Personal Finance
Study Guide Questions
Course Introduction
Personal Finance is a foundational course designed to equip students with the essential knowledge and practical skills needed to manage their personal economic lives effectively. Topics covered include budgeting, saving, investing, credit management, debt reduction, risk management, insurance, tax planning, and retirement preparation. Through real-world examples and interactive activities, students learn how to make informed financial decisions, set realistic financial goals, and navigate the complex world of personal finance to achieve financial stability and long-term security.
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 opportunity cost of a decision is the value of the next best alternative that must be foregone.
A)True
B)False
Answer: True
Q2) You cannot build financial security or wealth unless you spend less than you earn.
A)True
B)False Answer: True
Q3) By saving and investing,people are much more likely to have funds available for future consumption.
A)True
B)False Answer: True
Q4) Financial security is marked by having high income.
A)True
B)False Answer: False
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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) Professional networking is the process of establishing and using contacts to obtain and exchange career information.
A)True
B)False
Answer: True
Q2) The most common mistake in a résumé is mentioning your specific accomplishments from previous jobs.
A)True
B)False
Answer: False
Q3) According to the U.S.Census Bureau,getting an advanced degree has a bigger impact on annual income (as compared to a bachelor's degree) than getting a bachelor's degree (as compared to graduating from high school).
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) A balance sheet shows flows of income in and expenses out of your finances for a given period of time.
A)True
B)False
Answer: False
Q2) A cash-flow statement summarizes transactions that have taken place over a specific period of time.
A)True
B)False
Answer: True
Q3) Using credit cards to "balance" your budget is a proper budgeting tool.
A)True
B)False
Answer: False
Q4) The best method to control overspending is to regularly monitor unexpended balances in each budget classification.
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) A progressive tax is one that demands a higher percentage of a person's income as income increases.
A)True
B)False
Q2) Section 529 college savings plans are state-sponsored.
A)True
B)False
Q3) The IRS requires that you have receipts for deducted cash contributions of $250 or more.
A)True
B)False
Q4) The health insurance premium tax credit can help anyone defray the cost of health insurance.
A)True
B)False
Q5) Gross income is defined as all income received in the form of money.
A)True
B)False
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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) The best banking account PIN numbers and passwords are those that are easy to remember.
A)True
B)False
Q2) Share draft accounts at credit unions are generally more expensive than NOW accounts at commercial banks.
A)True
B)False
Q3) 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
Q4) 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
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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) If you find an error or omission on your credit report,you should notify the credit bureau that you wish to exercise your right to reinvestigation under the A)FCRA.
B)FDIC.
C)SEC.
D)FICO.
Q2) The APR can be used to compare credit contracts with different time periods,finance charges,repayment schedules,and amounts borrowed.
A)True
B)False
Q3) If the credit bureau refuses to make a correction to an error in your file,you may wish to provide your version of the disputed information by adding a consumer statement to your credit bureau file.
A)True
B)False
Q4) The additional dollar cost for using credit is referred to as the APR. A)True
B)False
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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) Virginia has just been quoted what appears to be a very competitive loan for $2,000 to be paid back in 24 monthly payments of $96.66 with a finance charge of $240.Using the n-ratio method of estimating the APR,what is the APR on this loan?
\( \mathrm{APR}=\frac{\mathrm{Y}(95 \mathrm{P}+9) \mathrm{F}}{12 \mathrm{P}(\mathrm{P}+1)(4 \mathrm{D}+\mathrm{F})} \)
A)8.0 percent
B)11.1 percent
C)19.2 percent
D)24.0 percent
Q2) Installment purchase agreements are loans in which the title does not pass to the buyer until the last installment payment has been paid.
A)True
B)False
Q3) A line of credit is structured much like a A)credit card account.
B)travel and entertainment card account.
C)budget account.
D)service credit.
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Page 9
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) What should buyers do before making a major purchase decision?
A)Comparison shop
B)Be impulsive
C)Negotiate
D)Haggle
Q2) The gross capitalized cost includes the price of the vehicle plus what the dealer paid to finance the purchase plus any other items,including insurance or a maintenance agreement over the life of the lease.
A)True
B)False
Q3) Never discuss ____ with an auto dealer.
A)trade-in values
B)cost of service contracts
C)affordable monthly payments
D)the need for a loan
Q4) Balloon auto loans were developed by lenders in response to the popularity of auto leasing.
A)True B)False
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Chapter 9: Obtaining Affordable Housing
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217 Verified Questions
217 Flashcards
Source URL: https://quizplus.com/quiz/26526
Sample Questions
Q1) Preforeclosure is the time between when the homeowner has been notified by the lender that he or she is in default and the actual foreclosure has been completed.
A)True
B)False
Q2) The mortgage suited for someone who has his or her home completely paid for but needs cash to live on is the ____ mortgage.
A)biweekly
B)shared-appreciation
C)rollover
D)reverse
Q3) Many communities have a multiple-listing service (MLS),which is an information and referral network among real estate brokers allowing properties listed with a particular broker to be shown by all other brokers.
