Financial Literacy
Exam Questions
Course Introduction
Financial Literacy introduces students to essential principles of managing personal finances and making informed financial decisions. Topics include budgeting, saving, banking, credit management, investing, taxation, insurance, and retirement planning. The course emphasizes developing practical skills for analyzing financial products, understanding consumer rights and responsibilities, and navigating the financial system. Through real-world examples and hands-on activities, students gain the confidence to evaluate their financial options and achieve long-term financial well-being.
Recommended Textbook
Personal Finance 11th Edition by Jack R. Kapoor
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19 Chapters
2490 Verified Questions
2490 Flashcards
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Chapter 1: Personal Finance Basics and the Time Value of Money
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) John Gleason is interested in purchasing a 46" rear projection TV for his living room. He knows that right now the TV will cost approximately $1500. However, John is a little concerned about his job. John is a pilot for Delta Airlines and he thinks it is possible that he could be laid off in the near future. What type of risk is John worried about?
A) Inflation risk
B) Interest rate risk
C) Income risk
D) Personal risk
E) Liquidity risk
Answer: C
Q2) Gross Domestic Product (GDP) measures the total value of goods and services produced within a country's borders, excluding items produced with foreign resources.
A)True
B)False
Answer: False
Q3) What is meant by the term "Time Value of Money?"
Answer: Answers will vary.
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Page 3
Chapter 2: Financial Aspects of Career Planning
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) An elevator speech is a short, persuasive, focused summary of your unique experiences and skills used when networking.
A)True
B)False
Answer: True
Q2) Tara Guest wants to gain some needed experience so when she is ready to start a career she has something to offer a company. She has decided to help the Edmond Historical Society present programs to local school children. Which of the following employment experience strategies is she pursuing?
A) Part-time employment
B) Volunteer work
C) Internship
D) Campus project
E) Cooperative education program
Answer: B
Q3) A list of grades received in school is commonly included on a resume.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Money Management Strategy: Financial
Statements and Budgeting
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) Which of the following would most likely be classified as a current liability?
A) Monthly balance due on a credit card
B) Total amount of a mortgage
C) Balance of a student loan
D) Total of a home improvement loan
E) Balance of an auto loan
Answer: A
Q2) Discretionary income is money left over after paying for housing, food, and other necessities.
A)True
B)False
Answer: True
Q3) When it comes to savings, most Americans:
A) have an adequate emergency fund.
B) devote large portions of their income to savings.
C) find saving difficult.
D) keep substantial amounts in a regular savings account.
E) reduce the amount they save during their working life.
Answer: C
Page 5
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Chapter 4: Planning Your Tax Strategy
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) The Form 1040 is most helpful to a person who:
A) is single with no other exemptions.
B) makes less than $50,000 with no interest or dividends.
C) itemizes deductions.
D) has exempt income.
E) has a simple tax situation.
Q2) Michele Walsh is considering an additional charitable contribution of $2,000 to a tax-deductible charity, bringing her total itemized deductions to $16,000. If Michele is in a 28 percent tax bracket, how much will this $2,000 contribution reduce her taxes?
A) $0
B) $560
C) $1,600
D) $2,000
E) $4,480
Q3) Money received in the form of dividends or interest is commonly called "earned income."
A)True
B)False
Q4) How is taxable income computed?
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Chapter 5: Financial Services: Savings Plans and Payment Accounts
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99 Verified Questions
99 Flashcards
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Sample Questions
Q1) The money market fund offered by investment companies is a relatively liquid financial service.
A)True
B)False
Q2) Tim Gleason has set up a legal agreement that allows the First State Bank of Orlando to manage funds set aside for his daughter's college education. What type of financial service is Tim using?
A) Payment service
B) Savings service
C) Borrowing service
D) Trust service
E) Asset management
Q3) What is the term used to refer to the yield on a long term bond issued by the federal government?
A) Prime rate
B) Discount rate
C) Mortgage rate
D) Treasury bond rate
E) Corporate bond rate
Q4) What are the main types of financial institutions used by consumers?
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Chapter 6: Introduction to Consumer Credit
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181 Verified Questions
181 Flashcards
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Sample Questions
Q1) Stored value (or gift) cards:
A) look nothing like typical debit cards.
B) have decreased in popularity since the mid-1990s.
C) work the same as a credit card.
D) may be eroded by fees and eventually expire.
E) are currently being used for very limited purposes.
Q2) Single lump-sum credit is a loan that must be repaid in total on a specified day, usually within 30 to 90 days.
A)True
B)False
Q3) The Fair Credit Reporting Act regulates the use of credit reports, requires the deletion of obsolete information, and gives consumers access to their files.
A)True
B)False
Q4) The Equal Credit Opportunity Act is very specific about how a person's age may be used in credit decisions.
