Money Management Test Questions
Course Introduction
Money Management is a foundational course designed to equip students with the essential skills and knowledge needed to make informed financial decisions. Topics covered include personal budgeting, banking, credit and debt management, saving and investing, financial goal setting, and understanding taxes. Through practical exercises and real-life scenarios, students learn how to plan for short- and long-term financial needs, avoid common financial pitfalls, and build a secure financial future. The course also explores consumer rights and responsibilities, enabling students to make smart choices in a complex financial landscape.
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
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Page 2
Chapter 1: The Financial Planning Process
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) Suppose that you are a 21-year-old college student.What stage of the financial life cycle are you currently in?
A) Stage 1: wealth accumulation
B) Stage 2: the golden years
C) Stage 3: the retirement years
D) Stage 4: the formative years
E) Stage 5: the educational years
Answer: A
Q2) A well-educated and trained employee is virtually guaranteed job security by today's employers.Therefore,he or she doesn't need to worry about keeping his or her skills current.
A)True
B)False
Answer: False
Q3) When comparing two different investment opportunities the investor should always choose the investment that minimizes the total amount of taxes paid.
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 type of expenditure would probably be the hardest for an individual to track?
A) Credit card
B) Cash
C) Checks written
D) Automatic payments
E) Direct deposits
Answer: B
Q2) Which questions do financial ratios help you answer?
A) Do I have adequate liquidity to meet emergencies?
B) Do I have the ability to meet my debt obligations?
C) Am I saving as much as I think I am?
D) All of the above
E) A and B
Answer: D
Q3) A vehicle leased in your name is an example of a tangible asset that you would list on your balance sheet.
A)True
B)False
Answer: False
Page 4
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Chapter 3: Understanding and Appreciating the Time Value of Money
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) The current value in today's dollars of a future sum of money is called
A) future value.
B) adjusted value.
C) compounded value.
D) present value.
E) discounted value.
Answer: D
Q2) An investment earning 12 percent interest per year should double in value in approximately four years.
A)True
B)False
Answer: False
Q3) If Monica invests $15,750 at 8 percent annual interest,how much would she have after eight years?
A) $29,152.15
B) $17,010.08
C) $32,354.22
D) $39,678.92
Answer: A
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) Which of the following is an advantage of filing electronically?
A) Faster refunds
B) Quick electronic confirmation
C) More accurate returns
D) All of the above
Q2) If you are self-employed,you have to pay both the employer and employee portions of FICA,for a total rate of 20 percent.
A)True
B)False
Q3) A tax system in which tax rates increase as income increases is called a(n)________ system.
A) progressive tax
B) universal tax
C) regressive tax
D) prorated tax
Q4) Gross income is another name for ________ income.
A) expected
B) total
C) net
D) value added
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Chapter 5: Cash or Liquid Asset Management
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) It is wise to wait until you are earning a substantial amount of money before you establish a disciplined financial plan for your future.
A)True
B)False
Q2) Explain the advantages of credit unions.Are there any disadvantages to them?
Q3) List three cash management resources that are used to electronically transfer money.
Q4) What recommendations would you give Christopher concerning his cash management?
A) Create a budget and set some savings goals.
B) Automate a savings plan using EFT.
C) Set up an account at a mutual fund company.
D) All of the above are good recommendations.
E) All of the above except C are good recommendations.
Q5) Liquid assets or funds are important to A) cover unplanned expenses.
B) prevent interrupting your long-term investments.
C) prevent overdrafts in checking accounts.
D) cover some planned expenses.
E) All of the above are correct.
Q6) List five features available through online and mobile banking.
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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 can you do if you cannot pay your credit card bills?
Q2) List the three primary methods used to determine interest charges on an unpaid credit card balance.
Q3) The Truth In Lending Act requires that all consumer credit agreements disclose the ________ in bold print?
A) Effective Annual Rate (EAR)
B) Annual Percentage Rate (APR)
C) Monthly Stated Rate (MSR)
D) Nominal Interest Rate (NIR)
Q4) What is the current APY on this credit card?
A) 21 percent
B) 22.99 percent
C) 23.14 percent
D) 24 percent
Q5) List the five benefits or advantages associated with credit cards.What are the two major disadvantages?
Q6) List four ways to avoid credit card fraud.
