Financial Planning
Exam Bank
Course Introduction
Financial Planning is a comprehensive course designed to equip students with the knowledge and skills necessary to effectively manage personal and corporate finances. The course covers fundamental concepts such as budgeting, savings, investments, risk management, retirement planning, tax strategies, and estate planning. Through real-world case studies and practical exercises, students learn how to develop financial plans tailored to different goals and life stages, analyze financial statements, and make informed decisions to enhance financial well-being. Upon completion, students will be prepared to create and assess strategic financial plans for individuals and organizations, ensuring long-term financial security and growth.
Recommended Textbook
Personal Financial Planning 14th Edition by Randy
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15 Chapters
2516 Verified Questions
2516 Flashcards
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Billingsley
Chapter 1: Understanding the Financial Planning Process
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) Effective financial plans are both economically and psychologically sound.
A)True
B)False
Answer: True
Q2) The government employs monetary and fiscal policy to help foster a [fast growing economy | no growth economy].
Answer: C
Q3) A ____ is a designation earned by financial planners after completing required courses of study.
A)MBA
B)LUTCF
C)CFP
D)E.A.
E)CLU
Answer: C
Q4) [Disney stock | Your car] would be considered a financial asset.
Answer: A
Q5) A stronger economy leads to [higher employment | lower employment].
Answer: A
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Chapter 2: Using Financial Statements and Budgets
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166 Verified Questions
166 Flashcards
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Sample Questions
Q1) Personal financial statements help you identify potential financial problems.
A)True
B)False
Answer: True
Q2) Your auto loan payments would be listed as an expense on the income and expense statement.
A)True
B)False
Answer: True
Q3) Personal balance sheet liabilities should be recorded at their
A)original outstanding balance.
B)year-end outstanding balance.
C)average outstanding balance.
D)current outstanding balance.
E)none of these.
Answer: D
Q4) Four categories,accounting for 75% of consumer spending,include [clothing | housing].
Answer: B
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Chapter 3: Preparing Your Taxes
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) Russ and Lois got married December 30.Although they were single for most of the year,they can legally file as married taxpayers in the year of the wedding.
A)True
B)False
Answer: True
Q2) Municipal bond investments typically provide tax-free interest income.
A)True
B)False
Answer: True
Q3) You have owned and lived in your home for 8 years.Now you have received an excellent promotion,but you will have to sell your home and move to another community.You expect to realize a capital gain of $100,000 on the home's sale.The capital gain will
A)be taxable as ordinary income.
B)be taxable at the 15% tax bracket.
C)be taxable at the appropriate long-term capital gains rate.
D)not be taxable because the home was your principal residence.
E)not be taxable because this is a job-related move.
Answer: D
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Page 5
Chapter 4: Managing Your Cash and Savings
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175 Verified Questions
175 Flashcards
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Sample Questions
Q1) Series EE savings bonds may be redeemed [any time after the first 12 months | only at the maturity date].
Q2) Asset management accounts (AMAs)are offered by brokerage firms and are protected by the Securities Investor Protection Corporation.
A)True
B)False
Q3) Money market mutual funds
A)allow check writing.
B)are not federally insured.
C)pool the funds of many small investors.
D)pay interest rates of 1 to 3 percent higher than those paid on regular savings accounts.
E)all of these.
Q4) A regular savings account is a time deposit.
A)True
B)False
Q5) A [checking | savings] account is called a demand deposit account.
Q6) Money market deposit accounts [are | are not] insured by an agency of the federal government.
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Chapter 5: Making Automobile and Housing Decisions
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) If the maximum loan-to-value ratio that a lender will accept on a $100,000 home is 90 percent,then the borrower must make
A)a minimum down payment excluding closing costs of $10,000.
B)a minimum down payment including closing costs of $10,000.
C)closing costs plus points of $10,000.
D)a maximum down payment of $10,000.
E)none of these.
Q2) Other factors being equal,fixed-rate mortgages will have higher interest rates initially than adjustable-rate mortgages.
