Personal Financial Planning Exam
Bank
Course Introduction
Personal Financial Planning introduces students to the fundamental principles and strategies necessary for effective management of personal finances. The course covers topics such as budgeting, savings, consumer credit, insurance, investments, retirement planning, tax considerations, and estate planning. Students will learn to set financial goals, analyze financial resources, and make informed decisions to secure their financial well-being. Emphasis is placed on developing practical skills and a comprehensive understanding of the personal financial planning process, enabling students to achieve financial independence and long-term security.
Recommended Textbook
Focus on Personal Finance An Active Approach to Help You 4th Edition by
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14 Chapters
1753 Verified Questions
1753 Flashcards
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Page 2
Jack R. Kapoor
Chapter 1: Personal Financial Planning in Action
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90 Verified Questions
90 Flashcards
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Sample Questions
Q1) If inflation is expected to be 9 percent,how long will it take for prices to double?
A) 6 years
B) 7 years
C) 8 years
D) 12 years
E) 18 years
Answer: C
Q2) The stages that an individual goes through based on stages in the family and financial needs is called the
A) Financial planning process
B) Budgeting procedure
C) Personal economic cycle
D) Adult life cycle
E) Tax planning process
Answer: D
Q3) Purchasing a car is an example of a consumable-product goal.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Money Management Skills
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Financial records that may need to be referred to on a regular basis should be kept in a safe deposit box.
A)True
B)False
Answer: False
Q2) Another name for take-home pay is
A) Monthly savings.
B) Discretionary income.
C) Disposable income.
D) Gross income.
E) Deductions.
Answer: C
Q3) The current financial position of an individual or family is best presented with the use of a
A) Budget.
B) Cash flow statement.
C) Balance sheet.
D) Bank statement.
E) Time value of money report.
Answer: C
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Chapter 3: Taxes in Your Financial Plan
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) What are two steps you can take if you think that you will be in a higher tax bracket next year?
Answer: 1.Delay deductions since they will have a greater benefit next year.
2.Accelerate the receipt of income in the current year to have it taxed at the lower current rate.
Q2) Joseph needs to complete his income taxes for the year.He has already calculated his adjusted gross income.What does he need to do next?
A) Add his tax-exempt income.
B) Subtract his itemized deductions.
C) Add his tax credits.
D) Subtract his tax-exempt income.
E) Add his tax exemptions.
Answer: B
Q3) Interest paid on a home equity loan is not deductible.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Financial Services: Savings Plans and Payment Account
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) Given the information here,what should Luke's adjusted bank statement balance AND adjusted checkbook balance be?
Show your work.
Q2) Billy accepted a job at a company that specializes in providing money for short-term retail lending.Where did he go to work?
A) A credit card company
B) An investment company
C) A life insurance company
D) A finance company
E) A payday loan company
Q3) Amber wants to open an account,but she doesn't know which kind is appropriate.She is interested in earning a higher interest rate and plans to keep at least $1,000 in her account so she can avoid paying a fee.Amber wants to open her account at an investment company.What kind of account should she open?
A) A certificate of deposit
B) An interest-earning checking account
C) A money market account
D) A money market fund
E) A regular savings account
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Chapter
Sources, and Costs
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170 Verified Questions
170 Flashcards
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Sample Questions
Q1) Which of the following is an example of closed-end credit?
A) A mortgage loan.
B) A department store credit card.
C) Overdraft protection.
D) A bank line of credit.
E) All of these are examples of closed-end credit.
Q2) What step can you take if your credit application is denied?
A) Sue the credit rating agency.
B) File a complaint against the merchant.
C) Ask why you were denied credit.
D) Reapply for credit once 30 days have passed.
E) Borrowers do not have any rights provided by law.
Q3) The easiest loans to obtain are also the least expensive.
A)True
B)False
Q4) Consumer credit dates back to colonial times when it was extensively used by farmers.
A)True
B)False
Q5) Explain redlining.
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Chapter 6: Consumer Purchasing Strategies and Wise
Buying of Motor Vehicles
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) Problem identification is part of the ____ phase of the decision-making process.
A) evaluating alternatives
B) postpurchase activities
C) preshopping activities
D) selection and purchase
E) More than one of these is correct.
Q2) An aesthetic feature of a vehicle is air conditioning.
A)True
B)False
Q3) Comparison shopping will be beneficial for buying
A) Inexpensive items.
B) One-time purchases of low-cost products.
C) Products whose prices are the same at all retailers.
D) Products whose quality is the same at all retailers.
E) Items that can be researched easily with advertisements.
Q4) Assume that you are completely dissatisfied with a purchase.What are the four steps in order that you should take to resolve your problem?
Q5) A good time to use a lawyer is when you appear in small claims court.
A)True
B)False
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Chapter 7: Selecting and Financing Housing
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Elaine purchased her living unit in a building with five other separate units.She purchased a
A) Condominium.
B) Duplex.
C) Manufactured home.
D) Single-family dwelling.
E) Townhouse.
Q2) A disadvantage of home ownership is the deductibility of mortgage interest and real estate tax payments.
A)True
B)False
Q3) Walt has decided to sell the home he has lived in for 50 years.The house has two bedrooms on the first floor,a finished basement,and a finished attic with a low ceiling.To prepare his home for sale,he should
A) Exaggerate the size of his yard.
B) Keep everything "as is."
C) List his house as a three-bedroom.
D) Take steps to make the house appear bright and large.
E) Underestimate the cost of utilities.