Q7) What is the difference between voluntary and involuntary inquires?
Page 8
Q8) List five signs that you have the credit card habit.
Q9) What four steps should you take if you think your identity has been stolen?
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Page 9
Chapter 7: Student and Consumer Loans: The Role of Planned Borrowing
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125 Verified Questions
125 Flashcards
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Sample Questions
Q1) 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.
Q2) The ________ is the automatic repayment plan with a 10-year term.
A) extended repayment
B) standard repayment
C) income-based repayment
D) graduated repayment
Q3) Which one of these clauses is not found in a typical loan contract?
A) Recourse
B) Deficiency payments
C) Acceleration
D) Withdrawal terms
E) Insurance agreement
Q4) Loans using the add-on method are a relative bargain,and should be sought out.
A)True
B)False
10
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Chapter 8: The Home and Automobile Decision
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199 Verified Questions
199 Flashcards
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Sample Questions
Q1) A mortgage for less than 80% of the appraised value of the home will not require PMI insurance because they default less often.
A)True
B)False
Q2) What are some factors that determine whether a homeowner should refinance?
Q3) Most predatory lenders offer prepayment privileges with their mortgages.
A)True
B)False
Q4) According to the Keown Book,what are some tips on making a complaint to a company?
Q5) Private mortgage insurance typically is not needed with a down payment of 20% or larger.Why?
A) Not true, all mortgage loans require PMI.
B) Buyers who have large down payments don't choose the extra insurance.
C) Buyers who invest large down payments are more motivated to make their mortgage payments.
D) All of the above
E) None of the above
Q6) What are the common mortgage loan options?
Q7) Name six factors that will determine your monthly lease payment.
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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) A disadvantage of term insurance is that the cost rises each time the policy is renewed.
A)True
B)False
Q2) Riley knows her ex-husband would not think about taking out a life insurance policy on himself to protect their two children in the event of his untimely death.As a result,Riley is taking out a policy on him and paying for it herself.That makes Riley the ________ and her children are the ________.
A) insured, policy holders
B) policy owner, beneficiaries
C) beneficiary, policy holders
D) insured, policy owners
E) none of the above
Q3) The main disadvantage of a flexible spending plan is that you may lose any money remaining in the account at the end of the fiscal year.
A)True
B)False
Q4) Briefly explain the different types of health insurance.
Q5) What factors should be considered when selecting a life insurance policy?
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Chapter 10: Property and Liability Insurance
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147 Verified Questions
147 Flashcards
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Sample Questions
Q1) Which of the following statements is true?
A) The lower your insurance credit score, the higher your homeowner's insurance rate will be.
B) The higher your insurance credit score, the higher your homeowner's insurance rate will be.
Q2) To be properly reimbursed for the loss of personal property in your home,you should take a written inventory of household contents and a video tape of these contents.You should have a written description and an oral description that includes which of the following?
A) Date of purchase
B) The cost of each item
C) Model number and brand name
D) Serial number
E) All of the above
Q3) List seven general ways you can keep your automobile insurance rates down while ensuring complete coverage.
Q4) Pretend you are an insurance agent.Explain the coinsurance and 80 percent rule to a client.
Q5) Explain Section I: Property Coverage for HO-2 and HO-3 policies.
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Chapter 11: Investment Basics
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309 Verified Questions
309 Flashcards
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Sample Questions
Q1) As the number of stocks in your portfolio increases
A) the variability in your portfolio increases.
B) the systematic risk in your portfolio increases.
C) the unsystematic risk in your portfolio increases.
D) none of the above.
Q2) You and your spouse have decided to incorporate bonds into your newly-formed retirement portfolio.You will most likely purchase them
A) directly from a bond dealer.
B) with your broker acting as intermediary.
C) directly from the issuing institution.
D) with an underwriter acting as intermediary.
Q3) If the corporation that issued a bond goes bankrupt,the bondholders are paid before stock holders are paid from any remaining assets of the corporation.
A)True
B)False
Q4) The real rate of return is the nominal rate of return adjusted for inflation.
A)True
B)False
Q5) How do interest rates affect returns on other investments?
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Chapter 12: Investing in Stocks
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178 Flashcards
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Sample Questions
Q1) Which stock index will have the largest representation of small-,mid- and large -cap stocks?
