Money Management Exam Solutions
Course Introduction
Money Management explores the fundamental concepts and practical skills needed to effectively manage personal and organizational finances. The course covers key topics such as budgeting, saving, investing, credit management, debt reduction, and financial goal setting. Students will learn how to create personal and household budgets, analyze spending habits, understand different types of financial products, and develop strategies for making informed financial decisions. By the end of the course, students will be equipped with the knowledge and tools to make sound financial choices and achieve long-term financial stability.
Recommended Textbook
Personal Finance Turning Money into Wealth 7th Edition by Arthur J. Keown
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17 Chapters
2509 Verified Questions
2509 Flashcards
Source URL: https://quizplus.com/study-set/1046
Page 2
Chapter 1: The Financial Planning Process
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101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/20731
Sample Questions
Q1) An economic condition in which rising prices reduce the purchasing power of money is termed
A) deflation.
B) inflation.
C) stagflation.
D) cash erosion.
E) none of the above.
Answer: B
Q2) The economic downturn that began in 2008 demonstrated that many Americans have sufficient emergency funds.
A)True
B)False
Answer: False
Q3) The most important aspect of choosing a career is the amount of income that career will generate over your lifetime.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Measuring Your Financial Health and Making a Plan
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117 Verified Questions
117 Flashcards
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Sample Questions
Q1) Which of the following items would not be included on a balance sheet?
A) Balances owed on your utility bills
B) Balances owed on your credit card(s)
C) Mortgage payment paid
D) Automobile loan balance
E) Student loan balance
Answer: C
Q2) ________ can be more than or less than the price you paid for a given asset,depending on what others are willing to pay for that asset today.
A) Net value
B) Fair market value
C) Intrinsic value
D) Sentimental value
Answer: B
Q3) An estimate of your anticipated after-tax income available for living expenses is commonly called take-home pay.
A)True
B)False
Answer: True
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Chapter 3: Understanding and Appreciating the Time Value of Money
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122 Verified Questions
122 Flashcards
Source URL: https://quizplus.com/quiz/20733
Sample Questions
Q1) Suppose that you had deposited $100 in a bank account for each of the last 5 years.What annual interest rate is attached to this account if there is now (at the end of the fifth year)$758.92 in the account?
A) 10%
B) 16%
C) 19%
D) 21%
E) 23%
Answer: D
Q2) The present value of a financial asset is what you should be willing to pay today for that financial asset.
A)True
B)False
Answer: True
Q3) Approximately how long will it take Enrique's investment to grow into $2,000?
A) Seventy-two months
B) Six years
C) Nine years
D) Twelve years
Answer: C
Page 5
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Chapter 4: Tax Planning and Strategies
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) To help Joseph with his tax planning,he should carefully track and maintain records for all of the following expenses during the tax year except
A) all expenses for prescribed health care needs that are not covered by insurance.
B) all job related expenses, especially those that are and are not reimbursed by his employer.
C) state and local income taxes, real estate taxes, and personal property taxes.
D) price appreciation, or increases from January 1 to December 31, for the 1,500 shares of stock he owns.
E) all of the above.
Q2) Chase Cutter has a marginal tax rate of 33 percent,a state income tax rate of 3.5 percent,and a city income tax rate of 0.5 percent.The tax for Social Security and Medicare is 7.65 percent.What would be the effective marginal tax rate on your last dollar of earnings?
A) 33 percent
B) 36.5 percent
C) 39.6 percent
D) 44.65 percent
Q3) Name the sources of tax-free income.
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Chapter 5: Cash or Liquid Asset Management
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110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/20735
Sample Questions
Q1) You are considering an MMMF.The fund is taxable and pays 8.5% interest.If your top federal tax bracket is 25% and you live in a state that doesn't impose income taxes,what after-tax return would you realize from this investment?
A) 6.38%
B) 2.13%
C) 7.44%
D) 8.25%
Q2) What recommendations would you give Christopher about his goal of buying a house in five years?
A) You don't have enough income to consider buying a house.
B) You need to develop a savings plan.
C) You need to estimate what a down payment would be.
D) You should switch to a Savings and Loan Association.
E) Both B and C are good answers.
Q3) Describe the advantages of online and mobile banking.
Q4) What is the importance of the APY?
Q5) Is EFT always a good thing? List some potential problems with EFT.
Q6) What is involved with proper cash management?
Q7) Explain the two types of gift,or stored value,cards.
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Chapter 6: Using Credit Cards: The Role of Open Credit
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153 Verified Questions
153 Flashcards
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Sample Questions
Q1) What rights would a college friend of yours have whose credit card application was denied?
A) The right to view her credit report
B) The right to have the file be accurate
C) The right to point out errors in her file
D) The right to request mistakes in the file be corrected
E) All of the above are correct answers.
