Personal and Household Finance
Solved Exam Questions
Course Introduction
Personal and Household Finance introduces students to the foundational principles of managing personal and family financial resources. Topics covered include budgeting, saving, banking, credit management, insurance, taxation, investments, and retirement planning. The course focuses on practical strategies for making informed financial decisions in daily life, understanding consumer rights and responsibilities, and developing skills to achieve short- and long-term financial goals. Students will also explore the impact of economic trends and personal values on financial choices, equipping them with tools to build and maintain financial stability throughout various life stages.
Recommended Textbook
Personal Finance 4 4th Edition by Lawrence
J. Gitman
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15 Chapters
2587 Verified Questions
2587 Flashcards
Source URL: https://quizplus.com/study-set/3514
Page 2
Chapter 1: Understanding the Financial Planning Process
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136 Verified Questions
136 Flashcards
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Sample Questions
Q1) What policies can the government utilize to help stabilize the economy?
A) Price stabilization policy
B) Monetary policy
C) Fiscal policy
D) b and c
E) a,b,and c
Answer: D
Q2) Financial planning is a continuing,life-long process.
A)True
B)False Answer: True
Q3) Defining financial goals is an important first step in personal financial planning process.
A)True
B)False Answer: True
Q4) Most people graduate from college with [no | some] debts. Answer: B
Q5) [Disney stock | Your car] would be considered a financial asset. Answer: A
Page 3
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Chapter 2: Using Financial Statements and Budgets
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) Inability to reach short-term goals will significantly affect your ability to reach long-term goals.
A)True
B)False
Answer: True
Q2) The income statement:
A) shows financial position at a specific point in time.
B) shows financial performance for a specific time.
C) shows financial position for a specific time.
D) shows financial performance at a specific point of time.
E) none of these.
Answer: B
Q3) When estimating income for the income and expense statement,you should:
A) use gross income.
B) include expected pay increases.
C) adjust for inflation.
D) use net income less capitalized interest.
E) none of the above.
Answer: A
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Page 4
Chapter 3: Preparing Your Taxes
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191 Flashcards
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Sample Questions
Q1) Dwayne and Gayle were divorced on September 29,have not remarried,and have no dependents.Their filing status for the year will each be "married" since they were married for more than half of the year.
A)True
B)False
Answer: False
Q2) A capital gain on an investment held for more than 12 months would be taxed at the same rate as ordinary income.
A)True
B)False
Answer: False
Q3) [All | Some] of your medical expenses during the year could be taken as an itemized deduction.
Answer: B
Q4) If you are married,you can legally file a single tax return.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Managing Your Cash and Savings
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189 Verified Questions
189 Flashcards
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Sample Questions
Q1) Which of the following accounts are partially or completely tax exempt from federal taxes when the earnings of the account are used to fund qualified college education expenses?
A) Certificates of deposit
B) U.S.Treasury bills
C) Series EE bonds
D) Money market mutual funds
E) Passbook savings
Q2) The main business of a savings and loan association (S&L)is to provide home mortgage and home improvement loans.
A)True
B)False
Q3) If you invest $1,200 per year at the end of each year for 40 years at an 8% rate of return,you will have accumulated: (Use time value table or financial calculator.Select the closest answer.)
A) $48,000.
B) $51,840.
C) $310,870.
D) $379,000.
E) $384,000.
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Chapter 5: Making Automobile and Housing Decisions
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198 Verified Questions
198 Flashcards
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Sample Questions
Q1) Which of the following is a reason for people to lease vehicles?
A) Leasing is generally less expensive than buying.
B) Monthly payments for leases are generally less expensive than loan payments.
C) One can afford a more expensive car with the same monthly payment by leasing rather than buying.
D) b and c only
E) a,b,and c
Q2) The earnest money deposit is a payment to the [real estate agent for his services | seller to show good faith when making an offer to buy].
Q3) The money factor on an auto lease is similar to the interest rate on a loan.
A)True
B)False
Q4) To be legally binding,real estate buy-sell agreements must be in writing,but leases may be oral.
