Individual Financial Decision Making Exam Review
Course Introduction
Individual Financial Decision Making explores the principles and tools necessary for making informed personal financial choices. The course covers essential topics such as budgeting, saving, investing, credit management, insurance, retirement planning, and understanding risk and return. Students learn to evaluate financial products and strategies, set and achieve financial goals, and apply critical thinking to everyday financial decisions. Real-world scenarios and case studies help students develop practical skills, empowering them to make confident decisions that support long-term financial well-being.
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) Most people graduate from college with [no | some] debts. Answer: B
Q2) 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
Q3) A successful financial plan will be based on a person's goals.
A)True
B)False
Answer: True
Q4) [Stocks | Your house] would be considered to be real property.
Answer: B
Q5) Your average propensity to consume is the percentage of each dollar of income,on the average,that is spent for current needs rather than savings. A)True
B)False
Answer: True
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Chapter 2: Using Financial Statements and Budgets
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184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/12408
Sample Questions
Q1) If your budget shows a deficit,[increase income | increase expenses] to regain balance.
Answer: A
Q2) A cash budget has value only if you use it,review it regularly,and keep careful records of income and expenses.
A)True
B)False
Answer: True
Q3) The income and expenditures statement examines your financial A) level.
B) performance. C) position.
D) assets.
E) objectives.
Answer: B
Q4) The primary function of financial statements is to provide a picture of your [actual | projected] financial position.
Answer: A
Q5) When your liabilities exceed your assets,you are [solvent | insolvent].
Answer: B
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Chapter 3: Preparing Your Taxes
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201 Verified Questions
201 Flashcards
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Sample Questions
Q1) Local governments get most of their tax revenue from
A) property taxes.
B) sales taxes.
C) licensing fees.
D) excise taxes.
E) income taxes.
Answer: A
Q2) If you earn less than $15,000,you probably pay more in social security taxes than in federal income taxes.
A)True
B)False
Answer: True
Q3) ____ would not be considered taxable income.
A) Child support payments
B) Proceedings from an employer retirement plan
C) Dividend income
D) a and b
E) a, b, and c
Answer: A
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Page 5
Chapter 4: Managing Your Cash and Savings
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193 Verified Questions
193 Flashcards
Source URL: https://quizplus.com/quiz/12410
Sample Questions
Q1) Money Market Mutual Funds invest in long-term treasury securities and other types of bonds.
A)True
B)False
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) You are going on an overseas trip and you want to have checks that are easily converted into local currency.You should purchase
A) cashier's checks.
B) certified checks.
C) conditional checks.
D) traveler's checks.
E) guaranteed checks.
Q4) [Anyone | Only those with an account at the bank] can purchase cashiers' checks.
Q5) An asset management account is likely to require a minimum investment of at least [$1,000 | $5,000].
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Chapter 5: Making Automobile and Housing Decisions
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222 Verified Questions
222 Flashcards
Source URL: https://quizplus.com/quiz/12411
Sample Questions
Q1) The largest single investment you will undertake in your lifetime will probably be the purchase of a house.
A)True
B)False
Q2) 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].
Q3) Using an FHA mortgage to finance your home would require a [lower | higher] down payment than a conventional loan.
Q4) Negative amortization is possible with a fixed-rate mortgage.
A)True
B)False
Q5) An adjustable rate mortgage with a baseline rate of 5%,a margin of 2%,and an annual cap of 1% would have an initial mortgage rate of 7%.
A)True
B)False
Q6) The purchase price of the house you are buying is $180,000.A loan-to-value ratio of 90% will produce a mortgage amount of [$162,000 | $180,000].
Q7) The term condominium/townhome refers to a type of [architecture | ownership].
Page 7
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Chapter 6: Using Credit
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180 Verified Questions
180 Flashcards
Source URL: https://quizplus.com/quiz/12412
Sample Questions
Q1) All of the following are useful ways to build a strong credit rating except
A) Open checking and savings accounts.
B) Open and use a charge account.
C) Apply for a long-term loan and occasionally be late with a payment.
D) Make payments on time.
E) Talk with the lender if you foresee difficulty in making a payment.
Q2) A credit card user's credit rating will be harmed if she pays only the minimum monthly payment on a credit card.
A)True
B)False
Q3) Anna uses her credit card regularly,but she pays the total balance monthly.Anna should look for a credit account with
A) no annual fee.
B) low interest rates.
C) long grace period.
D) a and b.
E) a and c.
Q4) Bank credit card purchases always begin accruing interest charges immediately.
A)True
B)False
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Chapter 7: Using Consumer Loans
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161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/12413
Sample Questions
Q1) Home equity loans are similar to other installment loans except
A) interest rates are generally higher.
B) the interest paid is generally tax deductible.
C) no home equity is required.
D) they are typically unsecured debts.
E) a and c
Q2) An installment purchase agreement typically includes a sales contract,a security agreement,a note,and an insurance agreement.
A)True
B)False
Q3) Consumer loans are often used by individuals today to purchase nondurable items.
A)True
B)False
Q4) The average student loan in 2012 was
A) $5,200
B) $10,600
C) $12,800
D) $18,400
E) $26,300
Q5) The majority of single payment loans [are | are not] secured by collateral.
