Individual Financial Decision Making Exam
Course Introduction
Preparation Guide
Individual Financial Decision Making explores the principles, tools, and psychological factors involved in making personal financial choices. The course covers budgeting, saving, investing, credit management, and risk assessment, with an emphasis on setting financial goals and planning for major life events. Students analyze real-world scenarios to apply concepts such as time value of money, behavioral finance, and the impact of economic fluctuations on personal wealth. Through practical exercises, learners develop critical skills to make informed, ethical, and effective financial decisions throughout their lives.
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) Low interest rates after 2008 and 2009 reflect the Federal Reserve's desire to A)stimulate economic growth.
B)reduce unemployment.
C)reduce inflation.
D)a and b
E)a, b, and c
Answer: D
Q2) The length of time you keep your money invested is less important than the rate of return you earn on your investments.
A)True
B)False
Answer: False
Q3) A stronger economy leads to [higher employment | lower employment]. Answer: A
Q4) [Disney stock | Your car] would be considered a financial asset. Answer: A
Q5) An economic contraction usually begins after a trough is reached. A)True
B)False
Answer: False
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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) Jamil invested $9,500 in an account he expects will earn 5% annually.Approximately how many years will it take for the account to double in value?
A)8.8
B)9.7
C)10.8
D)11.4
E)14.4
Answer: E
Q2) Investment assets include items such as boats or automobiles.
A)True
B)False Answer: False
Q3) A charge made on your credit card becomes a liability as soon as the charge is incurred.
A)True
B)False Answer: True
Q4) Investment assets are required to [earn a return | provide a service]. Answer: A
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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) For 2014,each personal exemption reduced taxable income by
A)$2,800.
B)$3,000.
C)$3,700.
D)$3,950.
E)$4,000.
Answer: D
Q2) An investment must be owned over one year in order to qualify for long-term capital gains treatment.
A)True
B)False
Answer: True
Q3) Gross income minus tax exempt income equals adjusted gross income.
A)True
B)False
Answer: False
Q4) Tax [avoidance | evasion] focuses on reducing taxes in ways that are legal and compatible with the intent of Congress.
Answer: A
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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) Interest earned on your [MMDA account | Series EE savings bonds] are free of state income taxes.
Q2) Interest rates will be lower on your [savings | checking] account.
Q3) Share draft accounts are commonly offered by
A)commercial banks.
B)savings and loan associations.
C)mutual savings banks.
D)credit unions.
E)insurance companies.
Q4) Money market mutual funds are insured up to $250,000 by the FDIC if purchased at an insured bank.
A)True
B)False
Q5) Asset management accounts are protected by the Federal Deposit Insurance Corporation.
A)True
B)False
Q6) The most common type of joint checking account would require the [signature of either party | signatures of both parties] on all checks.
Page 6
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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) To be legally binding,real estate buy-sell agreements must be in writing,but leases may be oral.
A)True
B)False
Q2) When buying a used car,it is very important to have it checked by a reputable mechanic.
A)True
B)False
Q3) An escrow account is used to collect ____ from one's monthly mortgage payment.
A)interest
B)principal
C)real estate taxes
D)homeowner's insurance
E)c and d only
Q4) A real estate sales contract will include
A)the amount you are willing to pay for the property.
B)the terms of the mortgage loan.
C)deed restrictions.
D)market value of the property.
E)all of these.
Page 7
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Chapter 6: Using Credit
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) With open account credit,one can often avoid interest charges if
A)the account balance is paid in full every month.
B)at least half the account balance is paid every month.
C)the minimum payment is made every month.
D)the account is a revolving credit account.
E)the balance is below the credit limit.
Q2) Student credit cards typically require that one be enrolled in a 2- or 4-year college/university and
A)a parent's signature.
B)own a vehicle.
C)hold a job.
D)have some form of income.
E)take at least nine hours.
Q3) Credit reports on individual borrowers are issued by credit bureaus.
A)True
B)False
Q4) In the year after the Credit Card Act of 2009 was passed,there was a(n)[increase | decrease] in defaults.
Q5) In the year after the Credit Card Act of 2009 was passed,there was a(n)[increase | decrease] in late payments.
Page 8
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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) The add-on method is less expensive than the simple interest method when stated rates of interest are identical.
A)True
B)False
Q2) [Public lenders | private lenders] of student loans are more flexible in providing financial relief when borrowers are under pressure.
Q3) College costs have been escalating,but not as rapidly as the overall rate of inflation.
A)True
B)False
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) About one in three student borrowers have a past due balance.
A)True
B)False
Q6) Consolidation loans are generally [inexpensive | expensive].
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Page 9
Chapter 8: Insuring Your Life
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) Cash value is an important component of whole life,universal life,and variable life but is never a component of term life insurance.
A)True
B)False
Q2) Using the needs approach,we look at the survivors' needs if the income producer dies [tomorrow | before his life expectancy].
