Personal Finance
Solved Exam Questions
Course Introduction
Personal Finance is a practical course designed to equip students with essential skills for managing their individual financial resources. Topics covered include budgeting, banking, credit management, personal loans, investing, retirement planning, insurance, and tax fundamentals. The course emphasizes real-world applications and decision-making strategies, empowering students to make informed choices about saving, spending, and protecting their money throughout different life stages.
Recommended Textbook
PFIN3 3rd Edition by Lawrence J. Gitman
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15 Chapters
2770 Verified Questions
2770 Flashcards
Source URL: https://quizplus.com/study-set/653 Page 2
Chapter 1: Understanding the Financial Planning Process
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143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/12407
Sample Questions
Q1) It is [fairly simple | impossible] to find a financial plan that will work for everyone. Answer: B
Q2) The individual consumer is
A) a member of the business group.
B) the party around which the personal financial environment is centered.
C) an important force in government.
D) an advocacy group.
E) relatively unimportant to business or government.
Answer: B
Q3) How long you invest is not nearly as important as the rate of interest you can earn on your investments.
A)True
B)False
Answer: False
Q4) [Inflation | Consumer Price Index] is the amount of goods and services each dollar buys at a given point in time.
Answer: C
Q5) For most people,employee benefits are of [little | major] importance.
Answer: B
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Chapter 2: Using Financial Statements and Budgets
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184 Verified Questions
184 Flashcards
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Sample Questions
Q1) Net worth is greatest for those in their prime working years,about age 55.
A)True
B)False
Answer: False
Q2) A(n)____ would not be listed as an asset on your balance sheet.
A) mortgaged home
B) savings account
C) owned automobile
D) checking account
E) leased automobile
Answer: E
Q3) On an income statement covering January 1 to June 30,____ would not be included as income.
A) wages and salaries received in that six months
B) interest received on June 30
C) auto sold with payment received May 15
D) inheritance granted in April, to be paid in September
E) income tax refund received April 14
Answer: D
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Page 4
Chapter 3: Preparing Your Taxes
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201 Verified Questions
201 Flashcards
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Sample Questions
Q1) Qualified dividends are taxed at the same rates as [earned income | long-term capital gains].
Answer: B
Q2) Russ and Lois got married December 30.Since they were single for most of the year,however,they can legally file as married taxpayers in the year of the wedding. A)True
B)False Answer: True
Q3) The Congress writes and passes the Internal Revenue Code.
A)True
B)False
Answer: True
Q4) You will have to list and be able to prove [standard | itemized] deductions if audited. Answer: B
Q5) A tax credit would result from [an IRA contribution | child care expenses]. Answer: B
Q6) Federal income taxation is [progressive | regressive].
Answer: A
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Chapter 4: Managing Your Cash and Savings
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193 Verified Questions
193 Flashcards
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Sample Questions
Q1) It costs financial institutions more for their customers to perform [ATM transactions | Internet transactions.]
Q2) Whenever you write a check or make a deposit,an entry should be made on your
A) deposit slip.
B) checkbook ledger.
C) check.
D) ATM account.
E) personal check.
Q3) A regular savings account is a demand deposit.
A)True
B)False
Q4) Low interest rates that have persisted since the financial crisis of 2008-09 have been a net benefit to [borrowers | retirees].
Q5) [More than | Fewer than] half the banking institutions in the U.S.are federally insured.
Q6) Series EE Savings bonds are now called Patriot Bonds. A)True
B)False
Q7) [Anyone | Only those with an account at the bank] could get a check certified.
Page 6
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Chapter 5: Making Automobile and Housing Decisions
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222 Verified Questions
222 Flashcards
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Sample Questions
Q1) Using an FHA mortgage to finance your home would require a [lower | higher] down payment than a conventional loan.
Q2) Renting affords more flexibility than home ownership.
A)True
B)False
Q3) Other factors being equal,fixed-rate mortgages will have higher interest rates initially than adjustable-rate mortgages.
A)True
B)False
Q4) Billy and Suzie want to calculate the difference in monthly payments on a $110,000 home as a result of a $5,000 down payment or a $10,000 down payment.Use your financial calculator to figure the monthly payments,assuming they get a 6.5%,30-year mortgage.