Q2) The use of credit involves receiving cash,goods,or services with an obligation to pay later.Which statement is not an opening line to the use of credit in a shopper's language?
A) "Charge it."
B) "Put it on my account."
C) "Put it on my debit."
D) "I'll pay for it with plastic."
Q3) Which of the following is an advantage of credit cards?
A) They make it easy to lose control of spending.
B) In general they are an expensive way to borrow money.
C) They allow the consumer the ability to rent cars and make online reservations.
D) Using them means you will have less spendable money in the future.
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Page 8
Chapter 7: Student and Consumer Loans: The Role of Planned Borrowing
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125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/20737
Sample Questions
Q1) Debt consolidation loans can be a very good thing for some people but they can also be dangerous to some.Explain the benefits and dangers of a debt consolidation loan.
Q2) What can a couple seeking to get out of debt do?
A) Avoid future use of credit card debt, except on a emergency basis.
B) Use savings to pay off current debt.
C) See if their creditors will restructure their loans.
D) Seek help from a reputable credit counselor.
E) All of the above are correct.
Q3) Which statement is true regarding direct unsubsidized loans?
A) The federal government pays the loan's interest while the student is still in school.
B) Such loans are made to undergraduate, graduate, and professional students.
C) Students have to demonstrate financial need in order to receive the loans.
D) All of the above are true.
Q4) A 529 plan is a tax-advantaged savings plan designed to encourage parents to save for future college costs for their children.The plan comes in two forms: pre-paid tuition plans and college savings plans.
A)True
B)False
Page 9
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Chapter 8: The Home and Automobile Decision
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199 Verified Questions
199 Flashcards
Source URL: https://quizplus.com/quiz/20738
Sample Questions
Q1) You,not your lender,should determine the amount you want to borrow for a mortgage.
A)True
B)False
Q2) Name the steps in smart buying.
Q3) The ________ mortgage sets the payments in advance in such a way that they rise steadily for 5 to 10 years,then level off to allow a person to buy a home earlier in life.
A) balloon payment
B) growing equity
C) shared appreciation
D) graduated payment
E) conventional
Q4) Your ARM has a two year adjustment interval,4% margin,2% periodic rate cap and a 6% lifetime cap.This year the market interest index increased by 2.75%.What will happen to your APR on this loan?
A) It will increase by 2%
B) It will increase by 2.75%
C) It will increase by 4%
D) It will increase by 6%
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Chapter 9: Life and Health Insurance
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212 Verified Questions
212 Flashcards
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Sample Questions
Q1) Which of the following factors is connected with convertible term life insurance?
A) A medical exam is not required.
B) It helps make a smooth transition from term to cash-value insurance.
C) There is a corresponding increase in premium cost.
D) Generally, the conversion feature is only offered during the first two years.
E) All of the above
Q2) The waiting or elimination period on one's disability insurance refers to the period after the disability during which no benefits can occur.The waiting period is equivalent to A) the cost of one's total premium.
B) one's annual salary.
C) one's median income.
D) 6 months of one's salary.
E) the deductible for one's health care policy.
Q3) Cash-value insurance is any policy that provides both a death benefit and an opportunity to accumulate cash value.
A)True
B)False
Q4) Compare and contrast the three basic types of HMOs.
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Chapter 10: Property and Liability Insurance
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147 Verified Questions
147 Flashcards
Source URL: https://quizplus.com/quiz/20740
Sample Questions
Q1) Lisa and Eric were notified that replacement cost coverage is in effect on a home owner's policy only if the home is insured for at least 80% of its replacement cost.This provision is known as the
A) Replacement Cost Rule.
B) 80 Percent Rule.
C) Replacement Cost Provision.
D) none of the above.
Q2) Valerie was very angry at her soon to be exhusband and when she found his expensive sports car at his girlfriend's home she rammed into it with her pickup truck.Will her insurance policy cover the damage to her vehicle?
A) Yes, she has full coverage.
B) No, one of the exclusions on her policy says it will not cover if the damage was intentional.
Q3) For structural damage to your dwelling,it would be a good idea to request for an estimate from a qualified contractor before accepting the check from your insurance company.
A)True
B)False
Q4) List the most common automobile insurance discounts.
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Chapter 11: Investment Basics
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309 Verified Questions
309 Flashcards
Source URL: https://quizplus.com/quiz/20741
Sample Questions
Q1) As a young college graduate,your biggest investment ally is A) leverage.
B) the amount of investment.
C) tax-free investments.
D) time.
E) the class of investments.
Q2) Why should investors with a short investment horizon invest less money in common stocks?
A) Because the stock market is very volatile and a catastrophic market event can happen at any time.
B) Because the investors won't have enough time available to effectively recover from a loss of their investment principle.
C) Because the transaction costs will negatively affect their returns in the short-term.
D) All of the above are correct.
E) Only A and B are correct.
Q3) Tell how your understanding of efficient markets helps with investing.