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Chapter 8: Insuring Your Life
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157 Verified Questions
157 Flashcards
Source URL: https://quizplus.com/quiz/12414
Sample Questions
Q1) Alice is 40 years old and earns $35,000 annually.The multiple earnings approach to determine the amount of life insurance needed shows that she should have 6.5 times her earnings.How much insurance should Alice have? (Show all work.)
Q2) An activity that reduces the chance that a loss will occur is [risk shifting | loss prevention].
Q3) A guaranteed purchase option is when an insured sells an interest in the life insurance policy to an investor,who then becomes the policy's beneficiary.
A)True
B)False
Q4) Guaranteed renewable term insurance allows you to renew the policy for another term without qualifying medically.
A)True
B)False
Q5) An insured can borrow from the [cash | face] value of her life insurance policy.
Q6) If a loss is certain to occur,there is [a | no] risk.
Q7) Life insurance needs change dramatically over one's lifetime.
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) Medicare Advantage policies require payment from the policyholder in the form of a deductible.
A)True
B)False
Q2) Typically group health insurance plans provide substantially less comprehensive coverage than the average individually underwritten policy.
A)True
B)False
Q3) Some surgical expense insurance pays a specific amount for a list of various types of surgery.
A)True
B)False
Q4) Most disabilities are permanent.
A)True
B)False
Q5) Millions of Americans are not covered by health insurance.
A)True
B)False
Q6) About [20 | 50] million Americans lack health insurance.
Page 11
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Chapter 10: Protecting Your Property
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195 Verified Questions
195 Flashcards
Source URL: https://quizplus.com/quiz/12416
Sample Questions
Q1) Earthquake policy and flood protection [would | would not] be provided by the standard HO policy.
Q2) Premium discounts may result from
A) safe driving record and prompt premium payment.
B) good grades and long-term employment.
C) multiple auto ownership and good credit rating.
D) safe driving record and good grades.
E) long-term employment and prompt payment of traffic tickets.
Q3) The principle of indemnity states that the insured can be compensated for an amount equal to his economic loss.
A)True
B)False
Q4) If your furniture in your rented apartment is destroyed by a fire,it [would | would not] be covered by your landlord's policy.
Q5) A written inventory of personal property is required by insurance companies for property insured under the unscheduled general contents coverage.
A)True
B)False
Q6) [Most | Few] tenants carry renters insurance.
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) The SIPC provides protection to the investor from
A) declining security prices.
B) low or missing dividend payments.
C) brokerage firm failure.
D) using margin requirements.
E) none of these.
Q2) ____ is a short-term investment activity.
A) Buying life insurance
B) Buying bonds
C) Investing in common stock
D) Speculating in common stock
E) Saving
Q3) On-line trading is the only valuable investment service available through the Internet.
A)True
B)False
Q4) The total return of a portfolio is influenced far more by specific security selection than asset allocation.
A)True
B)False
Page 13
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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) Stocks of stable,older companies are called [earnings | blue chip] stocks.
Q2) The returns you expect from securities are income and growth. A)True
B)False
Q3) Common stocks pay a guaranteed dividend each year. A)True
B)False
Q4) Pulling money out of the market exposes you to the significant risk that you'll miss the months of good returns that could help you recoup prior losses. A)True
B)False
Q5) The yields on municipal bonds are usually [lower | higher] than the returns available from fully taxable issues.
Q6) Past returns on an investment are [an indication | a guarantee] of future returns.
Q7) The callable feature of a bond protects the issuer when current rates are falling. A)True B)False
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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) Which of the following is not a source of mutual fund returns
A) dividend income
B) capital gains
C) changes in NAV
D) changes in IDB
E) All of the above are sources of mutual fund returns
Q2) A real estate investment trust that invests only in mortgages is called an equity trust.
A)True
B)False
Q3) The fund whose main objective is to simply match the market known as a(n)____ fund.
A) balanced
B) preferred stock
C) money market
D) index
E) none of these
Q4) No-load funds are generally sold directly to the investor without a salesperson.
A)True
B)False
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Chapter 14: Planning for Retirement
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226 Verified Questions
226 Flashcards
Source URL: https://quizplus.com/quiz/12420
Sample Questions
Q1) Upon retirement,married couples automatically receive 1.5 times the higher earning spouse's Social Security benefit.
A)True
B)False
Q2) The major source of retirement income for current retirees is [Social Security | personal savings].
Q3) The major financial benefit of beginning your retirement funding early is related to A) increased cost of living.
B) compound interest.
C) reduced anxiety.
D) inflation.
E) investment returns.
Q4) You can withdraw [your contribution | the total balance] of your Roth IRA at any time without penalty.
Q5) Anyone with earned income can contribute to some type of IRA.
A)True
B)False
Q6) [SEP | Keogh] plans are easier to establish.
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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) When you die intestate,you have given the court or state the privilege of determining
A) tax deadlines.
B) burial arrangements.
C) guardians of dependents.
D) beneficiary needs.
E) divisions of estate to charities.
Q2) The gift tax law allows a person to give gifts up to [$10,000 | $13,000] tax free.
Q3) You would create a [living | testamentary] trust to be used during your lifetime.
Q4) Real estate is taxed by [the state of residence | the state where the property is located].
Q5) ____ would represent a second level death-related cost.
A) Unpaid bills
B) Health related bills
C) Federal estate taxes
D) Inflation
E) none of the above
Q6) Your estate is more likely to be subject to [state | federal] death taxes.
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Page 17