Personal Financial Planning Practice
Questions
Course Introduction
Personal Financial Planning is a comprehensive course designed to introduce students to the fundamental principles and practical strategies of managing personal finances. The course covers essential topics such as budgeting, saving, investing, taxation, credit management, insurance, retirement planning, and estate planning. Through case studies, simulations, and real-life scenarios, students will develop the skills needed to make informed financial decisions, set achievable financial goals, and create a long-term financial plan. By the end of the course, students will be equipped with the knowledge and tools necessary to navigate complex financial choices throughout various stages of life.
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
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Sample Questions
Q1) The primary determinant of your standard of living is your [wealth | propensity to consume].
Answer: A
Q2) After reaching adulthood,your financial goals will [stabilize | continue to change].
Answer: B
Q3) For most people,employee benefits are of [little | major] importance.
Answer: B
Q4) Your personal value system will shape your attitude toward money and wealth accumulation.
A)True
B)False
Answer: True
Q5) Your [level of education | age] will usually have no effect on your earning capacity.
Answer: C
Q6) The best way to achieve your financial objectives is to [save every extra dollar you can | develop a sound financial plan].
Answer: B
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Page 3
Chapter 2: Using Financial Statements and Budgets
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) Sam and his wife Ann purchased a home in Lubbock,Texas in 1980 for $100,000.Their original home mortgage was for $90,000.The house has a current market value of $175,000 and a replacement value of $200,000.They still owe $55,000 on their home mortgage.Sam and Ann are now constructing their balance sheet.How should their home be reflected on their current personal balance sheet?
A) $200,000 asset and $55,000 liability
B) $200,000 asset and $90,000 liability
C) $175,000 asset and $55,000 liability
D) $175,000 asset and $90,000 liability
E) $100,000 asset and $55,000 liability
Answer: C
Q2) A liability would be listed on a balance sheet as the [amount originally borrowed | amount of the next loan payment to be made | none of these].
Answer: C
Q3) The savings ratio is useful in the evaluation of the balance sheet.
A)True
B)False
Answer: False
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Chapter 3: Preparing Your Taxes
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191 Verified Questions
191 Flashcards
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Sample Questions
Q1) The IRS definition of [gross | adjusted] income is "all income that is subject to federal taxes."
Answer: A
Q2) Which of the following is subject to federal income tax?
A) Tax credits Earnings on Roth IRA
B) Municipal bond interest
C) Child care support
D) Alimony received
E) All of the above
Answer: D
Q3) Itemized deductions are listed on Schedule:
A) A.
B) B.
C) C.
D) D.
E) F.
Answer: A
Q4) [Alimony | Child support] would be reported as taxable income.
Answer: A
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Chapter 4: Managing Your Cash and Savings
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189 Verified Questions
189 Flashcards
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Sample Questions
Q1) The least expensive method for banks to interact with their customers is:
A) a personal inreaction.
B) through phone.
C) through internet.
D) an ATM machine.
E) a full-service teller.
Q2) Your checkbook balance shows $706.50.The bank statement shows $772.77.The bank paid $2.50 interest.Checks 1501 ($85),1507 ($50.16),1511 ($20.50)are not shown on the statement.A service charge of $5 was levied by the bank.You made a $85 deposit yesterday that is not on the statement.What is the reconciled balance?
Q3) Harry just received $2,000 for graduation.He plans on investing this money for five years at 8% compounded annually.If he accomplishes this,Harry will have in an ending balance of: (Use time value tables or financial calculator.Select the closest answer.)
A) $2,160.
B) $2,520.
C) $2,608.
D) $2,938.
E) $3162.
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6
Chapter 5: Making Automobile and Housing Decisions
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198 Verified Questions
198 Flashcards
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Sample Questions
Q1) A lender gives you a choice of an 80% loan-to-value ratio or a 90% loan-to-value ratio.The interest rate for the 80% loan-to-value ratio loan will typically be [higher | lower] than the 90%.
