Financial Planning
Midterm Exam
Course Introduction
Financial Planning is a comprehensive course designed to equip students with the foundational concepts and practical tools necessary for effective personal and business financial management. The course covers essential topics including budgeting, savings strategies, investment options, retirement planning, risk assessment, insurance, and tax planning. Students learn how to analyze financial statements, set financial goals, create actionable plans, and make informed decisions to optimize financial wellbeing. Through case studies and interactive exercises, the course fosters analytical and decision-making skills, preparing students to manage finances responsibly in both personal and professional settings.
Recommended Textbook
Personal Financial Planning 14th Edition by
Randy Billingsley
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15 Chapters
2516 Verified Questions
2516 Flashcards
Source URL: https://quizplus.com/study-set/3416
Page 2
Chapter 1: Understanding the Financial Planning Process
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143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/67829
Sample Questions
Q1) [Inflation | Consumer Price Index] is the amount of goods and services each dollar buys at a given point in time.
Answer: C
Q2) The average American has less than $50,000 in savings.
A)True
B)False
Answer: False
Q3) The last step in the financial planning process is to
A)develop financial plans and strategies to achieve goals.
B)use financial statements to evaluate results of plans and budgets, taking corrective action as required.
C)implement financial plans and strategies.
D)redefine goals and revise plans and strategies as personal circumstances change.
E)periodically develop and implement budgets to monitor and control progress toward goals.
Answer: D
Q4) Having numerous credit cards can [improve | hurt] your credit score.
Answer: B
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Chapter 2: Using Financial Statements and Budgets
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166 Verified Questions
166 Flashcards
Source URL: https://quizplus.com/quiz/67830
Sample Questions
Q1) Elena purchased a stamp collection for $5,000 thirty years ago.If it appreciated 8% annually,what is it worth today?
A)$17,000
B)$36,400
C)$50,313
D)$123,023
E)$150,000
Answer: C
Q2) Only four categories of spending account for almost 90% of all consumer expenditures.
A)True
B)False
Answer: False
Q3) If your expenses exceed your income,the bottom line of your income/expense statement will show a [surplus | deficit].
Answer: B
Q4) Using time value of money is important when planning for long-term goals.
A)True
B)False
Answer: True
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Chapter 3: Preparing Your Taxes
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179 Verified Questions
179 Flashcards
Source URL: https://quizplus.com/quiz/67831
Sample Questions
Q1) Which of the following cannot be adjustment(s)to gross income on the 1040 form?
A)Health insurance premiums paid by self-employed individuals
B)Alimony paid
C)Moving expenses
D)Traditional IRA contributions
E)Child care deductions
Answer: E
Q2) Income shifting refers to the process of transferring income from the taxpayer to the IRS.
A)True
B)False
Answer: False
Q3) Federal income taxation is [progressive | regressive].
Answer: A
Q4) The alternative minimum tax calculation includes in taxable income certain types of deductions otherwise allowed,such as state and local income and property taxes.
A)True
B)False
Answer: True
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Chapter 4: Managing Your Cash and Savings
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175 Verified Questions
175 Flashcards
Source URL: https://quizplus.com/quiz/67832
Sample Questions
Q1) Janice Sanders plans on saving $12,000 for 3 years until she returns to college for her master's degree in personal financial planning.She would like to receive a fixed rate of return over that period.Which of the following would you recommend?
A)money market deposit account
B)1-year certificate of deposit
C)3-year certificate of deposit
D)Series EE US savings bond
E)b or c
Q2) The minimum denomination of T-bills you can buy is
A)$1,000.
B)$5,000.
C)$10,000.
D)$20,000.
E)none of these.
Q3) If Lois has $2,000 in checking,$50,000 in a money market mutual fund,and $75,000 in certificates of deposit (all individual accounts)at her local bank,her accounts would be insured through FDIC for $77,000.
A)True
B)False
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Page 6
Chapter 5: Making Automobile and Housing Decisions
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179 Verified Questions
179 Flashcards
Source URL: https://quizplus.com/quiz/67833
Sample Questions
Q1) Sean and Lisa (age 25 and 28,respectively)are purchasing their first home for $200,000 with a 5% down payment.They will withdraw the down payment from Lisa's IRA.They will have to pay ____ on the IRA withdrawal.
