Financial Literacy
Final Exam Questions
Course Introduction
Financial Literacy is a foundational course designed to equip students with the essential knowledge and skills to make informed and effective decisions regarding their personal finances. The course covers topics such as budgeting, saving, investing, credit management, loans, insurance, retirement planning, and understanding financial products and services. By exploring real-world scenarios and practical tools, students will learn how to set financial goals, manage risks, and develop strategies to build and maintain financial well-being throughout their lives.
Recommended Textbook
PFIN 6 6th Edition by Randall Billingsley
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15 Chapters
1162 Verified Questions
1162 Flashcards
Source URL: https://quizplus.com/study-set/2610 Page 2
Chapter 1: Understanding the Financial Planning Process
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110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/51975
Sample Questions
Q1) People with low incomes tend to be:
A)educated.
B)very old.
C)childless.
D)married.
E)very skillful.
Answer: B
Q2) An individual's salary will be lower if he or she lives in a(n)____________ area.
A)metropolitan
B)overpopulated
C)industrial
D)rural
Answer: D
Q3) The best way to achieve your financial objectives is to ____________
A)have a luxurious standard of living.
B)spend your money at once to reach your objectives swiftly.
C)develop a sound financial plan.
D)create a good tax evasion strategy.
Answer: C
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Page 3
Chapter 2: Using Financial Statements and Budgets
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102 Verified Questions
102 Flashcards
Source URL: https://quizplus.com/quiz/51976
Sample Questions
Q1) Construct a balance sheet using the following information.Be sure the format is correct.(Show all work.)
\[\begin{array} { | l | l | }
\hline \text { Cash on hand } & \$ 500 \\
\hline \text { Bank credit card balance } & 750 \\
\hline \text { Taxes due } & 500 \\
\hline \text { Utility bills (overdue) } & 120 \\
\hline \text { Auto loan balance } & 6,000 \\
\hline \text { Mortgage } & 45,000 \\
\hline \text { Primary residence } & 60,000 \\
\hline \text { Jewelry } & 1,200 \\
\hline \text { Stocks } & 6,000 \\
\hline \text { Coin collection } & 2,500 \\
\hline \text { 2001 Toyota } & 7,500 \\
\hline \text { Auto payment } & 250 \\
\hline
\end{array}\]
Answer: 11ea6c27_dbe9_acaa_9716_abf5cc278b8f_TB1266_00
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Chapter 3: Preparing Your Taxes
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81 Verified Questions
81 Flashcards
Source URL: https://quizplus.com/quiz/51977
Sample Questions
Q1) For those under the age of 65,medical and dental expenses may be included as itemized deductions:
A)when they exceed 4% of the adjusted gross income.
B)up to a maximum of $7,500 per individual per tax year.
C)only if they do not exceed 7.5% of the gross income.
D)only for amounts in excess of 10% of the adjusted gross income.
E)when they exceed 2% of the taxable income.
Answer: D
Q2) Dwayne and Gayle were divorced on September 29.They have not remarried since and have no dependents.Their filing status for the year will be married filing separately since they were married for more than half of the year.
A)True
B)False
Answer: False
Q3) Tax credits are dollar for dollar reductions in taxable income.
A)True
B)False
Answer: False
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5
Chapter 4: Managing Your Cash and Savings
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83 Verified Questions
83 Flashcards
Source URL: https://quizplus.com/quiz/51978
Sample Questions
Q1) Compound interest means that a savings account earns interest on the interest previously earned.
A)True
B)False
Q2) Money market deposit accounts:
A)allow free unlimited check writing every month.
B)are federally insured.
C)have floating maturity dates.
D)are offered only by credit unions.
E)pay the lowest interest rates of any bank accounts with check-writing facility.
Q3) Harry received a scholarship of $2,000.He plans to invest this money for five years at 8%,compounded annually.If he accomplishes this,Harry will have an ending balance of: (Use time value tables or a financial calculator.Select the closest answer.)
A)$2,160.
B)$2,520.
C)$2,608.
D)$2,938.
E)$3162.
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6
Chapter 5: Making Automobile and Housing Decisions
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72 Verified Questions
72 Flashcards
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Sample Questions
Q1) The Federal Housing Administration _____ to high loan-to-value ratio mortgages.
A)guarantee
B)insurance
C)subsidies
D)grants
E)tax shelters
Q2) ____________ are ongoing costs of home ownership.
