Financial Planning
Exam Solutions
Course Introduction
Financial Planning is a comprehensive course that introduces students to the principles and practices of managing personal and business finances to achieve specific financial goals. The curriculum covers the fundamentals of budgeting, saving, investing, insurance, tax planning, retirement planning, and estate planning. Students will learn how to develop and implement effective financial strategies, analyze financial statements, assess risk, and utilize various financial instruments. Through case studies and practical exercises, learners gain the skills necessary to make informed financial decisions, navigate financial markets, and design long-term financial plans that maximize wealth and minimize risk.
Recommended Textbook
Focus on Personal Finance 5th Edition by Jack
R. Kapoor
Available Study Resources on Quizplus
14 Chapters
1546 Verified Questions
1546 Flashcards
Source URL: https://quizplus.com/study-set/3062
Page 2
Chapter 1: Personal Financial Planning in Action
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86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/60778
Sample Questions
Q1) The major function of personal financial planning is to
A) Reduce taxes.
B) Increase savings.
C) Achieve personal economic satisfaction.
D) Improve your credit rating.
E) Obtain adequate insurance protection.
Answer: C
Q2) Who is less likely to be harmed by inflation?
A) Retired people
B) Lenders
C) Borrowers
D) Fixed income consumers
E) Financial regulators
Answer: C
Q3) Interest earned is calculated by multiplying the principal times the time value of money.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Money Management Skills
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102 Verified Questions
102 Flashcards
Source URL: https://quizplus.com/quiz/60779
Sample Questions
Q1) Patrick Guitman has a net worth of $145,000 and liabilities of $155,000. What are his total assets?
A) $10,000
B) $145,000
C) $155,000
D) $200,000
E) $300,000
Answer: E
Q2) After having established a spending plan, it is important to
A) File the budget in a safe deposit box.
B) Compare it to the previous budget.
C) Keep track of your actual income and expenses.
D) Pay attention only to expenses that are more than 10 percent of your salary.
E) None of these are true since budgets are just estimates.
Answer: C
Q3) One method to spend more money is to deduct an amount automatically from your salary in a direct deposit system.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Taxes in Your Financial Plan
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103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/60777
Sample Questions
Q1) Gross (or total) income includes
A) Exclusions.
B) Tax deductions.
C) Tax-deferred income.
D) Passive income.
E) Tax-exempt income.
Answer: D
Q2) The rate used to calculate the tax due on the next dollar of income is referred to as the
A) AMT.
B) Average tax rate.
C) Income tax rate.
D) Marginal tax rate.
E) Total tax rate.
Answer: D
Q3) An example of an excise tax is Social Security.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Financial Services: Saving Plans and Payment Accounts
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114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/60776
Sample Questions
Q1) Making transactions using a credit card will immediately reduce your bank balance. A)True
B)False
Q2) Brandon lost his debit card. When he realized it was gone, his account had $238 in unauthorized charges. Since he was embarrassed about his loss, he didn't contact his financial institution for 45 days. What is the most that he is liable for?
A) $0
B) $50
C) $188
D) $238
E) $500
Q3) Many people make mistakes when managing current cash needs. Which of these is NOT a frequently made mistake?
A) Using savings or borrowing to pay for current expenses
B) Budgeting spending
C) Failing to put unneeded funds in an investment plan
D) Having insufficient liquid assets to pay current bills
E) Overspending due to impulse buying and over using credit
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Chapter 5: Consumer Credit: Advantages, Disadvantages, Sources,
and Costs
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143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/60775
Sample Questions
Q1) Who is responsible for a loan repayment?
A) The store granting credit
B) The credit card company
C) The government
D) The cosigner and/or the borrower
E) The bank
Q2) The minimum monthly payment on a credit card is
A) The amount to be paid without paying interest.
B) The interest amount charged for the month.
C) The minimum to be paid to avoid any charges or fees.
D) The smallest amount you can pay and remain a borrower in good standing.
E) The amount needed to pay off the credit card in one year.
Q3) Although credit allows immediate satisfaction of needs and desires, a greater advantage is that it increases total purchasing power.
A)True
B)False
Q4) The Truth in Lending Act requires that open-end creditors explain how they calculate the finance charge.
A)True
B)False
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Chapter 6: Consumer Purchasing Strategies and Wise
Buying of Motor Vehicles
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116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/60774
Sample Questions
Q1) If you have a problem with a product and you are talking with a customer service person, you should raise your voice and demand unreasonable action during your conversation.
A)True
B)False
Q2) Paul bought some bad gasoline that damaged the gas tank of his vehicle.
A) He should sue the gas station where he bought his gas.
B) He never should have expected any problems with buying any product, especially gas for his car.
C) He should provide the gas station with documentation of his purchase and all repair costs.
D) He should assume that the gas station should be able to track his purchase based on video cameras.
E) He should do nothing.
Q3) The unit price of a 32-ounce jar of honey that costs $8.32 is $0.13 per ounce.
A)True
B)False
Q4) A lease for a car is typically for three to five years.
A)True B)False
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Chapter 7: Selecting and Financing Housing
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97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/60773
Sample Questions
Q1) If your home is assessed for $200,000, the market value of the home should be less than $200,000.
A)True
B)False
Q2) When Brett's apartment lease ends, he should receive his entire security deposit back even though the carpet has been damaged while he was living there.
