Personal Finance
Exam Answer Key
Course Introduction
Personal Finance explores the fundamental concepts and practical skills needed to manage individual and family financial resources effectively. The course covers key topics such as budgeting, saving, investing, credit and debt management, insurance, taxes, retirement planning, and financial goal setting. Students will learn how to make informed financial decisions, analyze different financial products, and develop strategies to achieve financial stability and security throughout various life stages. Emphasis is placed on fostering critical thinking and responsible financial behaviors to navigate todays complex economic environment.
Recommended Textbook
Personal Finance 13th Edition by E. Thomas Garman
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17 Chapters
3061 Verified Questions
3061 Flashcards
Source URL: https://quizplus.com/study-set/1328
Page 2
Chapter 1: Understanding Personal Finance
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148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/26518
Sample Questions
Q1) The statistic that measures the value of all goods and services produced in the United States is the
A)consumer price index.
B)index of leading economic indicators.
C)federal funds rate.
D)gross domestic product.
Answer: D
Q2) The preferred phase of the economic cycle is
A)expansion
B)peak
C)trough
D)contraction
Answer: A
Q3) The sum total of all economic activity is broadly measured by the gross domestic product.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Career Planning
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76 Verified Questions
76 Flashcards
Source URL: https://quizplus.com/quiz/26519
Sample Questions
Q1) A cover letter should be designed for each specific position for which you are applying.The same cover letter with the appropriate address and salutation cannot be used when seeking interviews from multiple employers.
A)True
B)False
Answer: True
Q2) Nonsalary benefits are forms of compensation that result in the employee not having to pay out-of-pocket money for certain expenses: for example,tuition reimbursement,paid sick leave,and child care.
A)True
B)False
Answer: True
Q3) According to the U.S.Census Bureau,adults (ages 25-34) with an advanced degree earn approximately $63,000 more per year than adults with only a high school diploma. A)True
B)False
Answer: True
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Chapter 3: Financial Statements,tools,and Budgets
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150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/26520
Sample Questions
Q1) Disposable income is income
A)before taxes.
B)after all employer withholding including taxes.
C)after all employer withholding except taxes.
D)minus fixed expenditures.
Answer: B
Q2) Which of the following provides information about a person's financial condition at a specific point in time?
A)Balance sheet
B)Federal tax return
C)Income and expense statement
D)All of these
Answer: A
Q3) When setting up your budget for the month,it is useful to use prior months' cash-flow statements to set your estimates for income and spending for the upcoming month.
A)True
B)False
Answer: True
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Chapter 4: Managing Income Taxes
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201 Verified Questions
201 Flashcards
Source URL: https://quizplus.com/quiz/26521
Sample Questions
Q1) Refer to Figure 4-1.What is Tony and Liz's taxable income?
A)$15,600
B)$28,000
C)$35,000
D)$63,000
Q2) A flexible spending account allows an employee to set up a pre-tax account into which a part of their pay is deposited with their employer to be used to pay for child care and medical expenses.
A)True
B)False
Q3) IRS Publication 17 provides most of the federal income tax information needed by the typical taxpayer.
A)True
B)False
Q4) Which of the following expenses on a home is not tax deductible annually?
A)Interest paid on a first mortgage
B)Property taxes
C)Homeowners insurance premium
D)Interest paid on a second mortgage
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Chapter 5: Managing Checking and Savings Accounts
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181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/26522
Sample Questions
Q1) Mutual savings banks are called "mutual" because the depositors own the institution and share in the earnings.
A)True
B)False
Q2) List the money market accounts according to the interest rate generally paid on each account (from highest to lowest).
A)Super NOW account, money market deposit account, and money market mutual fund
B)Money market deposit account, money market mutual fund, and super NOW account
C)Money market mutual fund, money market deposit account, and super NOW account
D)Money market deposit account, super NOW account, and money market mutual fund
Q3) A joint account that gives each owner access to the account (without the other's signature) is called a joint tenancy account with right of survivorship.
A)True B)False
Q4) Retail transaction fees can be assessed when you make a purchase via a point-of-sale terminal at a retail store.
A)True
B)False
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Chapter 6: Building and Maintaining Good Credit
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136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/26523
Sample Questions
Q1) A debt-to-equity method provides a quick idea of one's financial solvency.The larger the ratio,the riskier the likelihood of repayment.A ratio in excess of 0.25 is considered high.
