Financial Planning
Exam Answer Key
Course Introduction
Financial Planning is an essential course that introduces students to the process of managing personal finances and achieving financial goals. The curriculum covers key topics such as budgeting, saving, investing, risk management, retirement planning, tax strategies, and estate planning. Students learn to analyze financial situations, create comprehensive financial plans, and make informed decisions to enhance their financial well-being. Emphasis is placed on practical application, ethical considerations, and the tools and techniques used by professional financial planners to guide individuals and families toward long-term financial security.
Recommended Textbook
Focus on Personal Finance An Active Approach to Help You 4th Edition by
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14 Chapters
1753 Verified Questions
1753 Flashcards
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Page 2
Jack R. Kapoor
Chapter 1: Personal Financial Planning in Action
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90 Verified Questions
90 Flashcards
Source URL: https://quizplus.com/quiz/55824
Sample Questions
Q1) Hope Appleton is trying to decide whether to keep her money in a savings account or in a mutual fund.What would you tell her to help her analyze her decision?
Answer: Students answers will vary.Suggested responses might mention gathering information based on your experience and the experiences of others and using financial planning information sources such as the internet,financial institutions (banks,credit unions,or investment companies),media sources (newspapers,magazines,television,or radio),and financial specialists (financial planners,insurance agents,credit counselors,lawyers,or tax preparers)to compare alternatives.Also,mention analyzing risks and assessing personal goals.
Q2) Annual earnings on a $500 Certificate of Deposit earning 4.50% would be
A) $20.00
B) $22.50
C) $25.00
D) $500.00
E) $545.00
Answer: B
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Chapter 2: Money Management Skills
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) When creating a personal balance sheet,which of the following is a current liability?
A) Checking account
B) Net worth
C) Student loan
D) Money your sister owes you in two years
E) Charge account balance
Answer: E
Q2) A debt ratio of 0.5 indicates
A) The balance on the mortgage = 50% of the value of the home.
B) For every dollar of net worth, debt equals $0.50.
C) For every dollar of debt, net worth equals $0.50.
D) For every dollar of take-home pay, monthly credit payments equal $0.50.
E) For every dollar of assets, monthly credit payments equal $0.50.
Answer: B
Q3) One method to spend more money is to use a direct deposit system from payroll.
A)True
B)False
Answer: False
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4
Chapter 3: Taxes in Your Financial Plan
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) Determining adjusted gross income is the final step in calculating federal income tax. A)True
B)False
Answer: False
Q2) The maximum amount (in 2010)that an individual can give another in a year without being subject to federal taxes is
A) All gifts are taxable.
B) $10,000.
C) $13,000.
D) $15,000.
E) No gifts are taxable.
Answer: C
Q3) The adjusted gross income is increased by the itemized or standard deduction. A)True
B)False
Answer: False
Q4) What is the difference between tax-exempt income and tax-deferred income?
Answer: Tax-exempt income is never subject to tax.Tax-deferred income is income that will be taxed in the future.
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Chapter 4: Financial Services: Savings Plans and Payment Account
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) If a check is lost or stolen,you should use a
A) Stop-payment order.
B) Stale check.
C) Bank statement.
D) Blank endorsement.
E) Deposit ticket.
Q2) Opal earned 6% in her savings account.If she is in the 25% tax bracket,what is her after-tax savings rate of return?
A) 2%
B) 2.5%
C) 4.5%
D) 5%
E) 25%
Q3) How do inflation and taxes affect earnings on savings?
Q4) The only question you should ask yourself when selecting a financial service provider is "Where can I get the best return on my savings?
"
A)True
B)False
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Chapter
Sources, and Costs
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170 Verified Questions
170 Flashcards
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Sample Questions
Q1) Fredrick received a $1,400 loan from the bank for a new appliance.The bank is using the simple interest formula for this two-year,8% loan.What is his total interest?
A) $16
B) $80
C) $112
D) $224
E) $1,416
Q2) Rich received a $5,000 loan from the bank.The manager set up a 6% loan using the simple interest formula for one year,but with two payments.What is the interest for his second payment?
Q3) The debt-to-equity ratio is calculated by dividing your total liabilities,including your mortgage,by your net worth.
A)True
B)False
Q4) The most expensive loans are often provided by parents or other family members.
A)True
B)False
Q5) Compare closed-end credit with open-end credit.
Q6) What makes a home equity loan different from other loans?
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Chapter 6: Consumer Purchasing Strategies and Wise
Buying of Motor Vehicles
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) The largest fixed expense associated with a new automobile is A) Depreciation.
B) Insurance.
C) Interest on an auto loan.
D) License and registration.
E) Maintenance and repairs.
Q2) If you are somewhat interested in a specific vehicle,you should provide a small deposit so the car seller will hold the vehicle for you.
A)True
B)False
Q3) All of the following are fixed operating costs for a vehicle except A) Depreciation.
B) Insurance.
C) Interest on an auto loan.
D) License and registration.
E) Maintenance and repairs.
Q4) The settlement of a difference by a mediator is legally binding. A)True
B)False
Q5) What are five factors that affect the operating costs of a vehicle?
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Chapter 7: Selecting and Financing Housing
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) The opportunity to have another person take over rent payments and live in the rental unit is called (a)
A) Lease.
B) Lessee.
C) Lessor.
D) Rental agreement.
E) Subletting.
Q2) Angela wanted to rent an apartment,so her landlord required her to sign a lease.The lease is a legal document that defines the conditions of her rental agreement.
