Introduction to Personal Finance Test Preparation
Course Introduction
Introduction to Personal Finance is designed to equip students with the foundational skills and knowledge necessary to make informed, effective decisions regarding their financial resources. The course covers essential topics such as budgeting, saving, managing credit and debt, understanding interest rates, insurance, investments, retirement planning, and financial goal setting. Through real-life case studies and practical exercises, students will gain confidence in navigating financial products and developing strategies to achieve short-term and long-term financial stability. This course is beneficial for anyone seeking to build a solid financial foundation and make responsible choices for their personal and professional lives.
Recommended Textbook
Personal Finance 12th Edition by Jack Kapoor
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19 Chapters
2585 Verified Questions
2585 Flashcards
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Chapter 1: Personal Finance Basics and the Time Value of Money
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116 Verified Questions
116 Flashcards
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Sample Questions
Q1) If you are concerned about year-end tax payments and need an action plan,you may take the following action(s):
A)increase the amount withheld from each paycheck
B)file quarterly tax payments
C) shelter current income in a tax-deferred retirement program
D)invest in tax-exempt securities
E)All of these
Answer: E
Q2) The financial planning process concludes with efforts to:
A)develop financial goals.
B)create a financial action plan.
C)determine your current financial situation.
D)implement the financial action plan.
E)review and revise your financial plan.
Answer: E
Q3) Increased demand for a product or service will usually result in lower prices for the item.
A)True
B)False
Answer: False
Page 3
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Chapter 2: Financial Aspects of Career Planning
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) Suzanne is beginning to think she needs to find a new job.She is happy with her present salary and job duties,and has a large corner office with a wonderful view of the city.In spite of this,she dreads going to work each day.Discuss four reasons that may indicate she may need to change careers.
Answer: At some time in their lives,most workers change jobs.The following may be indications that it is time to move on: low motivation toward your current work,physical or emotional distress caused by your job,consistently poor performance evaluations,a lack of social interactions with coworkers,limited opportunity for salary or position advancement,and/or a poor relationship with your supervisor.
Q2) The following people are acceptable references as long as they can verify your abilities:
A)teachers
B)previous employers
C)supervisors
D)business colleagues
E)All of these
Answer: E
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Chapter 3: Money Management Strategy: Financial
Statements and Budgeting
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) Which one of the following presents a summary of cash receipts and payments for a period of time?
A)Balance sheet
B)Credit card statement
C)Investment summary
D)Cash flow statement
E)Asset report
Answer: D
Q2) Warranties are commonly kept with ____________ purchase records.
A)investment
B)insurance
C)credit
D)financial service
E)consumer
Answer: E
Q3) A person's net worth is the difference between the value of the items owned and the amounts owed to others.
A)True
B)False
Answer: True
Page 5
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Chapter 4: Planning Your Tax Strategy
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Which one of the following people is least likely to have to file a federal income tax return?
A)A U.S.citizen who is a resident of Puerto Rico.
B)A U.S.citizen earning $8,000 where taxes were withheld.
C)A single person earning less than $10,000.
D)A single person over age 65 earning $15,000.
E)A 28-year old single college student earning more than $11,000.
Q2) Mr.and Mrs.Keating want to give their son Dudley a total of $24,000.They each write him a check for $12,000 so they won't have to pay any gift tax.This is an example of:
A)fraud.
B)tax evasion.
C)tax exclusion.
D)tax avoidance.
E)tax deferred income.
Q3) How is taxable income computed?
Q4) An office audit requires that a taxpayer visit an IRS office to clarify some aspect of his or her tax return.
A)True
B)False
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Chapter 5: Financial Services: Savings Plans and Payment Accounts
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99 Verified Questions
99 Flashcards
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Sample Questions
Q1) Tim Gleason has set up a legal agreement that allows the First State Bank of Orlando to manage funds set aside for his daughter's college education.What type of financial service is Tim using?
A)Payment service
B)Savings service
C)Borrowing service
D)Trust service
E)Asset management
Q2) Which one of the following will help to avoid identity theft?
A)Put your social security and driver's license numbers on checks.
B)Put your full name on checks.
C)Put your full account number on checks when paying a bill.
D)Use passwords involving both letters and numbers.
E)Check your credit report once every three years.
Q3) To avoid high fees for cash loans,a person should avoid borrowing from a:
A)credit union.
B)savings and loan association.
C)pawnshop.
D)commercial bank.
E)mutual savings bank.
Page 7
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Chapter 6: Introduction to Consumer Credit
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185 Verified Questions
185 Flashcards
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Sample Questions
Q1) When imposters take your name,they are committing a crime.
A)True
B)False
Q2) The larger the debt-to-equity ratio,the riskier the situation is for lenders and borrowers.
A)True
B)False
Q3) Debit cards are often called:
A)bank cards.
B)ATM cards.
C)cash cards.
D)check cards.