A)True
B)False
Q5) What are the two basic types of credit? Give examples of both.
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Chapter 7: Choosing a Source of Credit: The Costs of Credit Alternatives
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136 Verified Questions
136 Flashcards
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Sample Questions
Q1) "Keeping up with the Joneses" is one of the reasons for indebtedness.
A)True
B)False
Q2) In addition to the Consumer Credit Counseling Service (CCCS), the following entities also provide counseling services:
A) Universities
B) Credit unions
C) Military bases
D) State and federal housing authorities
E) All of these
Q3) The Consumer Credit Counseling Service will refinance all of your existing debts for you.
A)True
B)False
Q4) If creditors add finance charges after subtracting payments made during the billing period, this is called the previous balance method.
A)True
B)False
Page 9
Q5) What can you do if you are unable to meet your credit obligations?
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Chapter 8: Consumer Purchasing Strategies and Legal Protection
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Sample Questions
Q1) The sticker price of a car refers to:
A) the amount of government taxes on a new car.
B) the cost of repairing a used car which is for sale.
C) the list of optional equipment that may be added to a car.
D) the suggested retail price of a new car.
E) a comparison of costs and performance of comparable cars.
Q2) Open dating provides information on:
A) freshness.
B) pricing.
C) nutrition.
D) common product use.
E) government inspection.
Q3) A motor vehicle has annual depreciation of $2,000; oil changes cost $120, automobile insurance $500 annually, and license plates costs $100. What is the annual amount of the total fixed operating cost for this vehicle?
A) $2,000
B) $2,120
C) $2,500
D) $2,600
E) $2,720
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Chapter 9: The Housing Decision: Factors and Finances
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99 Verified Questions
99 Flashcards
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Sample Questions
Q1) A condominium involves:
A) renting a mobile home.
B) buying stock in a nonprofit organization.
C) ownership of an individual living unit.
D) government-subsidized housing.
E) renting a house with the option to buy.
Q2) Todd Foley is applying for a $100,000 mortgage. He can select either a $600 monthly payment with no points or a $520 payment with two points. How many months will it take Todd to cover the cost of the discount points if he takes the lower monthly payment?
A) 6
B) 10
C) 18
D) 25
E) 48
Q3) Negotiating a purchase price for a home usually involves an offer and counteroffers.
A)True
B)False
Q4) What factors influence the type of housing a family will select?
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Chapter 10: Property and Motor Vehicle Insurance
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) If a homeowner leaves toys on stairs that results in injury to a delivery person, this may be ruled as:
A) vicarious liability.
B) negligence.
C) assigned risk.
D) umbrella coverage.
E) coinsurance.
Q2) Which one of the following types of coverage would pay for damage to your automobile in an accident for which you were at fault?
A) Property damage liability
B) Collision
C) Comprehensive physical damage
D) No-fault insurance
E) Assigned risk pool coverage
Q3) The 100 in 100/300/50 refers to:
A) property damage liability coverage.
B) the amount of the deductible.
C) collision coverage.
D) the total coverage for an accident.
E) the limit for bodily injury claims that can be paid to one person.
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Chapter 11: Health, Disability, and Long-Term Care Insurance
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159 Verified Questions
159 Flashcards
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Sample Questions
Q1) Health insurance includes:
A) life insurance.
B) disability insurance.
C) personal liability insurance.
D) an annuity.
E) an endowment.
Q2) Hospital insurance is which part of Medicare?
A) Part A
B) Part B
C) Part C
D) Part D
E) Part E
Q3) Medicare covers the cost of care received outside the United States, Canada, and Mexico.
A)True
B)False
Q4) Why are the costs of health insurance and health care increasing?
Q5) A good health insurance plan should impose no unreasonable exclusions.
A)True
B)False
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Chapter 12: Life Insurance
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167 Verified Questions
167 Flashcards
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Sample Questions
Q1) How frequently does the premium for a whole life policy change during the insured's life?
A) Every year
B) Every two years
C) Every five years
D) Every 10 years
E) It never changes
Q2) Most participating policies are sold by:
A) federal government agencies.
B) state insurance commissioners.
C) mutual life insurance companies.
D) stock life insurance companies.
E) investment banks.
Q3) The premium that is refunded to holders of a participating policy is called the policy dividend.
A)True
B)False
Q4) Most life insurance companies are mutuals.
A)True
B)False
Page 14
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Chapter 13: Investing Fundamentals
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125 Flashcards
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Sample Questions
Q1) All except which one of the following are good ways to acquire money for starting an investment program?
A) Pay bills first, and then save a reasonable amount of money for investment
B) Participate in an elective savings program offered by your employer
C) Make a special savings effort one month per year
D) Borrow money specifically for investment purposes
E) Take advantage of gifts, inheritances, and windfalls
Q2) Which one of the following is not a warning sign that you might be getting into credit card trouble?