Q5) The first step in the auto-buying process should be
A) test drive several cars.
B) begin negotiations.
C) consider alternative buying strategies.
D) decide whether to trade in your used car or to sell if yourself.
E) analyze how much car you can afford.
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Chapter 6: Using Credit
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180 Verified Questions
180 Flashcards
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Sample Questions
Q1) The decision whether or not to grant you credit will be made by [individual creditors | the credit bureau].
Q2) Clare's gross salary is $36,000 annually and her after-tax income is $28,800.What is Clare's maximum recommended monthly consumer credit payment?
A) $600.
B) $480.
C) $450.
D) $360.
E) $200.
Q3) Interest will almost always begin to accrue immediately when you use a bank credit card to
A) make purchases.
B) send payments.
C) compute finance charges.
D) get cash advances.
E) all of these.
Q4) One condition of a secured credit card is that the holder must [pay a higher rate of interest | deposit an amount equal to the credit line in a savings account].
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Page 8
Chapter 7: Using Consumer Loans
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) When the simple interest method is used to determine finance charges,the interest is calculated based on the
A) ending balance of the loan.
B) average outstanding balance.
C) actual balance of the loan.
D) beginning balance of the loan.
E) none of these.
Q2) If a loan has a prepayment penalty,there will be an additional cost to repay the loan early.
A)True
B)False
Q3) Savings and loan associations are allowed to make loans for things like cars,boats,and motorcycles.
A)True
B)False
Q4) The cash value of a whole life insurance policy can be used as a source of loan collateral.
A)True B)False
Q5) It is [legal | illegal] for a lender to charge a pre-payment penalty.
Page 9
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Chapter 8: Insuring Your Life
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157 Verified Questions
157 Flashcards
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Sample Questions
Q1) Multiple indemnity policies should be ignored as a source of funds when determining insurance needs because it offers no protection if the insured's death is due to natural causes.
A)True
B)False
Q2) An insured can borrow from the [cash | face] value of her life insurance policy.
Q3) Using the ____ approach is the most accurate method to determine life insurance needs.
A) human life value
B) multiple earnings
C) risk assessment
D) economic identification
E) needs
Q4) Credit life insurance is often a legal requirement when you buy something on credit.
A)True
B)False
Q5) A life insurance agent who takes her profession seriously is likely to have earned the [CPCU | CLU] professional certification.
Q6) It [is | is not] possible to avoid most risks in your life.
Page 10
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Chapter 9: Insuring Your Health
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165 Verified Questions
165 Flashcards
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Sample Questions
Q1) Medicare Advantage supplemental benefits include all of the following except
A) Vision
B) Dental
C) General checkups
D) Hospitalization
E) Wellness programs
Q2) The majority of employers pay
A) the entire health care insurance premium for workers.
B) the entire health care insurance premium for dependents.
C) the entire health care premium for workers and dependents.
D) part of the premium for workers and dependents.
E) none of the premium for workers and dependents.
Q3) Blue Cross / Blue Shield plans are really hybrid HMOs that allow members to go outside of network.
A)True
B)False
Q4) A group HMO employs a group of doctors to provide healthcare services to members in a central facility.
A)True
B)False
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Chapter 10: Protecting Your Property
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195 Verified Questions
195 Flashcards
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Sample Questions
Q1) Jake drove Amanda's truck to the football bowl game because his car was broken.On the way home,Jake was involved in an accident that was his fault.The resulting liability damages totaled $85,000.Jake has $100,000 liability coverage on his car,and Amanda has $50,000 on her truck.How would the $85,000 liability damages be paid for this accident?
A) $50,000 from Amanda's policy with no further payment
B) $85,000 from Jake's policy
C) $50,000 from Amanda's policy plus $35,000 from Jake's policy
D) $50,000 from Amanda's policy plus $35,000 out of Jake's pocket
E) $50,000 from Amanda's policy plus $35,000 out of Amanda's pocket.
Q2) Homeowners' insurance premiums are determined by
A) policy limits.
B) perils covered.
C) deductibles chosen.
D) all of these.
E) none of these.
Q3) If you are sued,the liability portion of your property insurance [must | has no obligation to] defend you.
