Financial Literacy
Final Exam Questions
Course Introduction
Financial Literacy is designed to equip students with the essential knowledge and skills necessary to make informed and effective decisions regarding their personal finances. The course covers fundamental topics such as budgeting, saving, investing, credit management, taxes, insurance, and retirement planning. Through practical examples and real-world scenarios, students learn how to set financial goals, analyze various financial products, and understand the consequences of financial decisions. By the end of the course, students will be empowered to navigate the financial challenges of everyday life and build a solid foundation for long-term financial well-being.
Recommended Textbook
Personal Finance 12th Edition by E. Thomas Garman
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3013 Verified Questions
3013 Flashcards
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Chapter 1: Understanding Personal Finance
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Sample Questions
Q1) According to economic theory,people will seek additional utility as long as marginal utility exceeds marginal cost.
A)True
B)False
Answer: True
Q2) The rate of increase in prices of items purchased by a particular individual is called the
A) federal funds rate.
B) consumer confidence index.
C) personal inflation rate.
D) consumer price index.
Answer: C
Q3) The amount you pay to purchase a health care plan is called the deductible.
A)True
B)False
Answer: False
Q4) Compound interest will produce larger investment values than simple interest.
A)True
B)False
Answer: True
Page 3
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Chapter 2: Career Planning
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Sample Questions
Q1) High-demand occupations tend to pay low salaries.
A)True
B)False
Answer: False
Q2) A _____ is one where a worker is expected to represent their employer on call day and night.
A) career
B) STEM career
C) internship
D) no-limits job
Answer: D
Q3) The ____ is a highly regarded interest inventory.
A) Strong Interest Inventory
B) Stanford-Binet Assessment
C) Likert Inventory
D) Simpson Test of Preferences (STOP)
Answer: A
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Page 4
Chapter 3: Financial Statements,tools,and Budgets
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151 Flashcards
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Sample Questions
Q1) The basis for financial planning is (are)
A) a budget.
B) personal values.
C) a balance sheet.
D) goals.
Answer: B
Q2) Budgeting is narrower in scope than overall financial planning as it is primarily concerned with projecting future income and expenditures over a period of time.
A)True
B)False
Answer: True
Q3) The formula for calculating net worth is
A) income minus expenses.
B) assets minus liabilities.
C) income minus liabilities.
D) assets minus expenses.
Answer: B
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Chapter 4: Managing Income Taxes
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Sample Questions
Q1) Estimating taxes requires taxpayers to send quarterly installment payments to the IRS.
A)True
B)False
Q2) Section 529 college savings plans are state-sponsored.
A)True
B)False
Q3) The most commonly used defined-contribution plan is the Roth IRA.
A)True
B)False
Q4) A way to defer income taxes to later years is to
A) contribute to individual retirement accounts.
B) defer income to a later year.
C) contribute to defined-contribution retirement plans.
D) all of these.
Q5) Cash contributions to qualified organizations,such as churches,schools,and other qualifying charities,require a receipt for a contribution of $250 or more.
A)True
B)False
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Chapter 5: Managing Checking and Savings Accounts
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Sample Questions
Q1) According to financial advisers,a person with monthly living expenses of $2,500 should maintain readily accessible savings of at least
A) $2,500.
B) $5,000.
C) $7,500.
D) $10,000.
Q2) A ______ is a firm that notifies all companies with which you have debit and credit cards in the event that the cards are lost.
A) card registration service
B) truth-in-savings service
C) money-market fund.
D) account monitoring service.
Q3) An asset management account is a multiple-purpose,coordinated package that provides a wide variety of financial services.
A)True
B)False
Q4) A written stop-payment order is valid for up to three years.
A)True
B)False
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Chapter 6: Building and Maintaining Good Credit
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Sample Questions
Q1) Divorce could affect the creditworthiness of both partners.
A)True
B)False
Q2) A credit applicant is required by federal regulations to disclose all of his or her sources of income.
A)True
B)False
Q3) You may still owe money after repossession if there is a
A) deficiency balance.
B) contingency clause in your contract.
C) foreclosure agreement.
D) Chapter 7 bankruptcy.
Q4) The most commonly used forms of credit by consumers are loans and credit cards.
A)True
B)False
Q5) Chapter 13 of the Bankruptcy Act provides for an immediate liquidation of assets.
A)True
B)False
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Chapter 7: Credit Cards and Consumer Loans
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160 Flashcards
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Sample Questions
Q1) Single-payment,open-ended,and service credit are lumped together under the category of
A) installment credit.
B) closed-end credit.
C) noninstallment credit.
D) revolving credit.
Q2) Which of the following should not be done when you find an error on your credit card statement?
A) Pay the remaining amount owed in full to isolate a disputed item.
B) Withhold payment for the disputed item(s).
C) Send a written notice of the error to the credit card issuer.
D) Send all original documentation to the credit card issuer.
Q3) Service credit normally carries no interest.
A)True
B)False
Q4) On an installment loan,the APR will always be higher than the add-on rate applied. A)True
B)False
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Chapter 8: Vehicles and Other Major Purchases
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Sample Questions
Q1) A technique used by an auto dealer whereby an offer for a traded-in vehicle is much higher than its true value in order to get a buyer to accept a too high price for the vehicle being purchased is called
A) a dealer holdback.
B) high-balling.
C) low-balling.
D) a rebate.
Q2) Low-balling generally occurs just before the close of a sale.
A)True
B)False
Q3) Buying on impulse not only results in higher spending but failure to obtain what is really wanted.
A)True
B)False
Q4) Service contracts are also called ____ warranties.
A) full
B) implied
C) extended
D) limited
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Chapter 9: Obtaining Affordable Housing
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Sample Questions
Q1) The FHA mortgage insurance premium can be paid up front in a lump-sum payment,or it can be financed.