Q2) The interest expense is lower on a 6-year auto loan than on a 3-year auto loan.
A)True
B)False
Q3) An increase in the "rent ratio" indicates that renting is more affordable relative to housing prices.
A)True
B)False
Q4) _____ and _____ are often paid as part of one's house payment and held in an escrow account.
A) Closing costs; interest
B) Insurance; real estate taxes
C) Principal; interest
D) Insurance; utilities
E) Utilities; real estate taxes
Q5) Negative amortization is possible with an adjustable-rate mortgage.
A)True
B)False
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Chapter 6: Using Credit
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) If your monthly before-tax income is $2,000 and your monthly take-home pay is $1,500,your maximum monthly consumer credit payments should not exceed:
A) $600.
B) $450.
C) $400.
D) $300.
E) $200.
Q2) [The Wage Earner Plan | Straight Bankruptcy] involves some type of debt restructuring.
Q3) One can and should check his credit bureau file regularly.
A)True
B)False
Q4) The intent of a Wage Earner Plan is to eliminate most of the debtor's obligations. A)True
B)False
Q5) Bank credit card purchases always begin accruing interest charges immediately. A)True B)False
Q6) An example of open account credit would be a bank [debit | credit] card.
Page 8
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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) The most popular use of consumer loans is to:
A) purchase a car.
B) finance a college education.
C) finance a vacation.
D) buy a house.
E) buy furniture.
Q2) Credit unions dominate the consumer loan market.
A)True
B)False
Q3) Installment loans using the simple interest method:
A) have the highest finance charges of any method.
B) have interest charged only on the monthly loan balance.
C) do not have balloon payments.
D) have a lower APR than the stated interest rate.
E) have a higher APR than the stated interest rate.
Q4) Credit life insurance [is | is not] a good financial deal from the perspective of the borrower.
Q5) Students borrowing to pay for college should base the amount borrowed on [current income | future income].
Page 9
Q6) Borrowing from relatives is [highly | seldom] recommended by financial advisors.
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Chapter 8: Insuring Your Life
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153 Verified Questions
153 Flashcards
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Sample Questions
Q1) A [viatical settlement | guaranteed purchase option] is when an insured sells an interest in the life insurance policy to an investor,who then becomes the policy's beneficiary.
Q2) Underwriters can predict whether or not you will suffer a loss this year.
A)True
B)False
Q3) 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
Q4) Life insurance [will | will not] pay the proceeds of the policy to the beneficiaries if an insured is killed in a commercial airline crash.
Q5) The settlement option chosen by most beneficiaries is:
A) lump sum.
B) interest only.
C) fixed amount.
D) fixed time.
E) life income.
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Chapter 9: Insuring Your Health
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) "Long-Term Care" is a term used to describe [nursing home | extended hospital].
Q2) Your bill for consultation with a specialist would ordinarily be paid by physicians expense insurance.
A)True B)False
Q3) Workers compensation would make payments to an injured worker [if he had been hurt on the job | only if he could prove negligence on the part of his employer].
Q4) After passage of the Affordable Health Care Act,many HMOs [allow | do not allow] out-of-network coverage.
Q5) Some surgical expense insurance pays a specific amount for a list of various types of surgery.
A)True B)False
Q6) [Medicare | Workers' compensation] pays for medical expenses that are the result of on-the-job injuries and illnesses.
Q7) The longer the elimination or waiting period in your disability income policy,the [higher | lower] the premiums.
Q8) Premiums for workers compensation are paid by the [employees | employers].
Page 11
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Chapter 10: Protecting Your Property
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189 Verified Questions
189 Flashcards
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Sample Questions
Q1) Sally drove Jessie's car to the mall and was involved in an accident that was her fault.The primary auto insurance that will cover this accident is [Sally's | Jessie's].
Q2) 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
Q3) A peril is a cause of loss.
A)True
B)False
Q4) Never discuss liability at the scene of an accident
A)True
B)False
Q5) Some common liability risks include:
A) driving a car.