Q4) The more efficient the market,the faster prices react to new information.
A)True
B)False
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Chapter 12: Investing in Stocks
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178 Verified Questions
178 Flashcards
Source URL: https://quizplus.com/quiz/20742
Sample Questions
Q1) What are the four basic investment questions a potential investor should answer before investing?
Q2) Stocks reduce risk by portfolio rebalancing.
A)True
B)False
Q3) A buy-and-hold investment strategy
A) avoids timing the market.
B) minimizes transaction costs.
C) postpones capital gains taxes.
D) means your gains will be taxed as long-term capital gains.
E) all of the above.
Q4) Discuss the relationship between growth stocks and income stocks and their P/E ratios.
Q5) The term "bear" stems from the fact that bears raise their paws upward when they attack.
A)True
B)False
Q6) Returns on stocks can come in the form of capital appreciation.
A)True
B)False
Page 14
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Chapter 13: Investing in Bonds and Other Alternatives
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) The interest rate carried on agency bonds,such as FNMA and FHLB,is ________ the interest rate on Treasury bonds.
A) higher than B) lower than C) usually the same as D) at most half that of E) none of the above
Q2) Most corporate bonds are tax-free bonds in the state the corporation is based in.
A)True
B)False
Q3) If you were to own a stock that offers voting rights and may pay dividends,you would most likely own ________ stock.
A) preferred
B) common
C) mutual fund
D) bond-value
E) none of the above
Q4) How do you determine a bond's valuation?
Q5) How can you improve your chances when investing in bonds?
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Chapter 14: Mutual Funds: An
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136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/20744
Sample Questions
Q1) Which of the following services do ETFs offer?
A) Automatic reinvestment of dividends, interest, and capital gains
B) Bookkeeping and tax help
C) Phone and Internet switching
D) All of the above
E) None of the above
Q2) Exchange traded funds are mutual funds that trade on an exchange just like individual securities and can be bought or sold throughout the trading day. A)True
B)False
Q3) There are dissimilarities between U.S.government,GNMA,municipal,and corporate bond funds.Please point them out.
Q4) Once you open a mutual fund account,you can use EFT to have money directly withdrawn from your bank account to pay yourself first. A)True B)False
Q5) A mutual fund's expense ratio compares the fund's expenses to its total assets. A)True B)False
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Chapter 15: Retirement Planning
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147 Verified Questions
147 Flashcards
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Sample Questions
Q1) Why have employers switched to defined-contribution plans instead of defined-benefits plans for most companies?
A) They remove the financial risk for future pension costs away from the company and pass it on to the employee.
B) The employer doesn't want to do any bookkeeping for the retirement plan.
C) Employers care deeply about what employees eventually receive from their plan.
D) All of the above are correct.
E) Only A and B are correct.
Q2) Why might one want to select the lump-sum payment option for one's retirement funds?
A) Taking the lump-sum can be a hedge against inflation.
B) The lump-sum option provides greater flexibility than other options.
C) You can invest the funds and perhaps earn a higher return.
D) Having access to the funds provides money for emergencies.
E) All of the above
Q3) Discuss the basic considerations when facing retirement.
Q4) Contributions to Roth IRAs are tax deductible.
A)True
B)False
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Chapter 16: Estate Planning: Saving Your Heirs Money and Headaches
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) A will created by an attorney cannot be contested.
A)True
B)False
Q2) All of the following are commonly used estate planning tools except A) a will.
B) durable power of attorney and joint ownership of assets.
C) life insurance.
D) gifts and trusts.
E) All of the above are commonly used estate planning tools.
Q3) If you have children from a previous marriage and you get remarried and own property jointly with your new spouse,then tenancy by the entirety should be sufficient for you if you wish your children to inherit your property.
A)True
B)False
Q4) Individuals to whom you have willed your property are known as executors.
A)True
B)False
Q5) List some common reasons people use trusts.
Q6) Provide some common sense approaches to estate planning.
Q7) How can you use the unlimited marital deduction to your advantage? Page 18
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Page 19
Chapter 17: Financial Life Events Fitting the Pieces Together
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81 Verified Questions
81 Flashcards
Source URL: https://quizplus.com/quiz/20747
Sample Questions
Q1) Only people 40 years or older should max out their retirement contributions at work.
A)True
B)False
Q2) According to "Step 1: Manage Your Life," what are the two things that,if not eliminated,might jeopardize your future?
Q3) Which of the following does a budget help you accomplish?
A) It allows you to not think about what you spend money on.
B) It allows you to live above your means.
C) It forces you to use restraint.
D) All of the above
E) None of the above
Q4) Living below your means deals with buying what you need versus buying what you want.
A)True
B)False
Q5) Tracking your spending for a month or so will help you plan savings.
A)True
B)False
Q6) Discuss why it is important to keep a clean credit record.
Page 20
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