Personal Financial Management
Exam Bank
Course Introduction
Personal Financial Management introduces students to the fundamental concepts and practical skills necessary to effectively manage personal finances. The course covers topics such as budgeting, saving, credit and debt management, personal banking, investing, insurance, and retirement planning. Emphasis is placed on developing informed decision-making abilities to achieve financial goals, avoid common financial pitfalls, and build long-term financial security. Through real-life scenarios and interactive exercises, students gain the knowledge and confidence required to make sound financial choices in both their personal and professional lives.
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
Source URL: https://quizplus.com/quiz/69803
Sample Questions
Q1) Your [level of education | age] will usually have no effect on your earning capacity. Answer: C
Q2) Investments are distinguished from savings on the basis of:
A) length of time held.
B) initial dollar outlay.
C) depreciation.
D) voting rights.
E) level of risk and expected return.
Answer: E
Q3) Ideally,retirement planning should begin:
A) during the year before retirement.
B) when the last child has left home.
C) as soon as the mortgage is paid off.
D) when you get married.
E) none of these
Answer: E
Q4) Most families find it [easy | difficult] to discuss money matters.
Answer: B
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Chapter 2: Using Financial Statements and Budgets
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174 Verified Questions
174 Flashcards
Source URL: https://quizplus.com/quiz/69804
Sample Questions
Q1) Only the current month's payment on your mortgage loans would be listed on the balance sheet as a liability.
A)True
B)False
Answer: False
Q2) Budgets are:
A) restrictive.
B) complicated.
C) forward looking.
D) permanent.
E) unnecessary.
Answer: C
Q3) Monthly statements and pay stubs can be shredded when year-end statements are received.
A)True
B)False
Answer: True
Q4) If you liquidate assets or borrow to make your budget balance,this will [increase | maintain] your net worth.
Answer: B
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Chapter 3: Preparing Your Taxes
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191 Verified Questions
191 Flashcards
Source URL: https://quizplus.com/quiz/69805
Sample Questions
Q1) The AMT includes in taxable income certain types of deductions otherwise allowed,such as state and local income and property taxes.
A)True
B)False
Answer: True
Q2) Social security taxes are paid on earned income but not on investment income.
A)True
B)False
Answer: True
Q3) Gross income minus tax exempt income equals adjusted gross income. A)True
B)False
Answer: False
Q4) There is no limit on the amount of Social Security component of FICA withheld annually.
A)True
B)False
Answer: False
Q5) Interest you paid on your [car | house] loan could be deducted. Answer: B
Page 5
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Chapter 4: Managing Your Cash and Savings
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189 Verified Questions
189 Flashcards
Source URL: https://quizplus.com/quiz/69806
Sample Questions
Q1) Money market deposit accounts are insured by the Federal Deposit Insurance Corporation (FDIC)if purchased at a bank.
A)True
B)False
Q2) The rate of return on a Series EE savings bond will be constant over the life of the bond.
A)True
B)False
Q3) Lower borrowing costs encourage the substitution of [debt for equity | equity for debt] in corporate capital structures.
Q4) Saving accounts are sometimes referred to as demand deposits.
A)True
B)False
Q5) Stop-payment services are easier with electronic funds transfers than with traditional check payments.
A)True
B)False
Q6) During the past few years,the number of financial institution failures per year has [risen | dropped].
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Chapter 5: Making Automobile and Housing Decisions
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198 Verified Questions
198 Flashcards
Source URL: https://quizplus.com/quiz/69807
Sample Questions
Q1) A condominium or townhome buyer will make monthly mortgage payments as well as pay a fee for services and maintenance of common areas.
A)True
B)False
Q2) The biggest fixed cost of owning a car is [the loan payment | insurance].
Q3) Jana has $1,500 for a down payment and thinks she can afford monthly payments of $300.If she can finance a vehicle with a 7%,4-year loan,what is the maximum loan amount Jana can afford?
A) $12,528
B) $14,208
C) $16,028
D) $17,900
E) $18,028
Q4) The monthly interest on your mortgage was $690; you paid $650.The result is:
A) growing equity.
B) negative amortization.
C) fixed interest expense.
D) shrinking principal.
E) indexed equity.