A)Down payments
B)Closing costs
C)Taxes on capital gains
D)Property taxes and insurance
Q3) A real estate sales contract will include:
A)the amount you have paid as an earnest money deposit.
B)the terms of a mortgage loan taken from a third party.
C)the future value of similar properties in foreign countries.
D)the movement in the value of the property over the last 20 years.
E)the current value of the properties in the neighboring locations.
Q4) Judy has $2,000 for a down payment on a vehicle and she can afford monthly payments of $400.If lenders are currently offering 6 percent interest on 5-year loans,what is the maximum price Judy can pay for a vehicle?
Page 7
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Chapter 6: Using Credit
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113 Verified Questions
113 Flashcards
Source URL: https://quizplus.com/quiz/51980
Sample Questions
Q1) _____ cards offer the cardholder a way to contribute to a worthy cause and are sometimes described as "credit cards with a cause."
A)Student
B)Debit
C)Credit
D)Affinity
E)Rebate
Q2) The key to creditworthiness is to maintain your debt safety ratio at 50 percent or above.
A)True
B)False
Q3) People who let their credit balances build up are mortgaging their future.
A)True
B)False
Q4) An individual's credit bureau file often includes information about his or her political and religious affiliations in addition to his or her financial information.
A)True
B)False
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Page 8
Chapter 7: Using Consumer Loans
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85 Verified Questions
85 Flashcards
Source URL: https://quizplus.com/quiz/51981
Sample Questions
Q1) The Rule of 78s is used to calculate the ____________ when an installment loan is paid off early.
A)APR
B)balance due
C)prepayment penalty
D)basic cost of money
Q2) The repayment of the principal of installment loans is made in a lump sum,and the repayment period of installment loans is six to twelve months.
A)True
B)False
Q3) Which of the following is true of loan collateral?
A)Loans secured by collateral always have higher finance charges than unsecured loans.
B)Collateral is an item of value used to secure the principal portion of a loan.
C)Collateral is always required by banks to lend to customers with good credit ratings.
D)Collateral is an item of value used to secure the interest portion of a loan.
E)Loans are secured by collateral that is readily marketable at a price high enough to cover the interest portion of the loan.
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Chapter 8: Insuring Your Life
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85 Verified Questions
85 Flashcards
Source URL: https://quizplus.com/quiz/51982
Sample Questions
Q1) Nonforfeiture rights guarantee that a policy owner will not lose his or her policy's
A)face value
B)death benefits for survivors
C)cash value
D)premium refunds
E)premium reductions
Q2) Which of the following types of insurance policies provides temporary coverage for a set period?
A)Universal life insurance policy
B)Whole life insurance policy
C)Variable life insurance policy
D)Term life insurance policy
E)Extended life insurance policy
Q3) The basic purpose of insurance is to _____.
A)protect your health
B)protect yourself from economic losses
C)supplement your income
D)shield you from bad decisions
E)protect yourself from non-financial losses
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Chapter 9: Insuring Your Health
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69 Verified Questions
69 Flashcards
Source URL: https://quizplus.com/quiz/51983
Sample Questions
Q1) A ___________ covers the cost of visits to a doctor's office or for a doctor's hospital visits,including consultation with a specialist.
A)surgical expense insurance
B)hospitalization insurance policy
C)elective surgery insurance
D)regular medical expense insurance
Q2) Living a healthy lifestyle is an example of loss prevention and control.
A)True
B)False
Q3) Workers' compensation insurance will make compensation payments to an injured worker _____.
A)only if he has been hurt on the job
B)only if he cannot prove negligence on the part of his employer
C)only if the worker has a take-home salary of $5,000 or more
D)only if his or her spouse is unemployed
E)only if the worker has a minimum of four dependents
Q4) Premiums for workers' compensation insurance are paid by the employees.
A)True
B)False
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Chapter 10: Protecting Your Property
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48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/51984
Sample Questions
Q1) A captive agent is:
A)an insurance agent who represents only one insurance company.
B)a federal insurance agent who can sell low-cost flood insurance coverage.
C)an independent agent who can insure homeowners and tenants together for flood insurance.
D)an automobile insurance agent who insures only other insurance agents.
E)a claims adjustor who assesses the probability of law violations during an investigation.
