Personal and Family Financial Planning
Mock Exam
Course Introduction
Personal and Family Financial Planning provides an in-depth introduction to the essential concepts and strategies for managing personal and family finances. The course covers topics such as budgeting, saving, investing, credit management, insurance, retirement planning, and tax considerations. Students will learn how to set financial goals, develop actionable plans, and make informed decisions to achieve financial security and well-being for themselves and their families. Through real-life scenarios and case studies, participants will gain practical skills in evaluating financial options, identifying risks, and planning for major life events, empowering them to build a strong foundation for financial stability and growth.
Recommended Textbook
Personal Finance An Integrated Planning Approach 8th Edition by Ralph R Frasca
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16 Chapters
1996 Verified Questions
1996 Flashcards
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Chapter 1: Financial Planning: Why Its Important to You
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66 Verified Questions
66 Flashcards
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Sample Questions
Q1) Estate planning is primarily concerned with how best to distribute your wealth during your life and at death.
A)True
B)False
Answer: True
Q2) It is likely that achieving financial goals
A)hinders your effort to achieve non-financial goals.
B)helps your effort to achieve non-financial goals.
C)is burdensome and lowers the quality of life.
D)turns people into cynics.
Answer: B
Q3) Sue Hank has just indicated that the extra benefits from getting an A in her personal finance course are not worth the extra effort she must give.Sue used marginal analysis in making her decision.
A)True
B)False
Answer: True
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Chapter 2: The Time Value of Money:
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66 Verified Questions
66 Flashcards
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Sample Questions
Q1) With a 10% interest rate,the present value of $100 received one year from today is $90.91.
A)True
B)False
Answer: True
Q2) An ordinary annuity assumes ________-of-period payments,while an annuity due assumes ________-of-period payments.
A)end;beginning
B)beginning;end
C)end;middle
D)beginning;middle
Answer: A
Q3) Generally speaking,planners can usually seek higher return investments to meet A)short-term goals.
B)long-term goals.
C)goals of any term.
D)dreams,but not goals. Answer: B
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Chapter 3: Financial Statement and Budgets: Where Are
You Now and Where Are You Going
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) In extending an expense item for the current budget year,an often-used and useful approach is to
A)use last year's figure.
B)use the average of the last three years.
C)use last year's figure plus a usual 10% "fudge factor."
D)adjust last year's figure upwards by this year's expected inflation.
Answer: D
Q2) In order to simplify the record-keeping chores of budgeting,you should use cash to pay bills whenever you can.
A)True
B)False
Answer: False
Q3) The current average savings rate for all U.S.families is generally in the range of:
A)10 to 20%.
B)5 to 10%.
C)0 to 5%.
D)0 to - 5%.
Answer: C
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Chapter 4: Taxes: the Governments Share of Your Rewards
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Property that has appreciated in value generally receives a stepped-up cost basis at death.
A)True
B)False
Q2) Which of the following is not a correct characteristic of a Coverdell Education Savings Account?
A)It may be used to fund an elementary or primary school education.
B)The child will not owe taxes on any withdrawal made to pay for qualified educational expenses.
C)There is a 10% penalty on early withdrawals before the child reaches age 17.
D)The amounts deposited in an Education IRA are not tax deductible.
Q3) Ed and his wife Edna gave their daughter $24,000.There are no potential estate taxes on this gift.
A)True
B)False
Q4) A tax levied on the property of the deceased before it is transferred is A)an estate tax.
B)an inheritance tax.
C)a gift tax.
D)an excise tax.
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Chapter 5: Liquidity Management: Managing Current
Assets and Current Liabilities
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97 Verified Questions
97 Flashcards
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Sample Questions
Q1) From a federal income tax perspective,interest on U.S.Series EE bonds
A)is subject to state and local taxes.
B)may be deferred until redemption and may be avoided if it is used for a child's college or vocational expenses.
C)is taxable when earned.
D)is exempt from federal taxes.
Q2) Which of the following checks does not guarantee payment?
A)A personal check with a restrictive endorsement
B)A certified check
C)A cashier's check
D)A traveler's check
Q3) With a right of survivorship the proceeds in a joint bank account pass to the surviving account owner.