Q5) The term condominium/townhome refers to a type of [architecture | ownership].
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) Credit bureaus:
A) will send you a free copy of your credit report whenever you ask.
B) may charge up to $20 for a copy of your credit report.
C) are required to correct errors only when a creditor asks them to.
D) all of these
E) none of these
Q2) For a fee,credit bureaus can provide credit scores for prospective borrowers.
A)True
B)False
Q3) Rebate credit cards work best for those who use the rebates,charge a lot,and do not carry high monthly balances.
A)True
B)False
Q4) The purpose of a credit report is to evaluate the kind of risk you pose to the lender.
A)True
B)False
Q5) You have a $926 balance on your credit card account.The minimum payment on your account is 2 percent of the latest balance or $20,whichever is greater.What will be the minimum payment this month?
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Chapter 7: Using Consumer Loans
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147 Verified Questions
147 Flashcards
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Sample Questions
Q1) You are borrowing $5,000 at 9%.You may choose a 24 or 36 month repayment plan.Monthly payments will be higher with the [24 | 36] month plan.
Q2) [Interim financing | Installment loan] is used in situations where the funds to be used for repayment are known to be forthcoming.
Q3) Your budget should be considered [before | after] taking on a large consumer loan.
Q4) You must be a member of a [credit union | S&L] in order to borrow money there.
Q5) The annual percentage rate (APR)on a single-payment loan for $1,000 at a simple interest rate of 12% is:
A) 10%.
B) 12%.
C) 15%.
D) 18%.
E) 24%.
Q6) The best loan rates for consumer loans are from consumer finance companies. A)True B)False
Q7) The interest paid on a student loan [is sometimes | is not] tax deductible.
Q8) There are now about [$1 billion | $1 trillion] in student loans outstanding.
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Chapter 8: Insuring Your Life
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153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/69810
Sample Questions
Q1) Insurance underwriting is best described as:
A) the process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums.
B) a set of activities used to identify the risk and rewards of investing the insured's funds on marketable securities.
C) production-related activities performed primarily by agents on the field.
D) process of developing pricing structures for insurance,often performed by an actuary.
E) a function most often performed by acturials.
Q2) Nonforfeiture rights guarantee that a policy owner will not lose his or her _____. A) face value.
B) death benefits for survivors.
C) cash value.
D) premium refunds.
E) premium reductions.
Q3) Credit life insurance is generally considered to be a [good | poor] life insurance buy.
Q4) The majority of term policies have a [level | decreasing] face value.
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Page 10
Chapter 9: Insuring Your Health
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154 Verified Questions
154 Flashcards
Source URL: https://quizplus.com/quiz/69811
Sample Questions
Q1) Activities of daily living (ADLs)are important in determining _____ for long-term care insurance.
A) type of care
B) services covered
C) waiting period
D) eligibility
E) benefit duration
Q2) The ["own occupation" | "any occupation"] definition of disability is more restrictive.
Q3) Medicare Advantage supplemental benefits include [lab tests | wellness programs].
Q4) Terms of payment and terms of coverage are two sets of provisions that should be carefully scrutinized when evaluating an insurance program.
A)True
B)False
Q5) An individual receiving health care [could | could not] receive multiple payments from more than one insurance company for this care.
Q6) Premiums for workers compensation are paid by the [employees | employers].
Q7) The average age of the American population is [decreasing | increasing].
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Chapter 10: Protecting Your Property
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189 Verified Questions
189 Flashcards
Source URL: https://quizplus.com/quiz/69812
Sample Questions
Q1) Which of the following best describes the personal property floater?
A) An endorsement providing coverage for items of expensive personal property not adequately covered under the standard homeowner's policy.
B) An addition to the automobile policy intended to cover items of personal property that are often in or upon a covered automobile.
C) A specialized inland marine policy covering boats and trailers used with boats.
D) A liability policy that covers against liability caused by ownership or use of items of personal property.
E) None of the above
Q2) The best place to buy automobile insurance is [auto dealer | | independent agent].
Q3) You would be considered to be negligent when you,a dependent,or another named insured's action causes harm or property loss.
A)True
B)False
Q4) The personal property of your [renter | visiting mother-in-law] would be covered by your HO policy.