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Page 9
Chapter 8: Home and Automobile Insurance
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) The actual cash value method of settling claims is based on the replacement cost of an item less depreciation.
A)True
B)False
Q2) Homeowner's insurance covers all of the following except
A) A detached garage.
B) Trees and shrubs.
C) A tool shed.
D) Personal property.
E) All of these are covered.
Q3) If you choose to wear your seatbelt,you are using
A) Risk avoidance.
B) Risk reduction.
C) Risk assumption.
D) Risk shifting.
E) Risk increasing.
Q4) Discuss what 100/300/50 means with relation to liability coverage for automobile insurance.
Q5) What is the purpose of a personal property floater?
Q6) What is the purpose of an umbrella policy?
Page 10
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Chapter 9: Health and Disability Income Insurance
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118 Verified Questions
118 Flashcards
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Sample Questions
Q1) COBRA and the Health Insurance Portability and Accountability Act of 1996 have improved health insurance coverage options for individuals and families who may have changed jobs or lost a job.
A)True
B)False
Q2) With a guaranteed renewable health insurance policy,the insurer is permitted to raise premiums for all members of a group.
A)True
B)False
Q3) Miguel is concerned that the health insurance option he is considering plays upon unrealistic fears.He is most concerned about a
A) Deductible.
B) Coinsurance.
C) Stop-loss provision.
D) Hospital indemnity policy.
E) Dread disease policy.
Q4) An employer self-funded health plan requires a low level of financial assets.
A)True
B)False
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Chapter 10: Financial Planning With Life Insurance
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Which of the following is NOT a type of permanent insurance?
A) Whole life
B) Straight life
C) Ordinary life
D) Term life
E) Cash value life
Q2) Which of the following is NOT important when buying life insurance?
A) Buying from a financially strong company
B) Buying from professionally qualified representatives
C) Ignoring the reputations of local agencies
D) Working with a representative who will help you select the proper kind of protection within your financial boundaries
E) Asking family or friends for recommendations to choose an insurance company
Q3) After you purchase a life insurance contract,you have a "free look" period that lasts
A) 3 days.
B) 5 days.
C) 10 days.
D) 30 days.
E) 60 days.
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Page 12
Chapter 11: Investing Basics and Evaluating Bonds
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) Which of the following is not correct?
A) The taxable equivalent yield is greater than the tax-exempt yield.
B) The taxable equivalent yield can be compared to the return on a taxable investment.
C) An investor can have a capital gain if she sells a municipal bond before maturity.
D) The taxable equivalent yield is calculated for municipal securities.
E) The tax-exempt yield is associated primarily with federal government securities.
Q2) Paul Paulson recently heard about layoffs at his company.What are at least three steps he can take to make sure his financial affairs are in order?
Q3) A common way of saying you need to diversify your investments is
A) A bird in the hand is worth two in the bush.
B) A stitch in time saves nine.
C) Birds of a feather flock together.
D) Don't judge a book by its cover.
E) Don't put all of your eggs in one basket.
Q4) Contrast a safe investment with a speculative investment.Include at least one example of each.
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Page 13
Chapter 12: Investing in Stocks
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155 Flashcards
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Sample Questions
Q1) You bought Harley-Davidson stock at $9 in March 2009 and saw the value increase to $22,then drop to $17 by early June 2009.Looking back,you realized that you missed a chance to "lock in" your profits and sell the stock at a price of $21 or higher.If you did not want to use a market order,what should you have used to lock in your profit?
Q2) Alberta owns 100 shares of stock of ABC Company,and Bobby owns 200 shares of the same stock.If ABC Company pays a $5 dividend to all stockholders with a record date of Friday,June 15,then
A) Alberta will receive the same amount as Bobby if they owned the stock two business days before the record date.
B) Both will receive the dividend as long as they sell their stock three days before the record date.
C) Alberta will receive half as much as Bobby if they owned the stock two business days before the record date.
D) Both will receive the dividend if they bought the stock on the record date.
E) Alberta and Bobby will receive the same amount if they bought the shares at least one month before the record date.
Q3) What is the difference between a primary market and a secondary market?
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Chapter 13: Investing in Mutual Funds
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) The investments in the Alamo Basics Contingency Fund have a current market value of $800 million.The fund also has liabilities that total $60 million.If this mutual fund has 20 million shares,what is the net asset value per share?
A) $3.00
B) $37.00
C) $40.00
D) $43.00
E) $60.00
Q2) Nicholas purchased 150 shares of ABC Mutual Fund at $10.50 and sold them one year later at a price of $14.50.His total earnings were
A) $400
B) $600
C) $2,025
D) $2,625
E) $4,650
Q3) What is a balanced fund?
Q4) How is the price per share for closed-end mutual funds determined?
Q5) What is a mutual fund?
Q6) What are the two primary reasons that investors purchase mutual funds?
Page 15
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Chapter 14: Starting Early: Retirement and Estate Planning
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) What is the difference between a revocable trust and an irrevocable trust?
Q2) A testamentary trust takes effect while you're alive.
A)True
B)False
Q3) A(n)____ cannot be changed or ended.
A) irrevocable trust
B) living will
C) power of attorney
D) revocable trust
E) will
Q4) Under what circumstances would a rollover IRA be appropriate?
Q5) An "average" older household spends most of its money on
A) Entertainment.
B) Food.
C) Housing.
D) Medical care.
E) Transportation.
Q6) Explain the importance of an executor and a guardian.
Q7) What is the maximum amount that one individual can give another each year without paying a gift tax?
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