A)True
B)False
Q3) As home prices have fallen in recent years,the rent ratio
A)has increased and rent affordability has increased
B)has decreased and rent affordability has decreased
C)has increased and rent affordability has decreased
D)has decreased and rent affordability has increased
Q4) With most ARMs,the interest rate over the lifetime of the loan can [increase to any level | increase only up to the pre-stated maximum].
Q5) [Lessor | Lessee] is another term for landlord.
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Chapter 6: Using Credit
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) Never adding up all your bills is one of the signs that you may be headed for serious credit problems.
A)True
B)False
Q2) A ____ is an agency that provides credit information about individual borrowers to lenders.
A)credit bureau
B)consumer bureau
C)credit statement
D)bank
E)credit scoring house
Q3) When canceling a credit card,you should cut up the card and ____ that you are canceling your account.
A)inform the issuer in writing
B)call the issuer and explain
C)inform the credit bureau in writing
D)call the credit bureau and explain
E)all of the above
Q4) Using [credit | savings] to handle financial emergencies is the recommended choice.
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Chapter 7: Using Consumer Loans
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Student loans are not dischargeable in Chapter 13 bankruptcy proceedings.
A)True
B)False
Q2) In order to continue receiving student loans,the student must be making satisfactory progress in his academic program.
A)True
B)False
Q3) If the add-on method is used to calculate a finance charge of $150.80 on a $2,200 loan,the amount to be repaid is $2,200.
A)True
B)False
Q4) A consumer loan probably would not be used to A)purchase an auto.
B)pay for college tuition.
C)consolidate several loans into one.
D)finance a special vacation.
E)buy back-to-school clothes.
Q5) Borrowing from relatives is [highly | seldom] recommended by financial advisors.
Q6) A 529 plan is a [savings | lending] plan.
Q7) It is [legal | illegal] for a lender to charge a prepayment penalty.
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Chapter 8: Insuring Your Life
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) If life insurance is convertible,the policy can be
A)transferred to the life of another person.
B)exchanged for cash.
C)changed to health or disability protection
D)changed to another type of life insurance.
E)revised as needed.
Q2) The needs analysis method is the most accurate approach to determining the proper amount of life insurance to buy.
A)True
B)False
Q3) The settlement option chosen by most beneficiaries is A)lump sum.
B)interest only.
C)fixed amount.
D)fixed time.
E)life income.
Q4) The most accurate way to determine how much life insurance you need is to use the [multiple-of-earnings | needs analysis] method.
Q5) Insurance is a tool that can lessen [economic | accident] risk.
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Chapter 9: Insuring Your Health
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148 Flashcards
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Sample Questions
Q1) Gabe is 58 years old and has been dependent on a cane for a couple of years.Gabe fears that he may need long-term care services some day in the future.His net worth is $400,000 and he receives $50,000 per year in a pension.He considers himself to be in excellent health and has never had a serious health scare like a heart attack,stroke,or cancer.He eats lots of bran and exercises regularly.Which of the following policies would you recommend to Gabe?
A)Gabe needs a disability income policy.
B)Gabe should buy a long-term care policy with a long elimination period, lifetime benefits, and a COLA.
C)Gabe should buy a long-term care policy with a five-year limit and short elimination period without a COLA.
D)Gabe doesn't need disability insurance and probably can't qualify for long-term care insurance.
E)Gabe can qualify for Medicaid if and when he needs long-term care services.
Q2) Disability income benefits under social security will be paid as long as you cannot perform the duties of the job you were holding when the disability began.
A)True
B)False
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Chapter 10: Protecting Your Property
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168 Verified Questions
168 Flashcards
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Sample Questions
Q1) An HO-3 form with one insurance company may provide completely different coverage than an HO-3 form with another insurance company.
A)True
B)False
Q2) Uninsured motorist coverage covers passengers in your car from losses caused by your negligence.
A)True B)False
Q3) Replacement cost and actual cash value is the same thing.
A)True
B)False
Q4) You just purchased an older home with a market value of $100,000 and a replacement value of $180,000.What HO form would meet your needs?