A)True
B)False
Q2) You should change the marital status linked to your credit card account should you become married,separated,or divorced.
A)True
B)False
Q3) Under the Fair Credit Reporting Act,the law requires
A)accurate, relevant, and recent information.
B)investigation of disputed information.
C)access to the information in your credit file.
D)All of these.
Q4) Creditors can legally require information about ____ on a credit application.
A)childbearing plans
B)marital status
C)age
D)all your sources of income
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Chapter 7: Credit Cards and Consumer Loans
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166 Verified Questions
166 Flashcards
Source URL: https://quizplus.com/quiz/26524
Sample Questions
Q1) Credit card costs can include
A)annual fees.
B)interest.
C)transaction fees.
D)All of these.
Q2) Under the Fair Credit Billing Act,you must make billing error complaints ____ to protect your legal rights.
A)in person
B)within 60 days after the first bill containing the error was mailed to you
C)over the telephone
D)both over the telephone and within 60 days after the first bill containing the error was mailed to you
Q3) If no payment is received by the due date on a credit account,
A)a credit bureau may be notified of slow payment.
B)the company may begin collection efforts.
C)the cardholder may be declared in default.
D)(All of these)
Q4) A retail credit card allows the holder to make purchases at numerous businesses.
A)True
B)False
Page 9
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Chapter 8: Vehicles and Other Major Purchases
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145 Verified Questions
145 Flashcards
Source URL: https://quizplus.com/quiz/26525
Sample Questions
Q1) Balloon auto loans were developed by lenders in response to the popularity of auto leasing.
A)True
B)False
Q2) ____ tend to have the widest range of choices and quality for used cars.
A)New car dealerships
B)Used car dealerships
C)Rental car companies
D)Repossession auctions
Q3) Leases work best for people who plan to buy a new vehicle every five to seven years.
A)True
B)False
Q4) Government agencies and media action lines are examples of which channel of complaint?
A)Local business
B)Self-regulatory organizations
C)Consumer-action agencies
D)Civil court
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Page 10
Chapter 9: Obtaining Affordable Housing
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217 Verified Questions
217 Flashcards
Source URL: https://quizplus.com/quiz/26526
Sample Questions
Q1) A housing unit that is detached from other units is called a single-family dwelling.
A)True
B)False
Q2) A mortgage loan with a fixed rate of interest and a fixed payment for principal and interest that is available from a financial institution is called
A)an assumable mortgage.
B)a conventional mortgage.
C)seller financing.
D)a lender buy-down mortgage.
Q3) A real estate broker has a legal obligation to the A)buyer.
B)seller.
C)lender.
D)party who is paying him or her.
Q4) Which of the following types of deeds is the safest?
A)Special warranty deed
B)Warranty deed
C)Deed of bargain and sale
D)Quitclaim deed
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Chapter 10: Managing Property and Liability Risk
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209 Verified Questions
209 Flashcards
Source URL: https://quizplus.com/quiz/26527
Sample Questions
Q1) Historically,homeowner's insurance paid only the actual cash value of property damaged or destroyed.
A)True
B)False
Q2) Good documentation is important when seeking reimbursement through insurance.
A)True
B)False
Q3) Deciding not to drive a car is an example of handling risk through A)risk avoidance.
B)loss control.
C)risk reduction.
D)transferring risk.
Q4) Both property and liability insurance protect you from financial losses resulting from damage to or destruction of your property.
A)True
B)False
Q5) Insurance is one of the least-understood purchases we make. A)True
B)False
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Chapter 11: Managing Health Expenses
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136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/26528
Sample Questions
Q1) Young adults may stay on a parent's health care plans until age 22 or graduating from college whichever comes first.
A)True
B)False
Q2) HMOs have dollar limits on their coverage
A)True
B)False
Q3) Health care plan is a generic name for any program that pays for or provides reimbursement for direct health care expenditures.
A)True
B)False
Q4) Your waiting period on disability income insurance can be ____ if you have some savings set aside as an emergency fund.
A)shortened
B)lengthened
C)costly
D)risky
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Chapter 12: Life Insurance Planning
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215 Verified Questions
215 Flashcards
Source URL: https://quizplus.com/quiz/26529
Sample Questions
Q1) Life insurance proceeds are nontaxable to the beneficiary.