E)All of these
Q4) The borrower's financial ability to meet credit obligations is called:
A)capacity.
B)character.
C)capital.
D)collateral.
E)conditions.
Q5) How can you protect yourself against credit card fraud?
Page 8
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Chapter 7: Choosing a Source of Credit: The Costs of Credit
Alternatives
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) Which interest formula is used by creditors and involves tables based on a mathematical formula to determine how much interest you have paid at any point in a loan?
A)Simple interest formula
B)Compound interest formula
C)Multiple compound interest formula
D)The rule of 78s
E)The rule of 72s
Q2) Explain the concept of "float."
Q3) The most basic method of calculating interest is the compound interest calculation.
A)True
B)False
Q4) You have two choices in declaring personal bankruptcy: Chapter 7 and Chapter 13 bankruptcy.
A)True
B)False
Q5) What can you do if you are unable to meet your credit obligations?
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Q6) What are two key concepts to remember if you are thinking of borrowing money or opening a credit account?
Chapter 8: Consumer Purchasing Strategies and Legal Protection
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) Which organization specializes in the testing of products for electrical and fire safety?
A)Consumers Union
B)Better Business Bureau
C)Consumer Product Safety Commission
D)Underwriters Laboratories
E)Federal Trade Commission
Q2) A motor vehicle has annual depreciation of $2,000; oil changes cost $120,automobile insurance $500 annually,and license plates costs $100.What is the annual amount of the total fixed operating cost for this vehicle?
A)$2,000
B)$2,120
C)$2,500
D)$2,600
E)$2,720
Q3) Representation by a lawyer is usually required in small claims court.
A)True
B)False
Q4) What factors influence most people's buying decisions?
Q5) What are the common sources of consumer information?
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Chapter 9: The Housing Decision: Factors and Finances
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) The purpose of zoning laws is to:
A)restrict property use.
B)encourage new housing development.
C)minimize people moving from an area.
D)reduce real estate property taxes.
E)assist real estate agents in finding homes for sale.
Q2) Explain what amortization is and how a down payment and loan duration impact it.
Q3) Which of the following can help you prepare your home for selling?
A)Moving furniture to the garage
B)Painting worn exterior
C)Closing the drapes when showing your home
D)Trimming the grass around old vehicles in the yard
E)Turning off the lights to conserve energy when showing your home
Q4) Money that is usually deposited with the lending institution for the payment of property taxes and homeowner's insurance is called:
A)points.
B)an escrow account.
C)a rate cap.
D)closing costs.
E)a buy-down.
Page 11
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Chapter 10: Property and Motor Vehicle Insurance
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) A friend wants to understand what affects the cost of auto insurance.Explain the main factors used to determine the automobile insurance premiums a person pays.
Q2) David Bowers must show a card from his automobile insurance company when he registers his car in the state of Oklahoma each year to show financial responsibility.Which of the following types of laws is the reason he must show this card each year?
A)Financial responsibility laws
B)Lemon laws
C)Truth in Lending Law
D)Equal Opportunity Law
E)Fiscal responsibility laws
Q3) George and Dr.Martha Cooper rent a condominium in an area known for litigious residents and high cost judgments.George has an extensive stamp collection and Martha has expensive photographic equipment.What kind of insurance would you recommend for a couple in their living situation?
Q4) Homeowner's insurance refers to coverage also available to condominium owners.
A)True
B)False
Q5) What do automobile insurance companies use GPS technology for?
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Chapter 11: Health, Disability, and Long-Term Care Insurance
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) The hospital indemnity policy is a good substitute for basic or major medical protection.
A)True B)False
Q2) Blue Shield plans provide hospital care benefits on essentially a "service type" basis.
A)True B)False
Q3) The United States has the lowest per capita medical expenditures of any industrialized country in the world.
A)True
B)False
Q4) Disability income insurance is probably the least neglected form of available insurance protection.
A)True B)False
Q5) Generally,disability income policies with shorter waiting periods have lower premiums.
A)True B)False
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Chapter 12: Life Insurance
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173 Verified Questions
173 Flashcards
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Sample Questions
Q1) If your insurance agent does not give you an interest-adjusted index upon request,then your best bet is to:
A)buy the policy anyway.
B)look for another agent.
C)tell the agent that you are still thinking.
D)tell the agent you will buy it later.
E)complain to the Better Business Bureau.
Q2) An important provision in every life insurance policy is the right to name your beneficiary.
A)True
B)False
Q3) Which of the following is a popular app for estimating life insurance needs?
A)www.Kiplinger.com/insurance
B)Human Life Value Calculator
C)money.msn.com
D)www.nerdwallet.com/life-insurance
E)www.familyneeds.com
Q4) What are the six methods of estimating your life insurance needs? Explain the basic principle of each method.
Q5) What are the two basic types of life insurance? Give examples of each.