A)True
B)False
Q4) The more frequently interest is compounded,
A)the higher your effective yield.
B)the lower your effective yield.
C)your effective yield stays the same.
D)there is no relationship between effective yield and compounding.
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Chapter 6: Short-Term Credit Management: Consumer Credit
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138 Verified Questions
138 Flashcards
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Sample Questions
Q1) Lenders can discriminate against you on the basis of your A)income.
B)age.
C)gender.
D)You can not be discriminated against for any of these reasons.
Q2) Visa and MasterCard are bank cards.
A)True
B)False
Q3) The advice "buy now and avoid future price increases" leads to a greater use of credit,but high rates of return on your investments may make that bad advice.
A)True
B)False
Q4) Generally,the higher your marginal tax rate the stronger the argument for using a home equity loan,everything else considered.
A)True
B)False
Q5) You cannot be denied credit because of your marital status. A)True
B)False
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Chapter 7: Consumer Durables: the Personal Auto
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109 Verified Questions
109 Flashcards
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Sample Questions
Q1) Which one of the following auto expenses represents a cost of operations?
A)Loan payments
B)Gasoline
C)Depreciation
D)Sales tax and titling
Q2) According to the Mail Order Merchandise Rule the sender
A)may extend shipment beyond 30 days as long as you are notified.
B)may substitute similar or more expensive goods in place of the goods you have ordered.
C)may not extend shipment beyond 30 days,unless your consent is obtained.
D)must reduce the price of goods ordered by 10% if the shipment is extended beyond 30 days.
Q3) Most auto manufacturers have arbitration programs.
A)True
B)False
Q4) "Policy adjustment" is another term for secret warranty.
A)True
B)False
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Chapter 8: Housing: the Cost of Shelter
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) A warranty on the sale of an existing home typically
A)covers all defects for a 10-year period.
B)covers the structural integrity of the home.
C)is similar to an extended warranty on the home appliances.
D)has low or nonexistent deductibles.
Q2) The purpose of the title search is to ensure that the A)title is free of claims from third parties.
B)buyer has adequate funds for a down payment.
C)appraisal is correct.
D)bank has title to the funds it is lending.
Q3) Fixed rate mortgage typically have a
A)higher initial interest rate than comparable adjustable rate mortgages.
B)lower initial interest rate than comparable adjustable rate mortgages.
C)identical initial interest rate to that on comparable adjustable rate mortgages.
D)an initial rate that may be above or below that on comparable adjustable rate mortgages.
Q4) Banks pay interest on amounts held in escrow accounts.
A)True
B)False
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Chapter 9: Financial Markets and Instruments: Learning the Investment Environment
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117 Verified Questions
117 Flashcards
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Sample Questions
Q1) If you instruct your broker to buy a stock at a specific price,you have given a market order.
A)True
B)False
Q2) Tangible assets are often viewed as a protection against inflation.
A)True
B)False
Q3) Pooling arrangements would not include
A)mutual funds.
B)investment trusts.
C)warrants and rights.
D)limited partnerships.
Q4) A stop order is simply a market order that is automatically triggered at a specific market price.
A)True
B)False
Q5) "Investor's Business Daily" is a radio show focusing on investment news.
A)True
B)False
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Chapter 10: Investment Basics: Understanding Risk and Return
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) If the risk-free rate of return increases,required returns on all other securities should increase as well.
A)True
B)False
Q2) Evidence shows that the return on U.S.Treasury bills was negative.
A)True
B)False
Q3) In constructing a portfolio of investments,you can eliminate random risk but not market risk.
A)True
B)False
Q4) A risk premium is the difference between
A)the return on an investment and its risk.
B)the return on an investment and the return on Treasury bills.
C)the rate of inflation and the return on Treasury bills.
D)the intrinsic value of an investment and its market price.
Q5) Firm specific risk can be entirely eliminated if the returns on two firms have perfect negative correlation.
A)True
B)False
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Chapter 11: Stocks and Bonds: Your Most Common Investments
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) Preferred stock received its name because it is generally a better investment than common stock.
A)True
B)False
Q2) A stock's beta weight is used in determining its expected return.