A)True
B)False
Q2) Group term life insurance would be especially beneficial for persons who A)are young.
B)have no dependents.
C)have health problems.
D)need a savings program.
Q3) A fundamental decision to make when buying life insurance is whether to purchase term insurance or cash-value insurance.
A)True
B)False
Q4) A typical life insurance agent would use a premium quote service to help you find a low-cost life insurance policy.
A)True
B)False
Q5) The needs-based approach is not as accurate as the multiple-of-earnings approach.
A)True
B)False
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Chapter 13: Investment Fundamentals
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172 Verified Questions
172 Flashcards
Source URL: https://quizplus.com/quiz/26530
Sample Questions
Q1) Tammy and Richard have $100 a month automatically transferred from their checking account to their mutual fund account.This is an example of
A)dollar-cost averaging.
B)making installment payments.
C)scrimping each month.
D)saving windfalls.
Q2) The largest portion of return on equity investments normally comes from capital gains as opposed to dividend income.
A)True
B)False
Q3) Short-term investing requires more diligent monitoring than long-term investing.
A)True
B)False
Q4) With a(n) ____ investment,the borrower agrees to pay the investor a specific rate of return for use of the principal.
A)fixed maturity
B)fixed income
C)debt
D)equity
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Chapter 14: Investing in Stocks and Bonds
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352 Verified Questions
352 Flashcards
Source URL: https://quizplus.com/quiz/26531
Sample Questions
Q1) Investors can purchase Treasury securities directly from the Treasury.
A)True
B)False
Q2) You should consider selling a bond before maturity when the bond rating has seriously slipped.
A)True
B)False
Q3) An investor who expected an economic downturn would want to put his or her stock portfolio in ____ stocks.
A)cyclical
B)well-known growth
C)speculative
D)countercyclical
Q4) Which of the following statements regarding the price/earnings ratio (P/E ratio) is false?
A)The P/E ratio is a measure of a stock's relative price.
B)P/E ratios should be compared among firms in the same industry.
C)P/E ratios for most corporations have ranged between 5 and 10.
D)A relatively low P/E ratio indicates that investors expect sluggish growth or an uncertain future.
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Chapter 15: Mutual Funds and Exchange Traded Funds
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176 Verified Questions
176 Flashcards
Source URL: https://quizplus.com/quiz/26532
Sample Questions
Q1) Which of the following types of investment companies operates much like an index fund?
A)closed-end fund
B)REIT
C)unit investment trust
D)exchange-traded fund
Q2) A mutual fund that invests in a mix of assets (usually stocks,bonds,and cash equivalents and sometimes international assets,gold,and real estate),and they buy and sell regularly to reduce risk while trying to outperform the market is a(n)
A)balanced fund.
B)asset allocation fund.
C)blend fund.
D)equity-income fund.
Q3) Investing in mutual funds that are part of the same family of funds can simplify one's finances.
A)True
B)False
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Chapter 16: Real Estate and High-Risk Investments
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112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/26533
Sample Questions
Q1) When an option writer does not own the asset,it is called a A)straddle.
B)naked option.
C)covered option.
D)warrant.
Q2) Most investors prefer to show a negative cash flow on a real estate investment.
A)True
B)False
Q3) Most of the total return from a real estate investment usually comes from A)high mortgage rates.
B)cash flow.
C)price appreciation.
D)capital improvements.
Q4) One receives an actual title to property with the right-to-use purchase of a timeshare
A)True
B)False
Q5) The average rate of return for all investors in futures is zero. A)True
B)False
18
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Chapter 17: Retirement and Estate Planning
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269 Verified Questions
269 Flashcards
Source URL: https://quizplus.com/quiz/26534
Sample Questions
Q1) When you write your will you are named in the will as the executor.
A)True
B)False
Q2) Property owned in joint tenancy with right of survivorship is distributed through probate.
A)True
B)False
Q3) You immediately benefit from putting money in a tax-sheltered retirement account because you can make the deposits with after-tax money.
A)True
B)False
Q4) Trusts can be used to transfer assets outside of probate.
A)True
B)False
Q5) You can set up an IRA by A)making annual contributions.
B)rolling over a distribution received from a qualified employer-sponsored plan.
C)rolling over from another IRA.
D)Any of these.
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