Q3) If the objective of your life insurance program is to get the greatest death protection now for your insurance dollars,you should choose ____ insurance.
A)term
B)universal
C)limited pay
D)industrial
E)whole life
Q4) With low-load whole life policies,sales commissions and marketing expenses account for between 20% to 25% of total premiums paid over the life of the policy.
A)True
B)False
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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) Medicare Advantage policies require payment from the policyholder in the form of [deductibles and coinsurance | copayments].
Q2) Many health insurance policies offer only reduced benefits for treatment of mental disorders.
A)True
B)False
Q3) Under the ACA,all Americans are required to have or buy health insurance or pay a penalty.
A)True
B)False
Q4) You would be more likely to receive [70 | 90] percent of your pre-disability income from a disability income policy.
Q5) The insurance designed to help with nursing home or in-home care due to chronic illness is called
A)Medicare
B)major medical insurance
C)comprehensive major medical insurance
D)nursing home care insurance
E)long-term care insurance
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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) An insurance adjustor is working for the [insurance company | claimant].
Q2) Liability coverage provides payment to the A)insured for damage.
B)family members of insured.
C)holder of the auto loan.
D)lawyer needed to defend criminal offense.
E)nonfamily members involved in the accident.
Q3) Covered liability perils do not include claims for libel,slander,or character defamation.
A)True
B)False
Q4) Actual cash value provides coverage at the current market value of your property. A)True B)False
Q5) Personal umbrella policies are intended primarily for wealthy families who are often viewed as targets for large liability claims.
A)True B)False
Q6) Negligent acts must be [intentional | unintentional] in order to be insured.
Page 12
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Chapter 11: Investment Planning
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162 Verified Questions
162 Flashcards
Source URL: https://quizplus.com/quiz/67839
Sample Questions
Q1) The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 is the most significant change in financial regulation since the Great Depression.
A)True
B)False
Q2) 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.
Q3) The axiom that explains diversification is [Don't cry over spilt milk | Don't put all of your eggs in one basket].
Q4) Margin requirements are set by the [SEC | Federal Reserve].
Q5) The SEC requires corporations to issue ____ describing the firm and the security issue it wishes to sell.
A)an advertisement
B)a prospectus
C)an underwriting journal
D)a dealer newsletter
E)none of these
Q6) A convertible bond would let the investor exchange it for [preferred | common] stock.
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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) The yields on municipal bonds are usually [lower | higher] than the returns available from fully taxable issues.
Q2) Common stockholders are considered to be the residual owners of the company.
A)True
B)False
Q3) The easiest way to invest in foreign stock is to purchase
A)the stock directly from an over sea's broker.
B)the stock directly from your regular broker.
C)the stock directly over the Internet.
D)international mutual funds.
E)American Depository Receipts.
Q4) Typically,the best time to invest in the stock market is when the market is very volatile.
A)True
B)False
Q5) The higher a stock's beta,the riskier the stock.
A)True
B)False
Q6) The commonly cited price for a bond is usually its [clean | dirty] bond price.
Q7) Stocks of stable,older companies are called [earnings | blue chip] stocks.
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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) Low-load funds do not charge a commission upon initial purchase.
A)True
B)False
Q2) A no-load fund has no
A)sales charges.
B)administrative charges.
C)management charges.
D)tax charges.
E)12b-1 fees.
Q3) With open-end mutual funds,investors cannot lose more than they invested.
A)True
B)False
Q4) The primary purpose of investing in income property is to produce an attractive annual cash flow.
A)True
B)False
Q5) Growth-and-income funds invest most of their capital in common stocks. 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
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Sample Questions
Q1) In a Roth 401(k),contributions [are | are not] tax deductible.
Q2) The initial estimates of retirement expenses and income should be done in [today's | future] dollars.
Q3) More than 50 percent of all wage earners and salaried workers today are covered by some type of employer-sponsored retirement or profit-sharing plan.
A)True
B)False
Q4) Miles has no retirement plan at work.Therefore,$2,000 contributed to his regular IRA will be tax deductible.
A)True
B)False
Q5) In long-term retirement planning,you decide on the required level of retirement income and funds needed over a 3 to 5 year series of intervals.
A)True
B)False
Q6) A 401(k)plan allows you to defer taxes on part of your income.
A)True
B)False
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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) The person who writes a will is called the A)testator.
B)attorney.
C)probater.
D)estate planner.
E)grantor.
Q2) If a grantor transfers a life insurance policy to an irrevocable trust within three years before the grantor's death,the policy will not be included in the estate.
A)True
B)False
Q3) Gift tax liability could be incurred on which of the following transactions?
A)Providing rent-free apartment for mother
B)1,000 hours of babysitting for grandchild
C)Son's deposit into husband-wife joint checking account
D)Setting up a revocable trust
E)$35,000 given to son
Q4) Your gross estate is all property subject to federal tax at your death.
A)True
B)False
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