Q1) Capital appreciation of an investment is a form of Current Income.
A)True
B)False
Q2) Zero-coupon bonds are issued by
A) the federal government.
B) municipalities.
C) corporations.
D) all of the above.
E) b and c only.
Q3) When a bond is sold between coupon payment dates,the [buyer pays the seller | seller pays the buyer] for the accrued interest.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q4) The commonly-cited price for a bond is usually its clean bond price.
A)True
B)False
Q5) Interest rate risk is greater for stocks than for bonds.
A)True
B)False
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Chapter 13: Investing in Mutual Funds
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) An annual fee charged by some mutual funds to cover marketing and distribution expenses is the
A) management fee.
B) back-end load.
C) transaction fee.
D) 12(b)-1 fee.
E) low-load.
Q2) Mutual funds are actually comprised of two or more companies.
A)True
B)False
Q3) A(n)____ actually runs the portfolio and makes the buy and sell decisions
A) transfer agent
B) distributor
C) money manager
D) investment advisor
E) c and d
Q4) Mutual funds may be classified by the types of securities they purchase.
A)True
B)False
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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) Home Appliance Warehouse,Inc.would like to set up a retirement plan for its employees that encourage employees to save for their own retirement.The company is willing to match employee contributions.Which of the following plans would be appropriate in this situation?
A) Cash balance plan
B) 403(b)plan
C) 457 plan
D) 401(k)plan
E) b,c,and d
Q2) An investor's principal source of retirement income is social security retirement funds.
A)True
B)False
Q3) The costs of investing in a variable annuity is typically [higher | lower] than investing in mutual funds.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
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Chapter 15: Preserving Your Estate
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177 Verified Questions
177 Flashcards
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Sample Questions
Q1) An executor plays an important function during the probate process.
A)True
B)False
Q2) Claudia had not yet signed her newly written will when she died.This [still would | would not] be valid.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) Which of the following is not a type of trust
A) credit shelter trust
B) qualified terminable interest property trust
C) crummey trust
D) charitable remainder trust
E) credible property sharing trust
Q4) A gift is given when the donor relinquishes control over the asset.
A)True
B)False
Q5) Inflation is a common reason for estates to break up.
A)True
B)False
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