A) DJIA
B) S&P 500
C) Wilshire 5000
D) None of the above
Q2) In the short run,market variability or volatility creates potential risk.
A)True
B)False
Q3) When all stocks move in the same direction,diversification among stocks works just as well as ever.
A)True
B)False
Q4) Briefly describe the SWOT analysis.
Q5) Common stockholders not only have the right to elect the board but also must approve day-to-day decisions of the chief executive officer.
A)True
B)False
Q6) Can you explain the risk-return trade-off with common stocks?
Page 15
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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) A bond with a speculative rating will have which of the following characteristics?
A) A high coupon yield
B) A high yield to maturity
C) Double BB or lower rating
D) All of the above are correct.
E) Only A and B are correct.
Q2) The city of Houston passed a bond issue to build a bridge over the bay.The bond was to have the interest paid by the income generated by charging drivers a toll to cross the bridge.This is an example of a ________ bond.
A) collateralized
B) cash
C) revenue
D) general obligation
E) none of the above
Q3) Compare and contrast preferred stock with bonds and common stock.
Q4) Most corporate bonds are tax-free bonds in the state the corporation is based in.
A)True
B)False
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Page 16
Chapter 14: Mutual Funds: An Easy Way to Diversify
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136 Verified Questions
136 Flashcards
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Sample Questions
Q1) Briefly explain the three ways to make money when you own shares in a mutual fund.
Q2) An ________ is a fixed pool of securities,generally municipal bonds.
A) earning trust
B) unit investment trust
C) equity corporation
D) asset diversification company
E) none of the above
Q3) For your investment program,you have occasionally been holding a few stocks that you purchased from various brokers.Based on this,which advantages of mutual funds would be appealing to you?
A) Diversification
B) Professional management
C) Avoidance of bad brokers
D) only A and C
E) A, B, and C
Q4) To obtain information about mutual funds you must always pay a fee.
A)True
B)False
Q5) How is an asset allocation fund different from a balanced mutual fund?
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Chapter 15: Retirement Planning
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147 Flashcards
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Sample Questions
Q1) What are the major differences between the new IRAs and the traditional IRA?
Q2) Congratulations! You have just retired with $1.4 million dollars in your 401(k)plan.You will be receiving a fairly large Social Security check and you have adequate personal savings outside of your 401(k)to live on for several years.You don't want to lock up your retirement money into an annuity because you want to be flexible for the future.What would be your best option?
A) Purchase an early withdrawal annuity.
B) Roll over the balance into a qualified IRA account.
C) Hire a Certified Financial Planner for investing advice.
D) All of the above are correct.
E) Only B and C are correct.
Q3) 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
Q4) What does the term 'self directed' mean concerning retirement accounts?
Q5) Elaborate on the basics of annuities and payouts.
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Chapter 16: Estate Planning: Saving Your Heirs Money and Headaches
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106 Flashcards
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Sample Questions
Q1) If a family has young children,or there are children from a previous marriage,then a trust is probably the best way to go for estate planning.
A)True
B)False
Q2) You and your brother have decided to invest in the stock market together.You will put in $5,000 each and open a single account at a brokerage.How should the ownership of this account be established if both of you wish the other to keep all the money in the event that the other should die?
A) Tenancy by the entirety
B) Joint tenancy with the right of survivorship
C) Tenancy in common
D) Community property
Q3) Identify three advantages and three disadvantages of irrevocable living trusts.
Q4) An attestation and witness clause is an attachment to a will that alters or amends a portion of the will signed in front of two witnesses.
A)True
B)False
Q5) Describe the typical funeral and administrative expenses.
Page 19
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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) Which of the following is considered to be a key element to effective debt management?
A) Know and understand the costs of debt.
B) Complete a budget: always spend more than you earn.
C) Take the largest possible loan you can obtain.
D) Accept credit whenever it is offered.
E) None of the above
Q2) List the six keys to successful debt management.
Q3) Women live,on average,7 years longer than men.
A)True
B)False
Q4) What does the phrase "living below your means" really mean and how is it related to wealth building?
Q5) Your tax status and the tax-advantaged benefits and opportunities afforded you by your employer may change as a result of your marriage.
A)True
B)False
Q6) How can someone plan for a major illness?
Q7) Discuss why it is important to keep a clean credit record.
Page 20
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