Individual and Family Financial Management
Mock Exam
Course Introduction
This course explores the principles and practices of effective financial management for individuals and families, emphasizing the decision-making processes involved in budgeting, saving, investing, credit use, and risk management. Students will learn to analyze financial needs and set goals, develop spending and savings plans, understand the impact of taxes and insurance, and evaluate consumer choices. The course also addresses life-stage planning, including retirement and estate considerations, and examines the social, psychological, and economic factors that influence financial attitudes and behaviors within diverse family settings.
Recommended Textbook PFIN3 3rd Edition by Lawrence J. Gitman
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15 Chapters
2770 Verified Questions
2770 Flashcards
Source URL: https://quizplus.com/study-set/653
Page 2
Chapter 1: Understanding the Financial Planning Process
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143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/12407
Sample Questions
Q1) Government places controls on the personal financial environment by use of
A) taxation and fiscal policy.
B) taxation and regulation.
C) taxation and competition.
D) regulation and competition.
E) regulation and fiscal policy.
Answer: B
Q2) An economy will usually go into a _________ after a peak.
A) Convolution
B) Expansion
C) Contraction
D) Recession
E) Depression
Answer: C
Q3) The two principal constraints which government places upon us are regulations and [tariffs | taxes].
Answer: B
Q4) The Federal Reserve's actions after the financial crisis of 2008 and 2009 resulted in [reduced interest rate | higher interest rates].
Answer: A
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Chapter 2: Using Financial Statements and Budgets
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184 Verified Questions
184 Flashcards
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Sample Questions
Q1) A cash budget should help you to
A) achieve your short-term financial goals.
B) implement disciplined spending.
C) eliminate impulse spending.
D) allocate funds to savings and investments.
E) do all of these
Answer: E
Q2) Inability to reach short-term goals will significantly affect your ability to reach long-term goals.
A)True
B)False
Answer: True
Q3) ____ would not be listed as a liability on your balance sheet.
A) Taxes owed
B) Loan balances
C) Bank credit card charges
D) Savings accounts
E) Rent due
Answer: D
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Page 4
Chapter 3: Preparing Your Taxes
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201 Verified Questions
201 Flashcards
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Sample Questions
Q1) The terms "tax free" and "tax deferred" [do | do not] mean the same thing.
Answer: B
Q2) The main objective of tax planning is to maximize the amount of money you keep by minimizing the amount of taxes you pay.
A)True
B)False
Answer: True
Q3) One's marginal tax rate is typical lower than one's average tax rate.
A)True
B)False
Answer: False
Q4) The Internal Revenue Service is responsible for writing the federal income tax codes. A)True
B)False
Answer: False
Q5) Federal income taxation is [progressive | regressive]. Answer: A
Q6) You will itemize your deductions.You [could | could not] use the 1040A. Answer: B
Page 5
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Chapter 4: Managing Your Cash and Savings
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193 Verified Questions
193 Flashcards
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Sample Questions
Q1) The least expensive method for banks to interact with their customers is [in person | ATM | online].
Q2) If Suzie has $2,000 in checking,$50,000 in a money market account,and $75,000 in certificates of deposit (all individual accounts)at her local bank,her accounts would be completely insured through FDIC.
A)True
B)False
Q3) Today the differences between a commercial bank and an S&L are [minor | major].
Q4) Banks must notify customers [30 | 60] days before lowering rates on deposit accounts or certificates of deposit.
Q5) If Lois has $2,000 in checking,$50,000 in a money market account,and $75,000 in certificates of deposit (all individual accounts)at her local bank,her accounts would be insured through FDIC for $100,000.
A)True
B)False
Q6) Stop-payment services are easier with electronic funds transfers than with traditional check payments.
A)True
B)False
Page 6
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Chapter 5: Making Automobile and Housing Decisions
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222 Verified Questions
222 Flashcards
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Sample Questions
Q1) The financing rate on the car you are leasing is called the A) money factor.
B) capitalized cost.
C) residual value.
D) purchase option.
E) capitalized cost reduction.
Q2) One can increase the tax benefits of homeownership by selecting a shorter term mortgage,for example 15 years rather than 30 years.