A)True
B)False
Q2) The portion of a mortgage payment that is applied to the principal increases quickly in the early years of the loan.
A)True
B)False
Q3) With an assumable mortgage,the buyer generally pays a down payment equal to the seller's equity in the home.
A)True
B)False
Q4) One formally applies for a mortgage loan only after signing a purchase contract. A)True
B)False
Q5) The damage deposit is an amount paid in advance to a landlord for normal wear and tear on rental property.
A)True
B)False
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Chapter 10: Managing Property and Liability Risk
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Sample Questions
Q1) Which of the following HO forms is especially written renters?
A) HO-3
B) HO-4
C) HO-6
D) HO-8
Q2) is the auto insurance coverage that would yield the most significant savings if eliminated.
A) Collision
B) Towing
C) Comprehensive
D) Uninsured motorist
Q3) The person buying the insurance contract is called the insurer.
A)True
B)False
Q4) Homeowner's insurance includes
A) property coverage.
B) liability coverage.
C) life insurance coverage.
D) both property coverage and liability coverage.
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Chapter 11: Managing Health Expenses
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126 Flashcards
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Sample Questions
Q1) HMOs generally require that your primary care physician must order all procedures and approve referrals to medical specialists.
A)True
B)False
Q2) In a dual-income household where both employers provide a health care plan,it is important to choose to be covered under the plan that provides ____ and is ____.
A) more protection;less expensive
B) tuition support;partially subsidized
C) life and dental insurance;more costly
D) disability insurance;less expensive
Q3) Medicare (Part B)requires a monthly premium for coverage.
A)True
B)False
Q4) It is becoming increasingly common for health care plans to offer lower rates to persons with a healthy lifestyle.
A)True
B)False
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Chapter 12: Life Insurance Planning
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Sample Questions
Q1) If Brent is concerned about not being able to pay his life insurance premium should he become disabled,he should consider a policy with
A) a waiver of premium.
B) cash dividends.
C) a multiple indemnity clause.
D) a guaranteed insurability option.
Q2) A modest funeral can easily cost more than $10,000.
A)True
B)False
Q3) Younger families should be wary of using retirement money for living expenses after the death of an income provider.
A)True
B)False
Q4) The premiums for newly purchased cash-value policies are always higher than those for term policies providing the same amount of coverage.
A)True
B)False
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Chapter 13: Investment Fundamentals
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Sample Questions
Q1) Typically the highest commissions are charged on investments in A) stocks.
B) bonds.
C) collectibles.
D) real estate.
Q2) ____ is not part of the steps in the investment planning process.
A) Determine current amount of investment assets
B) Change asset allocations monthly
C) Identify what could stop you from succeeding
D) Rebalance investment portfolio regularly
Q3) When comparing similar investments,your objective is to earn the best after-tax return.
A)True
B)False
Q4) Bear markets on average last about
A) 9 months.
B) 24 months.
C) 18 months.
D) 14 months.
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Chapter 14: Investing in Stocks and Bonds
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Sample Questions
Q1) A bond selling at more than its face value is selling at a premium.
A)True
B)False
Q2) Typically,preferred stockholders do receive voting rights.
A)True
B)False
Q3) The interest earned on a ____ will equal the inflation rate plus a fixed assigned rate of return.
A) revenue bond
B) tax-exempt bond
C) Treasury bill
D) I-bonds
Q4) U.S.Government TIPS bonds guarantee that the investor's return will outpace inflation.
A)True
B)False
Q5) A stock with a beta that is less than 1.0 or even a negative beta is called a defensive stock.
A)True
B)False
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Chapter 15: Investing Through Mutual Funds
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172 Flashcards
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Sample Questions
Q1) A charge that often decreases 1 percent each year the investor owns shares in the fund is called a
A) redemption fee.
B) 12b-1 fee.
C) management fee.
D) back-end load.
Q2) A mutual fund's ______ can allow investors to have amounts as low $25 per month transferred from their bank account to purchase shares.
A) automatic investment program
B) exchange privilege
C) systematic withdrawal plan
D) beneficiary designation
Q3) Bond funds are always low-risk investments.
A)True
B)False
Q4) Mutual funds have distinct features that make this form of investing both unique and investor-friendly.
A)True
B)False
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Chapter 16: Real Estate and High-Risk Investments
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Sample Questions
Q1) Suni invested $100,000 in rental property for which she received $10,000 rent.She will have to pay taxes on the full $10,000 rental income.
A)True
B)False
Q2) Investors in real estate enjoy a high level of liquidity.
A)True
B)False
Q3) Raw land and residential lots are the safest forms of real estate investment.
A)True
B)False
Q4) As a conservative investor,you can profit by selling a call on stock already owned,giving the buyer the right to purchase your shares at a fixed strike price for a time period.
A)True
B)False
Q5) Commercial property purchased to rent to other is designed for residential living such as houses,duplexes,apartments,mobile homes,and condominiums.
A)True
B)False
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Chapter 17: Retirement Planning
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Sample Questions
Q1) If the spouse waives his or her survivor's benefits in a defined-benefit retirement plan,the worker's retirement benefit will increase.
A)True
B)False
Q2) If the Social Security (FICA plus Medicare)tax rate is 7.65 percent,how much total Social Security tax would be paid by an employee earning $50,000 and his or her employer?
A) $3,825
B) $4,797
C) $7,650
D) $15,300
Q3) All of your employment income is subject to the FICA tax.
A)True
B)False
Q4) Living trusts take effect during the grantor's lifetime.
A)True B)False
Q5) If you have a nonworking spouse,that person may contribute to a spousal IRA.
A)True
B)False
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