A)True
B)False
Q5) Paying mortgage points to get a lower rate of interest makes more sense if you expect to live in a home for a [longer | shorter] period of time.
Q6) As home prices have fallen the "rent ratio" has [increased | decreased].
Page 7
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Chapter 6: Using Credit
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) Which of the following would be an indication of overspending?
A) Your checks are bouncing.
B) Collection agencies are calling you frequently.
C) All your credit cards are charged up to their limits.
D) You have no cash reserves and must borrow for incidentals.
E) All of the above
Q2) AChapter 13 bankruptcy filing would result in the discharge of most of your debts.
A)True
B)False
Q3) A credit limit refers to the maximum amount the cardholder can owe the issuer at any point in time.
A)True
B)False
Q4) _____ would be a proper use of credit.
A) Purchase of a house
B) A financial emergency
C) Shopping convenience
D) Investing
E) All of these
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Chapter 7: Using Consumer Loans
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147 Flashcards
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Sample Questions
Q1) Loan repayment of a [PLUS | Stafford] loan would begin two months after the loan is received.
Q2) There is a limit on the [number | dollar amount] of student loans you can have.
Q3) [Interim financing | Installment loan] is used in situations where the funds to be used for repayment are known to be forthcoming.
Q4) A characteristic of consumer loans is that they:
A) include a negotiated contract.
B) are arrived at through a formal process.
C) include a repayment schedule.
D) are used to purchase big-ticket durable goods and other items.
E) are all of these
Q5) The cash value of a whole life insurance policy can be used as a source of loan collateral.
A)True
B)False
Q6) PLUS loans are made to parents or legal guardians rather than to the student.
A)True
B)False
Q7) There are now about [$1 billion | $1 trillion] in student loans outstanding.
Q8) 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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153 Verified Questions
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Sample Questions
Q1) Jonathan Blake purchased an insurance policy of $150,000,and nominated his wife,Rebecca Blake as his primary beneficiary,and his son,Nathan Blake as his secondary beneficiary.Assuming that Rebecca and Nathan survive Jonathan,the benefit of the insurance shall be received by [Rebecca Blake | Nathan Blake].
Q2) Universal life insurance is often suitable for single college students since the cost is quite low.
A)True
B)False
Q3) Generally,the primary purpose of life insurance is to provide a tax-advantaged investment plan.
A)True
B)False
Q4) Annual term insurance premiums increase as you get older while whole life insurance premiums remain constant.
A)True B)False
Q5) A [credit life insurance | mortgage life insurance] is sold in conjunction with installment loans.
Q6) The majority of term policies have a [level | decreasing] face value.
Page 10
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Chapter 9: Insuring Your Health
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154 Flashcards
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Sample Questions
Q1) Advances in medical technology,drugs prescriptions,and treatments have substantially reduced the costs of health care in recent decades.
A)True
B)False
Q2) Surgical expense insurance would pay for cosmetic surgery [| to reduce the size of your nose | only if deemed a medical necessity].
Q3) Group health insurance premiums are usually lower than individual health insurance premiums.
A)True
B)False
Q4) When you are hospitalized for surgical care,surgical expense insurance will pay the hospital bill.
A)True
B)False
Q5) Blue Cross provides hospital coverage and Blue Shield provides prescription pharmacy coverage.
A)True B)False
Q6) The average age of the American population is [decreasing | increasing].
Page 11
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Chapter 10: Protecting Your Property
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189 Flashcards
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Sample Questions
Q1) An HO-2 policy will protect your property from losses from [all | listed] perils.
Q2) You will insure your house for $90,000.The premium on an HO-3 policy will be greater than that of an HO-2 policy.
A)True
B)False
Q3) Research shows that people with [lower | higher] credit scores tend to file more insurance claims.
Q4) If you have two insurance policies on the same property,the _____ clause explains how the two insurance companies will share the loss.
A) principle of indemnity.
B) co-insurance clause.
C) other-insurance clause.