A)True
B)False
Q3) Townhome,condominium and co-op owners can deduct real estate taxes and mortgage interest on their federal income taxes.
A)True
B)False
Q4) Terminating a car lease before expiration is often difficult and costly.
A)True
B)False
Q5) As a homeowner,you can deduct the mortgage interest and [property taxes | property insurance] if you itemize on your federal taxes.
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Chapter 6: Using Credit
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180 Verified Questions
180 Flashcards
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Sample Questions
Q1) It is not a good idea to use credit to
A) buy a home.
B) live beyond one's means.
C) spread payments within a budget.
D) purchase expensive items.
E) replace a check for small items.
Q2) The "preferred" way of stealing from consumers now is [through your credit card | stealing your car].
Q3) Secured credit cards require that the card holder puts up collateral in order to get the card.
A)True
B)False
Q4) Rebate card work best for those who use the rebates and
A) charge large amounts on the card.
B) pay the total card balance off monthly.
C) carry high monthly balances.
D) travel internationally
E) a and b
Q5) Using [credit | savings] to handle financial emergencies is the recommended choice.
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Chapter 7: Using Consumer Loans
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) You must be a member of a [credit union | S&L] in order to borrow money there.
Q2) The student loans with the best loan terms are the Stafford and the Perkins loans. A)True
B)False
Q3) A single payment loan
A) is generally unsecured by collateral.
B) usually matures in one year or less.
C) usually matures in five to seven years.
D) is generally used to finance auto purchases.
E) is provided by sales finance companies.
Q4) If the discount method is used to calculate a finance charge of $250.60 on a $2,400 loan,the amount to be repaid is $2,400.
A)True
B)False
Q5) An installment purchase agreement typically includes a sales contract,a security agreement,a note,and an insurance agreement.
A)True
B)False
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Chapter 8: Insuring Your Life
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157 Verified Questions
157 Flashcards
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Sample Questions
Q1) A life insurance policy should contain a co-insurance clause.
A)True
B)False
Q2) The purchase of insurance is a common form of which risk management technique:
A) risk retention
B) risk transfer
C) risk assumption
D) risk avoidance
E) loss control
Q3) An insured can borrow from the [cash | face] value of her life insurance policy.
Q4) The need for additional life insurance can be determined by looking at the difference between available resources and family monetary needs.
A)True
B)False
Q5) When cash value is withdrawn from a life insurance policy it is always tax free. A)True
B)False
Q6) Deciding to sell a motorcycle would be an example of risk sharing.
A)True
B)False
Page 10
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Chapter 9: Insuring Your Health
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165 Verified Questions
165 Flashcards
Source URL: https://quizplus.com/quiz/12415
Sample Questions
Q1) Most commonly,the deductible in a health insurance policy is on [an annual | a per incident] basis.
Q2) Disability insurance is designed to [replace some of your income | pay medical bills] when you are disabled.
Q3) Hospital insurance policies will pay for all hospital expenditures most of the time.
A)True
B)False
Q4) Long-term health care [does | does not] have a deductible.
Q5) Eating healthy and exercising is an acceptable substitute for comprehensive health care coverage.
A)True B)False
Q6) Major medical plans will usually cover the cost of nursing home care. A)True B)False
Q7) Millions of Americans are not covered by health insurance. A)True B)False
Q8) The medicare coinsurance payment is usually [10% | 20%].
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Chapter 10: Protecting Your Property
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195 Verified Questions
195 Flashcards
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Sample Questions
Q1) [Comprehensive | Named Peril] policy covers all perils unless they are specifically excluded.
Q2) A renters' policy typically [does | does not] provide protection against liability claims.
Q3) The professional designation you want your property insurance agent to have is the [ACLU | CPCU].
Q4) State financial responsibility laws require only auto liability insurance. A)True
B)False
Q5) The terms "perils" and "losses" refer to the same thing. A)True
B)False
Q6) Collision coverage would pay for damages to your car if a tree falls on it. A)True
B)False
Q7) Section I of a homeowner's insurance policy covers the insured's dwelling unit,accompanying structures,and personal liaiblity.
A)True
B)False
Page 12
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Chapter 11: Investment Planning
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196 Verified Questions
196 Flashcards
Source URL: https://quizplus.com/quiz/12417
Sample Questions
Q1) A long term investment strategy includes all of the following except A) stock and bond selection.