A)True
B)False
Q3) Agency bonds are issued by
A)state and local government welfare agencies.
B)regional agencies of multinational corporations.
C)the U.S.Treasury.
D)agencies of the federal government.
Q4) A company's book value is determined by
A)applying the CAPM valuation model.
B)applying a price-to-earnings model.
C)dividing its assets by the number of common shares outstanding.
D)dividing its net worth by the number of common shares outstanding.
Q5) A blue chip stock refers to a small company with excellent growth prospects. A)True
B)False
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Chapter 12: Mutual Fundsother Pooling Arrangements:
Investment Performance
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) You cannot buy an open-end fund at a premium or discount. A)True
B)False
Q2) A closed-end fund's appeal is enhanced if it
A)sells at a premium.
B)has a load.
C)does not have a load.
D)sells at a discount.
Q3) Money market mutual funds have the protection of FDIC insurance. A)True
B)False
Q4) For a fee a HOLR can be converted into the underlying shares. A)True B)False
Q5) The most popular UITs are those investing in real estate. A)True B)False
B)False Page 14
Q6) A REIT's equity per share is similar to a fund's NAV. A)True
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Page 15
Chapter 13: Property and Liability Insurance: Protecting Your Lifestyle Assets
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) If you lower the probability of loss by taking preventive action you are engaging in which one of the following risk management strategies?
A)Risk avoidance
B)Risk reduction
C)Risk retention
D)Risk transfer
Q2) In a homeowners' policy,the subrogation clause
A)places your right to sue after the insurers right to sue for recovery of its payments for damages.
B)places your right to sue before the insurers right to sue for recovery of its payments for damages.
C)eliminates your right to sue for any damages for which even partial reimbursement is received.
D)provides coverage from any damage due to a subterranean source.
Q3) In specific areas of the country,flood insurance may be provided through the federal government's National Flood Insurance Program.
A)True
B)False
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Chapter 14: Health Care and Disability Insurance: Protecting Your Earning Capacity
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) The most widely held form of health care coverage is employer-provided group insurance.
A)True
B)False
Q2) In larger firms,COBRA requires that employers must offer terminating employees who cannot obtain alternative group insurance coverage
A)continued group insurance coverage that is convertible to individual coverage.
B)government sponsored health insurance.
C)an individual policy at termination.
D)counseling on how alternative coverage might be obtained individually.
Q3) In a "living will" you transfer all of your assets to your heirs while you are still living.
A)True
B)False
Q4) Social Security disability benefits are not affected by family status.
A)True
B)False
Q5) Workers' compensation provides comprehensive health insurance coverage.
A)True
B)False
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Chapter 15: Life Insurance and Estate Planning: Protecting Your Dependents
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) Which of the following individuals would definitely not qualify for survivors' benefits under Social Security?
A)Widower of divorced spouse
B)Child of deceased worker under age 18
C)Disabled child of deceased worker over age 18
D)Dependent parent of deceased worker
E)It is possible that under certain circumstances any of the above may qualify for survivor's benefits.
Q2) Of those assets distributed at death,which one of the following must pass through probate?
A)Assets distributed through the will
B)Assets distributed through a living trust
C)Assets distributed through a contractual transfer
D)All of the assets described above must pass through probate.
Q3) Limited payment life typically terminates coverage at age 65.
A)True
B)False
Q4) You may only specify one person as a primary beneficiary.
A)True
B)False
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Chapter 16: Retirement Planning: Planning for Your
Long-Term Needs
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119 Verified Questions
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Sample Questions
Q1) A significant percentage of wealth held by those over 65 is in the form of home equity.
A)True
B)False
Q2) When a pension plan satisfied all the government mandated requirements for it to receive a tax advantaged status,it is referred to as a
A)defined benefit plan.
B)qualified retirement plan.
C)normal retirement plan
D)individual savings plan.
Q3) If you have a significant break in service,all vested benefits may be lost.
A)True
B)False
Q4) The Pension Benefit Guaranty Corp does not
A)insure defined pension benefits.
B)help pensions locate benefits in terminated plans.
C)require firms to adequately fund promised defined benefits.
D)set standards for minimum benefits.
Page 19
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