A)True B)False
Q3) As interest rates increase, more people are able to afford the cost of an average-priced home.
A)True
B)False
Q4) Jim wants to make an offer to buy an older house. At this point, he should
A) Move into the house.
B) Set up a home inspection.
C) Contact the seller to purchase his lawn tools.
D) Close the purchase transaction.
E) Sign his mortgage papers.
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Chapter 8: Home and Automobile Insurance
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103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/60772
Sample Questions
Q1) Last month some of your friends were injured in an accident. Their total injuries were as follows: * Brenda \(\quad \$ 85,000\)
* Raquel \(\$ 125,000\)
* Louis \(\quad \$ 40,000\) Coverage was 100/300/50. What was the total medical coverage in this accident?
A) $40,000
B) $85,000
C) $125,000
D) $225,000
E) $250,000
Q2) Angela should decrease her deductible from $1,000 to $250 in order to reduce her home insurance premium.
A)True
B)False
Q3) A landlord is responsible for paying renter's insurance.
A)True
B)False
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10
Chapter 9: Health and Disability Insurance
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106 Verified Questions
106 Flashcards
Source URL: https://quizplus.com/quiz/60771
Sample Questions
Q1) This type of plan combines features of HMOs and PPOs. It uses a network of participating physicians and medical professionals who have contracted to provide services for certain fees.
A) Home health care agency
B) Hospital and medical service plan
C) Medicare
D) Point-of-service (POS) plan
E) Public insurance company
Q2) Jack needs comprehensive medical coverage. However, his income is very low. What plan should he investigate?
A) Medicare Part A
B) Medicare Part B
C) Medicaid
D) Medigap
E) Medicare Part C
Q3) Health insurance is a form of protection that eases the financial burden people may experience as a result of someone's death.
A)True
B)False
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Page 11
Chapter 10: Financial Planning With Life Insurance
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91 Verified Questions
91 Flashcards
Source URL: https://quizplus.com/quiz/60770
Sample Questions
Q1) A young employee is buying individual life insurance and is worried about the impact inflation will have on his life insurance coverage. Which of the following riders should he consider?
A) Waiver of premium disability benefit
B) Accidental death benefit
C) Guaranteed insurability option
D) Cost-of-living protection
E) Accelerated benefits
Q2) 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
Q3) The sooner a person is likely to die, the lower the premiums he or she will pay.
A)True
B)False
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Chapter 11: Investing Fundamentals and Bonds
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140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/60769
Sample Questions
Q1) Which of the following investments typically has the largest potential growth?
A) Government bonds
B) Cash
C) Cash equivalents
D) Certificates of deposit
E) Stocks
Q2) A 25-year-old single investor with a secure, full-time job that pays $60,000 would likely prefer investments with less risk.
A)True
B)False
Q3) Investment goals are always oriented to the future.
A)True
B)False
Q4) Young investors are often more interested in ______ investments than are older investors.
A) growth-oriented
B) government bond
C) cash
D) conservative
E) High quality corporate bonds
Page 13
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Chapter 12: Investing in Stocks
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142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/60768
Sample Questions
Q1) Glen bought XYZ stock on November 8, 2012, at a price of $39.20 and then sold it on March 19, 2014, at $11.20. Glen can be classified as a speculator.
A)True
B)False
Q2) A prospectus that contains detailed financial data may be sent annually to stockholders of publicly owned corporations.
A)True
B)False
Q3) If you bought a stock on July 1, 2014, and sold it on July 15, 2014, you may be a(n) A) Speculator.
B) Trader.
C) Investor.
D) Two of these are correct.
E) All of these are correct.
Q4) The EPS of a company can be compared to the industry's average EPS. A)True B)False
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Page 14
Chapter 13: Investing in Mutual Funds
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85 Verified Questions
85 Flashcards
Source URL: https://quizplus.com/quiz/60767
Sample Questions
Q1) A problem with taxation of mutual funds is
A) Professional management.
B) The possibility to eliminate taxes if held in a Roth individual retirement account.
C) Being required to report reinvested income dividends and capital gain distributions on your federal tax return as current income.
D) Tax deferral if the fund is held in a retirement account like a 401(k) account.
E) The diversification offered to investors.
Q2) Thomas wants to invest in a fund that invests in stock, bonds, and money market instruments. Which of the following will meet his needs?
A) Asset allocation funds
B) Aggressive growth funds
C) Junk bond funds
D) Midcap funds
E) Short-term corporate bond funds
Q3) Mutual funds carry a "real risk" that they can decrease in value.
A)True
B)False
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Chapter 14: Starting Early: Retirement and Estate Planning
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118 Verified Questions
118 Flashcards
Source URL: https://quizplus.com/quiz/60766
Sample Questions
Q1) An inter vivos trust takes effect while you're alive.
A)True
B)False
Q2) Which of the following is not an important document associated with estate planning?
A) Birth certificate.
B) Legal name change.
C) Insurance policy.
D) Marriage certificate.
E) Spending plan or budget.
Q3) What steps should be taken in retirement planning?
A) Avoid life insurance.
B) Estimate preretirement living expenses.
C) Exceed budget amounts for spending.
D) Conduct a financial analysis and estimate retirement living expenses.
E) All of these are correct.
Q4) Social Security covers 97% of all workers in America.
A)True
B)False
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