A)True
B)False
Q3) Which of the following is a form of housing in which the units are owned by a nonprofit organization?
A) Condominium
B) Cooperative housing
C) Manufactured home
D) Single-family dwelling
E) Townhouse
Q4) Identify three services that a real estate agent can provide.
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Chapter 8: Home and Automobile Insurance
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) Another name for a homeowner's insurance policy is an umbrella policy.
A)True
B)False
Q2) Two main types of risk are related to your home and your vehicle.What are these main risks?
Q3) An insurance program
A) Should be constant through one's life.
B) Should change along with needs and goals.
C) Should minimize personal property and liability risks.
D) Should be constant through one's life, and should minimize personal property and liability risks.
E) Should minimize personal property and liability risks, and change along with one's needs and goals.
Q4) Risk avoidance is an organized plan for protecting yourself,your family,and your property.
A)True
B)False
Q5) What is the purpose of a personal property floater?
Q6) Discuss what 100/300/50 means with relation to liability coverage for automobile insurance.
Page 10
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Chapter 9: Health and Disability Income Insurance
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118 Verified Questions
118 Flashcards
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Sample Questions
Q1) Xavier's employer offers a health plan that stresses preventive services and covers routine immunizations and checkups,screening programs,and diagnostic tests.What kind of plan does his employer offer?
A) Health maintenance organization (HMO)
B) Private insurance company
C) Hospital and medical service plan
D) Medicare
E) Preferred provider organization (PPO)
Q2) A flexible spending account is funded by an employer.
A)True
B)False
Q3) The set amount that you must pay toward medical expenses before the insurance company pays benefits is called
A) Reimbursement.
B) Out-of-pocket limit.
C) Deductible.
D) Internal limit.
E) Indemnity.
Q4) How are FSAs and HSAs similar?
Q5) What is guaranteed renewability?
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Chapter 10: Financial Planning With Life Insurance
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Pam just started working at XYZ Widget Company and finally wants to get insurance coverage.She does not want to take a medical exam to get coverage because she has some underlying health conditions and is concerned that she might not qualify for a policy.Which of the following life insurance policies should she apply for?
A) Adjustable life
B) Group life
C) Limited life
D) Universal life
E) Variable life
Q2) Purchasing a life insurance policy is a basic and inexpensive task.
A)True
B)False
Q3) Jeanne wants to purchase a life insurance policy with guaranteed premiums.What kind of policy would she want to purchase?
A) Dividend policy
B) Nonparticipating policy
C) Mutual policy
D) Participating policy
E) Stock policy
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Page 12
Chapter 11: Investing Basics and Evaluating Bonds
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) Younger investors tend to invest in more growth-oriented investments than older investors.
A)True
B)False
Q2) Investors choose safe investments because they know there is a moderate chance that these investments will become worthless.
A)True
B)False
Q3) A _____________ is an employer-sponsored retirement account.
A) TRA account
B) 301(a) account
C) 509(re) account
D) 401(k) account
E) 321(a) account
Q4) Describe asset allocation and its importance.
Q5) An easy way to determine what percentage of your assets should be invested in growth investments is to take your age and subtract it from 80.
A)True
B)False
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Chapter 12: Investing in Stocks
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) Before investing in a company's stock,an investor should analyze the industry in which the company operates.
A)True
B)False
Q2) Gavin has owned MNOP stock for several years and has seen the stock increase in value from $20 to $35.He wants to "lock in" his gains,so he needs to place an order that will sell his stock at the next available opportunity after its market price drops to $33.What kind of order should he use?
A) Current sale order.
B) Limit order.
C) Market order.
D) Stop-loss order.
E) None of these.
Q3) The book value of a stock is equal to the result of total assets less total liabilities divided by the number of outstanding shares of common stock.
A)True
B)False
Q4) Is the Internet a valid tool to use for evaluating stocks? Why or why not?
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Chapter 13: Investing in Mutual Funds
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) Contrast a load fund and a no-load fund.
Q2) An aggressive growth fund invests in companies with a long history of paying dividends.
A)True
B)False
Q3) How is the price per share for open-end mutual funds determined?
Q4) Which of the following is a fund that invests in stocks or securities contained in a specific stock or securities index?
A) Closed-end fund
B) Exchange-traded fund
C) Net asset value fund
D) No-load fund
E) Open-end fund
Q5) Explain the taxability of reinvested income dividends in a mutual fund.
Q6) For individuals,stocks and bonds are safer choices than mutual funds because money is pooled from many investors for mutual funds.
A)True
B)False
Q7) Describe the investment strategy of a socially responsible fund.
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Chapter 14: Starting Early: Retirement and Estate Planning
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) If you die intestate,your beneficiaries will receive your estate.
A)True
B)False
Q2) Jason is updating his estate planning and wants to set up the legal document to leave half of the adjusted gross estate to his wife.He is writing a(n)
A) Exemption trust will.
B) Guardian will.
C) Simple will.
D) Stated amount will.
E) Traditional marital share will.
Q3) Annabelle works at Acme Cleaning Company.When she retires,her employer's health insurance plan and Medicare should cover all of her medical expenses.
A)True
B)False
Q4) If a will is found to be invalid,the result is called in-probate.
A)True
B)False
Q5) Under what circumstances would a rollover IRA be appropriate?
Q6) What information might you want to include in a letter of last instruction?
Page 16
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