A)True
B)False
Q4) Couples buying a home should generally put ownership in both names.
A)True
B)False
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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) Individuals who enter into,change,and cancel insurance policies on behalf of an insurance company that they represent are referred to as insurance
A)brokers.
B)agents.
C)facilitators.
D)underwriters.
Q2) The best way to document a homeowner's insurance loss is with pictures.
A)True
B)False
Q3) After purchasing a new computer,Sally met her friend Jason for lunch.On returning to her car,Sally discovered that her car had been broken into and her computer was gone.____ insurance will cover the damage to her car,and ____ insurance will cover the stolen computer.
A)Comprehensive auto; comprehensive auto
B)Collision; comprehensive auto
C)Comprehensive auto; homeowner's
D)Collision; homeowner's
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Page 12
Chapter 11: Managing Health Expenses
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136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/26528
Sample
Questions
Q1) Lance,a volunteer baseball coach,was hit by a hard line drive.As a result of the injury,Lance was taken to the emergency room for treatment and admitted to the hospital.Lance's covered expenses totaled $4,000.How much of the $4,000 will Lance have to pay if these are his first medical expenses of the year and he has the following health insurance coverage?
$500 deductible per year
80/20 coinsurance
$1,000 per year out-of-pocket coinsurance cap
A)$500
B)$700
C)$1,000
D)$1,200
Q2) Traditional health insurance provides protection against direct medical expenses and,thus,does not cover
A)injury related health care.
B)illness related health care.
C)recuperative medical care resulting from illness or injury
D)lost income when you cannot work due to illness or injury.
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13
Chapter 12: Life Insurance Planning
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215 Verified Questions
215 Flashcards
Source URL: https://quizplus.com/quiz/26529
Sample Questions
Q1) To understand the different versions of cash-value life insurance policies that pay a variable return,you must evaluate
A)the cost of the insurance protection portion.
B)the rate of return on the invested funds.
C)the company's expense charges.
D)(All of these)
Q2) The premiums for a $100,000,20-year,decreasing term policy would be less than the premiums for a $100,000,20-year policy with a fixed face value,other things being equal.
A)True
B)False
Q3) If Bethany works at a job where her income fluctuates from month to month and is concerned about not being able to pay her cash-value life insurance premium some months,she should consider a policy with A)a waiver of premium.
B)cash dividends.
C)automatic premium loan provision.
D)a guaranteed insurability option.
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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) The real rate of return on an investment is the yield minus the effect of taxes only.
A)True
B)False
Q2) Financial risk relates to the possibility that the investment
A)will fail to pay a return to the investor.
B)is subject to a sharp price changes.
C)will fall in value.
D)is illiquid.
Q3) Research indicates that an investor can cut random risk in half by diversifying in as few as five stocks and bonds.
A)True
B)False
Q4) Your risk tolerance is your ability to weather changes in the values of your investments.
A)True
B)False
Q5) Diversification reduces all risk.
A)True
B)False
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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) The term securities refers to the ownership instruments of common stock and preferred stock only.
A)True
B)False
Q2) Unsecured bonds are called ____ bonds.
A)mortgage
B)collateral trust
C)equipment
D)debenture
Q3) Indentures that allow the issuer to repurchase the bond at par value or by paying a premium are known as a call option.
A)True
B)False
Q4) The inverse of the P/E ratio is the
A)dividend yield.
B)income curve.
C)earnings yield.
D)earnings per share.
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Page 16
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) A mutual fund buys and sells its shares at NAV,plus or minus any sales charges or fees.
A)True B)False
Q2) Mutual funds 12b-1 fees have the same effect as front-end loads in that they reduce the return received by investors.
A)True B)False
Q3) The shares of an open-end mutual fund are sold at a discount from their net asset value.
A)True B)False
Q4) The average expense ratio for managed stock mutual funds is around ____ percent and _____ percent for index funds.
A)2.00; 0.75
B)1.26; 0.25
C)0.25; 1.26
D)0.75; 2.00
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Page 17
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) Aggressive investors take a particularly speculative position when they do not own the underlying asset,as when they buy naked options or sell naked puts.
A)True
B)False
Q2) An option is a contract that
All of these.
A)gives the holder the right to buy or sell a specific asset.
B)specifies a predetermined price.
C)specifies a time period.
D)All of these.
Q3) Commercial properties are generally more risky investments than residential properties.
A)True
B)False
Q4) People who pursue options and futures investments should have a moderate-to-aggressive investment philosophy.
A)True
B)False
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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) Employers usually offer employees retirement plans because the promise of a secure retirement represents an effective way to recruit and keep valuable employees.
A)True
B)False
Q2) Roth IRAs have no required minimum distributions (RMDs).
A)True
B)False
Q3) One can create a trust without an attorney.
A)True
B)False
Q4) Employees of small firms are more likely to be covered by pension plans than employees of large firms.
A)True
B)False
Q5) Retirement plans with named beneficiaries are examples of nonprobate property.
A)True
B)False
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