B) entertaining guests at home.
C) being careless in performing professional duties.
D) all of the above
E) none of the above
Q6) The advisable dollar limit for any one auto accident is [$100,000 | $300,000].
Page 12
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Chapter 11: Investment Planning
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168 Verified Questions
168 Flashcards
Source URL: https://quizplus.com/quiz/69813
Sample Questions
Q1) Your goals tend to set the tone for your investment program,and they play a major role in determining how conservative or aggressive you're likely to be in making investment decisions.
A)True
B)False
Q2) In addition to a description of any investments owned,the worksheet listing your investments should include:
A) the purchase price.
B) the original amount of the investment.
C) the current annual income.
D) the latest market value.
E) all of the above
Q3) An odd lot transaction is generally more expensive than a round lot transaction. A)True
B)False
Q4) The total return of a portfolio is influenced far more by specific security selection than asset allocation in the long run.
A)True B)False
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Chapter 12: Investing in Stocks and Bonds
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) Bonds rated AA by S&P and Aa by Moody's would be investment quality.
A)True
B)False
Q2) Municipal bonds can be attractive investments,despite their lower interest rate,since their interest income is exempt from federal income tax.
A)True
B)False
Q3) Changes in the value of securities due to social,political,or economic factors are referred to as market risk.
A)True
B)False
Q4) Event risk occurs when something substantial happens to a company that has an immediate impact on its financial condition.
A)True
B)False
Q5) You are looking for a guaranteed steady stream of income; you should invest in [stocks | bonds].
Q6) By holding stock in 5 companies,you are reducing [market | business] risk.
Q7) [Cash |Stock] dividends are the most common form of dividends.
Page 14
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Chapter 13: Investing in Mutual Funds
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170 Verified Questions
170 Flashcards
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Sample Questions
Q1) In the Wall Street Journal's listing of mutual funds,an "r" 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) 12(b)-1 fee
D) management fee
E) none of the above
Q2) Money market funds are traded on the money market,just as closed-end stock funds are traded on the stock market.
A)True
B)False
Q3) Asset allocation funds invest in stocks,bonds,and cash.
A)True
B)False
Q4) The value of your shares in a closed-end fund is determined by [the cost of the fund | supply and demand factors].
Q5) [Both load and no-load | Only no-load] funds can charge a redemption fee.
Q6) A [global | international] fund invest exclusively in foreign securities.
Page 15
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Chapter 14: Planning for Retirement
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208 Verified Questions
208 Flashcards
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Sample Questions
Q1) A Roth IRA will be funded with [pre | post] tax dollars.
Q2) Short-term retirement planning usually involves:
A) 3 to 5 years time horizon.
B) waiting until the age is 50 and start planning.
C) the need to save large amounts annually.
D) the use of more risky investments.
E) reducing inflation projections.
Q3) A graded vesting schedule would legally have to give you some vesting rights even though you worked at a company only 1 year.
A)True
B)False
Q4) Whether or not Social Security benefits will be subject to income taxes depends on the age of the recipient.
A)True
B)False
Q5) A person who is self-employed on a part-time basis can qualify for a Keogh account.
A)True
B)False
Q6) [SEP | Keogh] plans are easier to establish.
Page 16
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Chapter 15: Preserving Your Estate
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) Claudia had not yet signed her newly written will when she died.Her new will [would | would not] be valid.
Q2) Which of the following is not a type of trust?
A) Credit shelter trust
B) Qualified terminable interest property trust
C) Crummey trust
D) Charitable remainder trust
E) Credible property sharing trust
Q3) A letter of last instruction might provide directions for:
A) location of the will.
B) legal and accounting services.
C) explanation of the actions taken in the will.
D) location of jewelry and family affects.
E) all of the above
Q4) The unlimited marital deduction is available only if the recipient spouse is a [U.S.citizen and files a gift tax return | legal resident and does not have to file a gift tax return].
Q5) Updating an estate plan is a critical part of the estate planning process.
A)True
B)False
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