D) companies' insurable interest.
E) principle of subrogation.
Q5) Age of home affects insurance premiums the most.
A)True
B)False
Q6) Negligent acts must be [intentional | unintentional] in order to be insured.
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Chapter 11: Investment Planning
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168 Flashcards
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Sample Questions
Q1) A(n) [underwriting | prospectus] is a document made available to prospective security buyers that describes the firm and a new security issue.
Q2) Instructing your broker to buy or sell a stock at a particular price is a:
A) limit order.
B) market order.
C) margin order.
D) regular order.
E) stop order.
Q3) National stock exchanges are part of broker markets. A)True B)False
Q4) The [DJIA | S&P Index] is based on 500 different stocks.
Q5) The Securities Investors Protection Corporation would make payment to you if [the corporation in which you bought stock | the brokerage firm holding your stock] went bankrupt.
Q6) A security is sold only once in the [primary | secondary] market.
Q7) A fixed dividend would be received with [common | preferred] stock.
Q8) The collection of investments you select to meet your investment goals is called your [portfolio | allocation].
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Chapter 12: Investing in Stocks and Bonds
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186 Flashcards
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Sample Questions
Q1) Monte Jackson is considering the purchase of XYZ stock and would like to estimate its approximate yield if he holds it 5 years.The current price is $20 and Monte expects it would rise to $30 over the 5-year holding period.The expected dividend is $1.00 each year.
Q2) The risk free rate of return is often measured by the return on US Treasury Bills.
A)True
B)False
Q3) Dividend reinvestment plans should be avoided because of their relatively high cost. A)True
B)False
Q4) Which of the following is an advantage of owning growth stocks?
A) High and growing interest
B) High but declining dividends
C) Low PE ratio
D) High potential for capital growth
E) Tend to be solid blue-chip stocks
Q5) Changes in the general level of prices within an economy produce [purchasing power risk | interest rate risk].
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Chapter 13: Investing in Mutual Funds
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170 Flashcards
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Sample Questions
Q1) Global mutual funds can invest both in domestic and international stocks.
A)True
B)False
Q2) The primary investment objective of bond mutual funds is [growth | income].
Q3) Redeeming your mutual fund shares might result in a charge called:
A) a back-end load.
B) a front-end load.
C) a redemption tax.
D) a management fee.
E) none of these
Q4) An open-end investment company is commonly known as a mutual fund.
A)True
B)False
Q5) Bond mutual funds are always less risky than stock mutual funds.
A)True
B)False
Q6) The securities owned by a mutual fund are in the custody of [the management company | an independent bank].
Q7) A no-load mutual fund would most likely be sold by [a broker | calling the mutual fund company].
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Chapter 14: Planning for Retirement
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208 Flashcards
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Sample Questions
Q1) A vested employee has a right to receive benefits from an employer's retirement funds even if he no longer works there.
A)True B)False
Q2) Depending on your age,Social Security retirement benefits could be reduced because of employment income.
A)True B)False
Q3) Even the best retirement plan needs to be reviewed every few years.
A)True
B)False
Q4) If your employer matches your 401(k)contributions,you should contribute [the maximum allowed for tax deferrable | at least the amount matched by your employer].
Q5) In short-term retirement planning you estimate the required level of retirement income as a percentage of current income,fund that amount,and then adjust that number every 3 to 5 years.
A)True B)False
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Chapter 15: Preserving Your Estate
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) A will is required by state law.
A)True
B)False
Q2) Updating an estate plan is a critical part of the estate planning process.
A)True
B)False
Q3) You could give an unlimited amount of assets to your [children | spouse] without incurring any gift taxes.
Q4) _____ would be a first-level death-related cost.
A) Funeral expenses
B) Federal estate taxes
C) Probate expenses
D) Inheritance taxes
E) Administrative costs
Q5) A testamentary trust is established in a will and is funded through a probate process.
A)True
B)False
Q6) Most estates break-up because the deceased had [an improper estate plan | no estate plan].
Page 17
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