Q4) The advisable dollar limit for any one auto accident is [$100,000 | $300,000].
Q5) [Most | Few] tenants carry renters insurance.
Page 12
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Chapter 11: Investment Planning
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196 Verified Questions
196 Flashcards
Source URL: https://quizplus.com/quiz/12417
Sample Questions
Q1) Long-term securities are traded in the primary market.
A)True
B)False
Q2) Which of the following is not a securities market
A) capital market
B) money market
C) primary market
D) secondary market
E) Dow Jones market
Q3) A diversified securities portfolio is characterized by
A) dissimilar risk and return characteristics of the securities.
B) concentrating on a single industry.
C) minimal loss potential.
D) stable earnings.
E) formula timing.
Q4) On a percentage basis,commissions will be higher if you are buying a [large | small] number of shares.
Q5) Diversification should [reduce the possibility of losing all your money | have little impact on the risk of losing money].
Page 13
Q6) An IPO is be sold in the [primary | secondary] market many times.
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Chapter 12: Investing in Stocks and Bonds
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195 Verified Questions
195 Flashcards
Source URL: https://quizplus.com/quiz/12418
Sample Questions
Q1) A bond is quoted as 6 ¹/ 05.The bondholder would receive ____ interest per year.ions?
A) $ 5
B) $ 50
C) $ 65
D) $500
E) $650
Q2) A bond with a S&P rating of BBB is considered investment-grade.
A)True
B)False
Q3) The returns you would expect from your investments could be A) risk.
B) capital gains.
C) current income.
D) a and c above.
E) b and c above.
Q4) Changes in the value of securities due to social,political,or economic factors are referred to as market risk.
A)True
B)False
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Chapter 13: Investing in Mutual Funds
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174 Verified Questions
174 Flashcards
Source URL: https://quizplus.com/quiz/12419
Sample Questions
Q1) Value funds are comprised of stocks with [low | high] PE ratios.
Q2) Index funds,while trying to match market performance,consistently [perform well | perform poorly] against market benchmarks.
Q3) [Open-end | Closed-end] mutual funds always redeem shares at NAV.
Q4) Socially Responsible Funds typically avoid investing in
A) Environmentally sound companies
B) Alcohol and Tobacco stocks
C) Car companies that do not promote safety
D) Fast food chains that sell meat
E) All of the above
Q5) In the Wall Street Journal's listing of mutual funds,a "t" after the mutual fund name and before the NAV means that the particular mutual fund has a ____ associated with it.
A) front-end load
B) back-end load
C) 12b-1 fee
D) management fee
E) b and c
Q6) Individuals would not trade among themselves in [a closed end | an open end] investment company.
Page 15
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Chapter 14: Planning for Retirement
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226 Verified Questions
226 Flashcards
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Sample Questions
Q1) The initial estimates of retirement expenses and income should be done in [today's | future] dollars.
Q2) Jacque Solis (age 38)is leaving her current job and would like to take a long vacation before starting new employment.She has $58,000 in a qualified plan that she would like to live on during this period.If she is in a 25 percent marginal tax bracket,how much will she have left after paying taxes and penalties?
A) $58,000
B) $43,500
C) $37,700
D) $29,000
E) $14,500
Q3) 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
Q4) The period during which annuity payments are made to the individual is called the [distribution | survivorship] period.
Q5) A self-employed person could set up a [Keogh | 403(b)] retirement plan.
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Chapter 15: Preserving Your Estate
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178 Verified Questions
178 Flashcards
Source URL: https://quizplus.com/quiz/12421
Sample Questions
Q1) One should make copies of his will and store them in different places.
A)True
B)False
Q2) The gift tax law allows a person to give gifts up to [$10,000 | $13,000] tax free.
Q3) Most commentators believe the annual exclusion amount from estate tax will be set at $3,500,000 for 2013.
A)True
B)False
Q4) [Most | Very few] people need to do estate planning.
Q5) You need to make major revisions in your will.You should write a [codicil | new will].
Q6) Proof of mental capacity lies on the person contesting a will,not the individual writing a will.
A)True
B)False
Q7) Your gross estate is composed only of nonprobate property.
A)True
B)False
Q8) Your will [may | may not] contain a testamentary trust.
Page 17
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