A)federal income taxes
B)an early withdrawal penalty
C)social security taxes
D)a and b
E)a, b, and c
Q2) If you qualify,you might be able to buy a home with no down payment with [an FHA | a VA] loan.
Q3) The Veterans Administration guarantees mortgage loans given to qualified veterans. A)True
B)False
Q4) Condominium and co-op owners can deduct real estate taxes and mortgage interest on their federal income taxes.
A)True
B)False
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) The Wage Earner Plan requires debtors to give up most of their assets.
A)True
B)False
Q2) A proper use of open account credit would be to buy a [food | washing machine].
Q3) Persons with very poor credit ratings can still get ____ credit cards.
A)secured
B)student
C)prestige
D)affinity
E)rebate
Q4) The proceeds of a home equity loan can be used for just about any purpose,and the interest paid is usually tax deductible.
A)True
B)False
Q5) The decline in housing prices made it [harder | easier] for households to refinance their mortgages.
Q6) Student credit cards are structured much differently than regular credit cards.
A)True
B)False
Q7) An example of open account credit would be a bank [debit | credit] card.
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Chapter 7: Using Consumer Loans
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148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/67835
Sample Questions
Q1) If a 12-month installment loan is prepaid at the end of 6 months,one-half of the interest would be saved.
A)True
B)False
Q2) Purchasing credit life or disability insurance protection is usually
A)required in order to make the loan.
B)nonnegotiable.
C)at the lender's option.
D)very costly.
E)a good idea for the borrower.
Q3) 529 plans are best suited for a child [already in college | with several years left before going to college].
Q4) Sales finance companies commonly purchase the retail installment contracts of businesses that sell big-ticket items such as automobiles,furniture,and appliances.
A)True
B)False
Q5) Consolidation loans are generally [inexpensive | expensive].
Q6) The longer the loan maturity,the [lower | higher] the total finance costs will be.
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Chapter 8: Insuring Your Life
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151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/67836
Sample Questions
Q1) Henry must make set premium payments on his insurance policy until he dies,and if he cancels the policy he will receive the cash value.His plan is a ____ life policy.
A)term
B)whole life
C)limited payment
D)universal
E)none of the above
Q2) The [policyholder | insurance company] makes the investment decisions with variable life insurance.
Q3) A life insurance policy's cash value may be collected by terminating the policy.
A)True
B)False
Q4) The life insurance policy that clearly separates the protection and savings elements is [whole life | universal life].
Q5) Like universal life insurance,variable life insurance provides a minimum guaranteed return.
A)True B)False
Q6) The majority of term policies have a [level | decreasing] face value.
Page 10
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Chapter 9: Insuring Your Health
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148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/67837
Sample
Questions
Q1) Joe has a disability income policy that pays a monthly benefit of $1,200.Joe has been disabled for 30 days,but he only received a check in the amount of $600 from his disability insurance.What is probably the reason that he only received $600?
A)The policy has a deductible of $600.
B)The elimination period is 15 days.
C)The policy has a 50% coinsurance clause.
D)Joe is considered to be only 50% disabled.
E)Joe has only owned the policy for 6 months.
Q2) A preferred provider organization has characteristics of both an IPA and an indemnity plan.
A)True
B)False
Q3) Long-term care insurance can cover both nursing home and home health care. A)True
B)False
Q4) If your employer offers access to a group health insurance plan,you may still be better off going with an individual policy.
A)True
B)False
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Chapter 10: Protecting Your Property
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168 Verified Questions
168 Flashcards
Source URL: https://quizplus.com/quiz/67838
Sample Questions
Q1) Co-insurance is a policy provision to discourage the policyholder from being A)overinsured.
B)underinsured.
C)insured only if specified by lending agency.
D)insured with more than one company.
E)insured by government agencies.
Q2) Antiques,collections,and boats are adequately protected under a standard homeowner's policy.
A)True
B)False
Q3) While you were away on winter vacation,there was a severe snowstorm that caused your roof to cave in causing a $20,000 loss.Your H0-2 policy will cover this loss.