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Page 12
Chapter 11: Investment Planning
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168 Verified Questions
168 Flashcards
Source URL: https://quizplus.com/quiz/69813
Sample Questions
Q1) Asset allocation is another term for [selecting the stocks you don't want to buy | deciding what percentage of your investment you want in stocks].
Q2) A convertible bond would let the investor exchange it for [preferred | common] stock.
Q3) Once one's asset allocation plan is developed and securities are selected,these decisions do not have to be made again until there is a major life change.
A)True
B)False
Q4) The Securities Investor Protection Corporation insurance guarantees the dollar value of your securities will not dip below a certain level.
A)True
B)False
Q5) The owner of a bond would expect to receive [steady | variable] annual income.
Q6) According to recent legislation,under the FDIC each brokerage account is insured up to $250,000.
A)True
B)False
Q7) Stockbrokers prefer clients who [buy and hold | trade actively.]
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Chapter 12: Investing in Stocks and Bonds
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186 Verified Questions
186 Flashcards
Source URL: https://quizplus.com/quiz/69814
Sample Questions
Q1) Individuals invest in preferred stock for its high [current income | potential gain].
Q2) For a U.S resident,the best way to minimize exchange rate risk when investing in foreign stocks is to buy [them directly on the foreign exchanges | American Depositary Receipts].
Q3) A bond priced at 89 8/32.What is its price?
A) $89.25
B) $890.25
C) $898.32
D) $646.50
E) none of the above
Q4) Preferred stockholders will receive their share of company earnings [before | after] bond interest is paid.
Q5) Dividend income is taxed [as ordinary income | at capital gains rates].
Q6) Only the federal government issues convertible bonds.
A)True
B)False
Q7) Past returns on an investment are [an indication | a guarantee] of future returns.
Q8) By holding stock in 5 companies,you are reducing [market | business] risk.
Page 14
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Chapter 13: Investing in Mutual Funds
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170 Verified Questions
170 Flashcards
Source URL: https://quizplus.com/quiz/69815
Sample Questions
Q1) Dividend income,capital gains distributions received,and changes in the fund's share price are all sources of return for a mutual fund.
A)True
B)False
Q2) The market value of your mutual fund shares will move in the [same | opposite] direction as the market value of the underlying securities.
Q3) A group of funds managed by a single company which offers conversion privileges is called a:
A) management group.
B) fund family.
C) brokerage group.
D) switched funds.
E) convenience group.
Q4) Load fees charged on mutual funds help insure that the fund is well managed and that the investor's yields will be greater than those on no-load funds.
A)True
B)False
Q5) [Aggressive growth | Equity-income] funds would be more speculative.
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Chapter 14: Planning for Retirement
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208 Verified Questions
208 Flashcards
Source URL: https://quizplus.com/quiz/69816
Sample Questions
Q1) Of the following survivors of a fully insured worker,_____ would not be eligible for Social Security benefits.
A) spouse age 50,with dependent children
B) spouse age 47,no children
C) spouse age 65,with dependent children
D) spouse age 65,no children
E) spouse age 26,with dependent children
Q2) An investment vehicle that systematically pays out benefits over an extended period of time is a(n):
A) common stock.
B) preferred stock.
C) mutual funds.
D) annuity.
E) money market securities.
Q3) Household expenses usually increase after retirement.
A)True
B)False
Q4) An IRA is a type of an investment.
A)True
B)False
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Chapter 15: Preserving Your Estate
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160 Verified Questions
160 Flashcards
Source URL: https://quizplus.com/quiz/69817
Sample Questions
Q1) The most favorable tax treatment results when you transfer your estate (after death)to your:
A) children.
B) spouse.
C) parent.
D) employer.
E) siblings.
Q2) Property held jointly with the right of survivorship [would possibly | would not] be part of your gross estate subject to federal estate taxes.
Q3) Property held in different states does not complicate the estate planning process.
A)True
B)False
Q4) Your will would appoint _____ to carry out the terms of the will.
A) an attorney
B) an executor
C) a tax accountant
D) a life insurance beneficiary
E) an administrator
Q5) A valid will [must be written | can be oral or written].
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