Q2) Donna,who is single and 30 years old,received several speeding tickets recently and was shocked by the effect they had on her auto insurance.Donna drives a 2002 Pontiac Firebird.She is currently not covered by health insurance,has an emergency fund of $25,000,an income of $100,000 per year,and an investment portfolio of $230,000.She is trying to reduce the price of her auto insurance.Which of the following actions is most likely to help Donna reduce the price of her auto insurance?
A)Maintaining her liability limits at current levels
B)Raising her medical payments coverage
C)Raising her deductible from $250 to $1,000
D)Maintaining her collision coverage at current levels
E)Raising her collision coverage by $10,000
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Page 12
Chapter 11: Investment Planning
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79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/51985
Sample Questions
Q1) Discount brokers will:
A)execute orders at the best possible price.
B)give commission to the investment bankers.
C)issue prospectus of the new issue in the primary market.
D)provide finance to underwrite the shares issued for the first time.
E)maintain a minimum balance of unsold shares of loss-making corporations.
Q2) A stock portfolio containing 80 percent common stocks is appropriate for:
A)a retired couple who needs a stable return.
B)a divorced middle-aged mother who needs a high current income.
C)a blue-collar,two-income family with five kids.
D)a young worker with a secure job putting money aside for retirement.
E)a couple in their mid-50s with dependent parents.
Q3) Clara's portfolio is worth $200,000 and her portfolio consists of common stocks worth $56,000.Therefore,equity constitutes _____ of Clara's portfolio.
A)10%
B)33%
C)28%
D)56%
E)61%
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Page 13
Chapter 12: Investing in Stocks and Bonds
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86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/51986
Sample Questions
Q1) One would prefer a stock with steadily increasing earnings per share and return on equity.
A)True
B)False
Q2) What is the effect of an increase in the current price of an investment?
A)The approximate expected yield will increase.
B)The approximate expected yield will decrease.
C)The approximate expected yield will remain the same.
D)The average annual current income will increase.
E)The average annual current income will decrease.
Q3) Net profit margin is a key measure of profitability that relates the net profits of a firm to its sales.
A)True B)False
Q4) When interest rates rise,bond prices will:
A)increase and then return to a steady price.
B)rise.
C)fall.
D)vary unpredictably.
E)not be affected.
Page 14
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Chapter 13: Investing in Mutual Funds, ETFS and Real Estate
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48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/51987
Sample Questions
Q1) Which of the following is true of real estate investments?
A)Real estate investments move in tandem with stocks.
B)Real estate investments are considered active investments for income tax purposes.
C)Real estate investments lead to lower taxes due to tax shelter.
D)Real estate investments have less scope for financial leverage.
E)Real estate investments cannot depreciate.
Q2) An investor with a small amount of money should stick to using load funds instead of no-load funds.
A)True
B)False
Q3) A major benefit of mutual funds to small investors is diversification.
A)True
B)False
Q4) A(n)_____ actually runs the portfolio and makes the buy and sell decisions.
A)transfer agent
B)distributor
C)investment advisor
D)regulator
E)custodian
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Chapter 14: Planning for Retirement
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48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/51988
Sample Questions
Q1) An annual contribution of $3,000 to a retirement account that earns 6 percent will be worth approximately _____ in 20 years.(Use the table of future value annuity factors or a financial calculator.Round off to the nearest tens place.)
A)$60,000
B)$96,780
C)$100,000
D)$110,360
E)$192,600
Q2) Which of the following pension plans enables an employee to estimate what his or her pension payment would be upon retirement?
A)A Keogh plan
B)A profit-sharing plan
C)A defined benefit plan
D)A defined contribution plan
E)A 401(k)plan
Q3) Workers who elect to retire early-at age 62-will receive reduced Social Security retirement benefits.
A)True
B)False
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Page 16
Chapter 15: Preserving Your Estate
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53 Verified Questions
53 Flashcards
Source URL: https://quizplus.com/quiz/51989
Sample Questions
Q1) The taxable estate is less than the adjusted gross estate.
A)True
B)False
Q2) The transfer of an estate (after death)by an individual to the _____ of the individual will result in the most favorable tax treatments.
A)children
B)spouse
C)parents
D)employer
E)siblings
Q3) A trustee is the person who writes a will.
A)True
B)False
Q4) The unified rate schedule applies to federal _____ taxes.
A)sales and gift
B)gift and service
C)gift and estate
D)infrastructure and estate
E)estate and professional
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