A)True
B)False
Q4) A personal liability umbrella policy typically includes coverage for auto related liability losses in excess of the limits purchased in a personal auto policy.
A)True
B)False
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Page 12
Chapter 11: Investment Planning
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162 Verified Questions
162 Flashcards
Source URL: https://quizplus.com/quiz/67839
Sample Questions
Q1) A systematic investment routine involves investing similar sums in regular intervals.
A)True
B)False
Q2) The NYSE index includes all stocks listed on the "big board."
A)True
B)False
Q3) A collection of investments is called
A)a letter of exposure.
B)a diversification.
C)a grouping.
D)an envelope.
E)a portfolio.
Q4) When completed,an investment plan is a way of translating an abstract investment target into a specific investment program.
A)True
B)False
Q5) The New York Stock Exchange is a dealer market.
A)True B)False
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Chapter 12: Investing in Stocks and Bonds
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184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/67840
Sample Questions
Q1) TIPS are appropriate for investors who are conservative and concerned about inflation.
A)True
B)False
Q2) A bond with a yield to maturity that equaled or exceeded an investor's desired rate of return is considered an attractive investment.
A)True
B)False
Q3) Which of the following types of bonds are unsecured?
A)mortgage bond
B)equipment trust certificate
C)debenture bond
D)agency bond
E)all of these
Q4) A bond selling below par value is selling at A)a discount.
B)its coupon value.
C)a premium.
D)maturity.
E)the highest effective yield.
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Chapter 13: Investing in Mutual Funds
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176 Verified Questions
176 Flashcards
Source URL: https://quizplus.com/quiz/67841
Sample Questions
Q1) Redeeming your mutual fund shares might result in a charge called
A)a back-end load.
B)a front-end load.
C)a redemption tax.
D)a management fee.
E)none of these.
Q2) Closed-end mutual funds can trade at either a discount or a premium from their net asset value.
A)True
B)False
Q3) Open-ended mutual funds can be traded on an intraday basis.
A)True
B)False
Q4) A quotation for a mutual fund shows a NAV of $9.60 and an offer price of $10.00.With an investment of $1,000,you could buy [104.17 | 100] shares.
Q5) The price per share of a closed-end investment fund could be lower than its NAV.
A)True
B)False
Q6) Growth funds [?do | ?do not] involve a fair amount of risk.
Page 15
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Chapter 14: Planning for Retirement
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205 Verified Questions
205 Flashcards
Source URL: https://quizplus.com/quiz/67842
Sample Questions
Q1) Funds to finance social security come from
A)voluntary contributions from employee, employer, and self-employed.
B)compulsory contributions from employee, employer, and self-employed.
C)state and federal income tax.
D)compulsory contributions from government, employee, and employer.
E)Congressional appropriations.
Q2) Judy,age 68,is receiving Social Security benefits.She received $45,000 in consulting income this year.Her Social Security benefits [will | will not] be reduced because of these earnings.
Q3) Roth IRAs are the only IRAs that have the potential to produce tax-free earnings.
A)True
B)False
Q4) Employer matching contributions are common with ____ plans.
A)401(k)
B)403(b)
C)457
D)a and b
E)a and c
Q5) Inflation will have [little | great] impact on your retirement plans.
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Chapter 15: Preserving Your Estate
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177 Verified Questions
177 Flashcards
Source URL: https://quizplus.com/quiz/67843
Sample Questions
Q1) If a person dies intestate (without a valid will),the estate is distributed according to established state laws of intestate succession.According to Utah's probate code (as described in Exhibit 15.4 of your textbook),what is the estate distribution for no spouse and no offspring but parents?
Q2) An estate plan is good only as long as it fits the needs,desires,and circumstances of the parties involved.
A)True
B)False
Q3) Death will erase any debts existing at that time.
A)True B)False
Q4) Custodial accounts are used to protect the property of minor children. A)True B)False
Q5) You could give an unlimited amount of assets to your [children | spouse] without incurring any gift taxes.
Q6) Liquidity is important in an estate to pay for death costs and possible taxes. A)True
B)False
17
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