Page 14
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Chapter 13: Investing Fundamentals
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) Liquidity is the ability to buy or sell an investment quickly without substantially affecting the investment's value.
A)True
B)False
Q2) An example of ____________ risk occurs when the financial return on an investment does not keep up with prices that are increasing in the overall economy.
A)market
B)interest
C)inflation
D)business failure
E)current
Q3) The maturity dates for most bonds range between ____________ years.
A)0 to 5
B)5 to 20
C)10 to 20
D)1 to 30
E)15 to 40
Q4) List the sources of investment information that investors can use to evaluate a potential investment.
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Chapter 14: Investing in Stock
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) The dividend yield for a stock investment is calculated by dividing:
A)the annual dividend amount per share by the investment's past price per share.
B)the annual dividend amount per share by the investment's current price per share.
C)the annual dividend amount per share by the investment's future price per share.
D)the investment's past price per share by the annual dividend amount per share.
E)the investment's current price per share by the annual dividend amount per share.
Q2) A stock that sells for $1 or less per share is called a _____ stock.
A)fractional
B)penny
C)dollar
D)ten-dollar
E)coin
Q3) A cyclical stock is a stock that follows the business cycle of advances and declines in the economy.
A)True
B)False
Q4) What is the primary difference between common stock and preferred stock?
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16
Chapter 15: Investing in Bonds
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141 Flashcards
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Sample Questions
Q1) The current yield on a corporate bond takes into account:
A)the bond's face amount.
B)the interest rate paid by the bond.
C)dollar amount of interest.
D)current market value of the bond.
E)All of these.
Q2) For government bonds,the bid price is the maximum price that a buyer is willing to pay for a government security.
A)True
B)False
Q3) Which of the following statements is not true about Treasury Inflation-Protected Securities?
A)They are currently sold with 5-, 10-, and 30-year maturities.
B)The amount of principal increases with inflation and decreases with deflation.
C)They pay interest twice a year, at a fixed rate.
D)They can be held until maturity or sold before maturity.
E)Interest income and growth in principal are exempt from federal income tax.
Q4) Bonds are generally considered a relatively safe investment.How is it possible to lose money on bonds?
Q5) How do interest rates in the economy affect the price of a corporate bond?
Page 17
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Chapter 16: Investing in Mutual Funds
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145 Flashcards
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Sample Questions
Q1) Typically,you must invest at least $15,000 to open a mutual fund account.
A)True
B)False
Q2) Why do investors purchase mutual funds instead of purchasing stocks,bonds,or other investments on their own?
Q3) Which one of the following publications does not provide readers with information about mutual funds and investing?
A)Bloomberg Businessweek
B)Current Business Survey
C)Forbes
D)Kiplinger's Personal Finance Magazine
E)Money
Q4) Today many investors use which of the following to create a financial plan to generate the income needed to satisfy their long-term goals?
A)Invesco company
B)Nasdaq index
C)Down Jones Industrial Average
D)Morgan Stanley company
E)Standard & Poor's index
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Chapter 17: Investing in Real Estate and Other Investment
Alternatives
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) A vacation home is deemed a second home so long as you rent it no more than ________ per year.
A)one month
B)14 days
C)7 days
D)8 weeks
E)4 weeks
Q2) Coin dealers,precious metals dealers,and some banks sell gold bullion in amounts ranging from _____ grams to 500 ounces or more.
A)5
B)10
C)25
D)50
E)There is no minimum order.
Q3) Real Estate Investment Trusts must distribute at least 90 percent of their taxable annual earnings to shareholders.
A)True
B)False
Q4) What are some possible disadvantages of real estate investments?
Page 19
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Chapter 18: Starting Early: Retirement Planning
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Sample Questions
Q1) With a fixed-dollar annuity,the money you pay is invested in common stocks or other equities.
A)True
B)False
Q2) Describe 5 of the 7 misconceptions about retirement found in the chapter and explain what you should do if you hold any of these.
Q3) Social Security is a package of protection,providing retirement,survivors',and disability benefits.
A)True
B)False
Q4) During retirement,as long as you do not earn more than the annually exempt amount through part-time work,your Social Security payments will not be affected. A)True
B)False
Q5) If you leave the company before you retire,then you have a right to a portion of the benefits under an employer pension plan only if you are vested.
A)True
B)False
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Chapter 19: Estate Planning
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Sample Questions
Q1) Estate planning is a definite plan for the administration and disposition of one's property during one's lifetime and at one's death.
A)True
B)False
Q2) Gerald Wilkins owns a home worth $250,000,a car worth $15,000,various investments worth $600,000 and other personal assets worth $25,000.What are these things to Gerald?
A)Estate
B)Will
C)Trust
D)Probate
E)Liabilities
Q3) How many months after your death is the federal estate tax due and payable in cash?
A)3
B)6
C)9
D)12
E)15
Q4) Explain what a will is and what occurs at your death if you do not have one.
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