B) diversification.
C) immediate financial needs to pay current bills.
D) risk-return behavior.
E) investor education.
Q2) A [bull | bear] market is characterized by falling stock prices.
Q3) Selling equities you don't own and buying them back to cover the sale is
A) short selling in anticipation of a bear market in that security
B) going long.
C) discounting the market averages.
D) a very safe investment activity.
E) considered wise in a bull market.
Q4) The most widely followed stock average is the
A) Dow Jones Industrial Average.
B) Standard & Poor's Index.
C) New York Stock Exchange Index.
D) American Stock Exchange Index.
E) Wall Street Journal Index.
Q5) Margin requirements are set by the [SEC | Federal Reserve].
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Chapter 12: Investing in Stocks and Bonds
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195 Verified Questions
195 Flashcards
Source URL: https://quizplus.com/quiz/12418
Sample Questions
Q1) The commonly-cited price for a bond is usually its [clean | dirty] bond price.
Q2) Changes in the value of securities due to social,political,or economic factors are referred to as market risk.
A)True
B)False
Q3) Zero coupon bonds will pay interest [at maturity | annually].
Q4) An example of event risk would be
A) inflation.
B) a corporate takeover.
C) a newspaper article about the economy.
D) earnings announcements.
E) capital growth.
Q5) Which of the following are characteristic of Treasury inflation-indexed bonds?
A) They are short-term securities issued by the federal government.
B) The interest paid is indexed for inflation.
C) The face value of the bond is indexed for inflation
D) The value of the bond could fall below the face value.
E) b and c
Q6) One should look for companies with steadily [increasing | decreasing] book value per share.
Page 14
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Chapter 13: Investing in Mutual Funds
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174 Verified Questions
174 Flashcards
Source URL: https://quizplus.com/quiz/12419
Sample Questions
Q1) A mutual fund with an objective of both growth and income is a(n)
A) bond fund.
B) equity-income fund.
C) growth fund.
D) sector fund.
E) balanced fund.
Q2) Mutual funds may be classified by the types of securities they purchase.
A)True
B)False
Q3) Back end loaded mutual funds are most appropriate for
A) An investor with a short time horizon
B) An investor with a long time horizon
C) An investor who wants to purchase a no-load product
D) All investors
E) Back end loaded mutual funds are never appropriate
Q4) Mutual funds are actually comprised of two or more companies.
A)True
B)False
Q5) All funds will have [management | 12(b)-1] fees.
Q6) A [global | international] fund invest exclusively in foreign securities.
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Chapter 14: Planning for Retirement
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226 Verified Questions
226 Flashcards
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Sample Questions
Q1) The social security administration [can | cannot] give you a fairly accurate estimate of benefits you can expect in the future.
Q2) By itself,Social Security is sufficient to allow a worker and spouse to maintain their preretirement standard of living.
A)True
B)False
Q3) Social security benefits may be available to dependents of the retired,disabled,or deceased worker.
A)True
B)False
Q4) The income base on which social security tax is computed [increases each year | remains the same for long periods of time].
Q5) Annual increases in the social security benefit check are related to the A) retiree's income.
B) number of dependents.
C) quality of life.
D) current cost of living.
E) pre-retirement cost of living.
Q6) Most people invest their retirement funds too [aggressively | conservatively].
Page 16
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Chapter 15: Preserving Your Estate
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178 Verified Questions
178 Flashcards
Source URL: https://quizplus.com/quiz/12421
Sample Questions
Q1) You would create a [living | testamentary] trust to be used during your lifetime.
Q2) Custodial accounts are used to protect the property of minor children.
A)True
B)False
Q3) If you have a small estate,you should [contact an attorney | write your will yourself].
Q4) The main objective of estate planning is to save attorney's fees. A)True
B)False
Q5) Walter left nothing to his wife in his will.His wife [is out of luck | can get the amount that the state intestacy laws would have given her].
Q6) All living trusts are revocable. A)True
B)False
Q7) Real estate is taxed by [the state of residence | the state where the property is located].
Q8) When Jessica gets a divorce,her will leaving everything to her former husband usually will be [nullified | still valid] in most states.
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