A) Paying off your credit card balance off each month
B) Using your credit card to pay for small purchases
C) Taking advantage of the cash advance feature
D) Using a large number of credit cards
E) Using the cash advance feature of one credit card to occasionally pay the monthly payment on another credit card
Q3) The fees for investor services and newsletters usually range between $30 and $1,000 per year.
A)True
B)False
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Page 15
Chapter 14: Investing in Stocks
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142 Flashcards
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Sample Questions
Q1) A blue-chip stock is too speculative for most investors.
A)True
B)False
Q2) A securities exchange is a marketplace where member brokers who are representing investors meet to buy and sell securities.
A)True
B)False
Q3) Earnings per share is a corporation's after-tax earnings divided by the number of stockholders.
Earnings per share = After-tax income/Number of shares outstanding
A)True
B)False
Q4) The P-E ratio is the price of a share of stock divided by the corporation's earnings per share.
A)True
B)False
Q5) If a corporation's earnings decline, the stock's value usually increases. A)True
B)False
Q6) Why do corporations issue stock? Why do investors buy that stock?
Page 16
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Chapter 15: Investing in Bonds
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) Generally, interest on corporate bonds is paid every:
A) month.
B) three months.
C) six months.
D) nine months.
E) year.
Q2) If a bond is purchased at a price below the face value, the yield to maturity is:
A) greater than the stated interest rate.
B) the same as the stated interest rate.
C) less than the stated interest rate.
D) zero.
E) of no significance.
Q3) The only way an investor can make money on a bond investment is to hold the bond until maturity.
A)True
B)False
Q4) Bond interest payments are a tax-deductible business expense.
A)True
B)False
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Chapter 16: Investing in Mutual Funds
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138 Verified Questions
138 Flashcards
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Sample Questions
Q1) All of the following information is contained in a mutual fund's fee table, except:
A) expected return on investment.
B) management fees.
C) contingent deferred sales fees.
D) 12b-1 fees.
E) redemption fees.
Q2) Many financial planners recommend that investors pick a mutual fund with an expense ratio that is:
A) 1 percent or less.
B) between 1 and 2 percent.
C) between 2 and 3 percent.
D) between 3 and 4 percent.
E) over 4 percent.
Q3) Why do investors purchase mutual funds instead of purchasing stocks, bonds, or other investments on their own?
Q4) There are more exchange-traded funds than there are open-end mutual funds.
A)True
B)False
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Page 18
Chapter 17: Investing in Real Estate and Other Investment
Alternatives
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) Which type of REIT invests directly in properties?
A) Compound
B) Equity
C) Mortgage
D) Hybrid
E) Simple
Q2) A real estate syndicate provides professional management and unlimited liability for its members.
A)True
B)False
Q3) General partners in a real estate limited partnership bear unlimited liability.
A)True
B)False
Q4) Since first and second mortgages are risky investments, these can potentially provide relatively high rates of return.
A)True
B)False
Q5) What advantages do real estate investments offer?
Q7) Explain the relationship between syndicates and REITs. Page 19
Q6) What role can a REIT play in diversifying an individual's investment portfolio?
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Page 20
Chapter 18: Starting Early: Retirement Planning
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Sample Questions
Q1) The potential loss of buying power during inflation is what makes it so important to plan ahead for your retirement.
A)True
B)False
Q2) If a marriage lasted more than 15 years, the marital assets are generally split 50-50 if the couple divorces.
A)True
B)False
Q3) Under a 401(k) plan, you can elect to have your employer make nontaxable contributions to the plan for your benefit and reduce your salary by an offsetting amount.
A)True
B)False
Q4) When should you apply for Social Security?
A) 3 months before you retire
B) 1 year before you retire
C) 1 year after you retire
D) 10 years before you retire
E) On the day you retire
Q5) What are the key steps in retirement planning?
Page 21
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Chapter 19: Estate Planning
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Sample Questions
Q1) Which statement is not true about an ethical will?
A) It is used to pass on your values and beliefs to your heirs.
B) It is a legally binding document.
C) It dispenses emotional and spiritual wealth.
D) It requires earnest self-examination.
E) It can be prepared without an attorney's assistance.
Q2) Which of the following is an important document needed for estate planning?
A) Your driver's license
B) Your transcript from college
C) Your birth certificate
D) Your birthday cards
E) All of these documents are needed in estate planning.
Q3) Gerry Legere has died without writing a will. What is the legal term for this?
A) Probate
B) Intestate
C) Testamentary
D) Statutory
E) Codicil
Q4) Explain what a will is and what occurs at your death if you do not have one.
Q5) What are some common reasons for setting up a trust?
Page 22
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