A)HO-2
B)HO-3
C)HO-4
D)HO-6
E)HO-8
Q5) Uninsured motorist insurance is relatively [expensive | inexpensive].
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Chapter 11: Investment Planning
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162 Verified Questions
162 Flashcards
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Sample Questions
Q1) The single most important reason for investing is for [home purchase down payment | retirement].
Q2) Mutual funds often sell directly to investors. A)True B)False
Q3) The collection of investments you select to meet your investment goals is called your [portfolio | allocation].
Q4) The major reason most people invest is to shelter current income from taxes.
A)True B)False
Q5) You are selling short; you anticipate the price of the stock will [rise | fall].
Q6) Once you meet the conditions of ample insurance and liquidity,you're ready to start investing.
A)True B)False
Q7) An order to buy or sell a security at the best price available at the time the order is received is a [market | limit] order.
Q8) Short-term securities are traded in the [money | capital] market.
Q9) A fixed dividend would be received with [common | preferred] stock.
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Chapter 12: Investing in Stocks and Bonds
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184 Verified Questions
184 Flashcards
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Sample Questions
Q1) Dividends and earnings per share [refer | do not refer] to the same thing.
Q2) Municipal bonds can be attractive investments,despite their lower interest rate,since their interest income is exempt from federal income tax.
A)True
B)False
Q3) Bond return can include both interest and capital gains.
A)True
B)False
Q4) A beta of more than one would be expected of a speculative stock.
A)True
B)False
Q5) The commonly cited price for a bond is usually its clean bond price. A)True
B)False
Q6) Stocks with price movements that tend to follow the business cycle are called A)cyclical stocks
B)defensive stocks
C)speculative stocks
D)income stocks
E)tech stocks
Page 14
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Chapter 13: Investing in Mutual Funds
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) Open-ended mutual funds companies buy their shares back from investors at NAV.
A)True
B)False
Q2) A technology fund is an example of a sector fund.
A)True
B)False
Q3) Exchange-traded funds have characteristics of both closed-end and open-end funds.
A)True
B)False
Q4) To be a true no-load fund,there can be a maximum ____ load and a maximum ____ 12(b)-1 fee.
A)0%; 0.00%
B)0%; 0.25%
C)0%; 1.00%
D)3%; 0.25%
E)3%; 1.00%
Q5) [Open-end | Closed-end] mutual funds always redeem shares at NAV.
Q6) The primary investment objective of bond mutual funds is [growth | income].
Q7) Real estate typically exhibits [?less | ??more] volatility than stocks.
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Chapter 14: Planning for Retirement
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205 Verified Questions
205 Flashcards
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Sample Questions
Q1) A Roth IRA
A)is funded with after-tax dollars.
B)allows interest or dividends to accrue tax-free.
C)permits you to withdraw your contribution at any time.
D)provides for tax-free earnings if you hold the account 5 years and are 59 1/2 at withdrawal.
E)does all of these.
Q2) An IRA is a type of an investment.
A)True
B)False
Q3) Variable annuities are usually better choices than fixed annuities for risk tolerant investors during the withdrawal phase of the annuity.
A)True
B)False
Q4) The cash-balance retirement plan is being used to replace traditional defined benefit plans.
A)True
B)False
Q5) With an IRA,the [account owner | institution] is the trustee.
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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) Requirements for a valid will do not include which of the following?
A)The testator must be of sound mind.
B)The testator must not be unduly influenced.
C)The will must be properly executed.
D)There must be no fraud in the execution of the will.
E)The will must be drawn up by an attorney.
Q2) A will is required by state law.
A)True
B)False
Q3) A beneficiary of a will [should | should not] serve as a witness to the will.
Q4) An appropriate trust to set up with a disabled child being the beneficiary would be the [special needs | minor's section 2503(c)] trust.
Q5) You have a spouse,two children,one grandchild,and a living father.If you died without a valid will,the person(s)most likely to receive the proceeds of your estate would be your A)grandchildren.
B)children.
C)spouse.
D)father.
E)spouse and children.
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