Practical Finance
Final Test Solutions
Course Introduction
Practical Finance offers students a comprehensive understanding of real-world financial principles and their application in personal, professional, and entrepreneurial contexts. The course covers fundamental financial concepts such as budgeting, saving, investing, risk management, and financial planning. Through interactive case studies, problem-solving exercises, and hands-on activities, students develop practical skills to analyze financial information, make informed decisions, and apply proven financial strategies. Emphasis is placed on financial literacy, critical thinking, and the ability to navigate complex financial environments both individually and within organizations.
Recommended Textbook
Personal Finance Building Your Future 1st Edition by Robert
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17 Chapters
1223 Verified Questions
1223 Flashcards
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Page 2
B. Walker
Chapter 1: Money Matters: Values, Vision, Mission, and You
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95 Verified Questions
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Sample Questions
Q1) What country was declared the "Happiest Place on Earth"?
A) The United States
B) Germany
C) Finland
D) Denmark
Answer: D
Q2) Which of the following is not reflective of a SMART goal?
A) Specific
B) Measurable
C) Attainable
D) Reasonable
E) Timely
Answer: D
Q3) What should your mission statement reflect?
A) Your life goals,how to see them clearly,and how to be motivated to continue on with them
B) Your personal financial plan
C) Your likes and dislikes
D) Your family's spending habits
Answer: A
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Chapter 2: Time Value of Money
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60 Verified Questions
60 Flashcards
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Sample Questions
Q1) What is a lump sum?
A) A single,one-time payment
B) All of your money is put together in a pile
C) A series of equal payments that are made at equal intervals over time
D) The value of an amount based on the interest rate
Answer: A
Q2) If you put $1,000 into an account earning 5% interest annually,how much will you have in five years?
A) $5,000.00
B) $1,276.28
C) $1,050.50
D) $1,500.00
Answer: B
Q3) What is (1+ r/n)<sup>n</sup> -1?
A) Future value (FV)
B) Annual percentage rate (APR)
C) Annual percentage yield (APY)
D) Compound percentage interest (CPI)
Answer: C
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Chapter 3: Planning and Budgeting
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68 Flashcards
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Sample Questions
Q1) Dave has decided to budget his money and never spend more than he makes.What is Dave's budgeting strategy called?
A) Net cash flow
B) Saving and spending plan
C) Consumption adjustment
D) Sustainable consumption
Answer: D
Q2) How do small leaks relate to budgets and opportunity costs?
Answer: A small leak is when money is spent on items or services that are not priorities,and,as a result,when the time comes to purchase a bigger ticket item of higher priority,the funds do not exist.The opportunity cost of spending those little amounts of money is that larger,more important,long-term goals cannot be achieved.
Q3) Extraordinary expenses are not to be folded into the monthly budget.
A)True
B)False
Answer: False
Q4) Explain sustainable consumption as it relates to budgets.
Answer: Sustainable consumption is not spending more than you make,and not being wasteful with resources.
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Chapter 4: Financial Instruments and Institutions
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75 Verified Questions
75 Flashcards
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Sample Questions
Q1) The FDIC for banks and NCUSIF for credit unions insure savings accounts up to what amount?
A) $50,000
B) $100,000
C) $200,000
D) $250,000
Q2) Which of the following is not included in the dependent life stage?
A) Certificate of deposit
B) College savings plan
C) Student loans
D) Savings account
Q3) You must be a resident of the state in which you open a college savings plan.
A)True
B)False
Q4) Elena is a college freshman and needs a checking account.What type of financial institution should she choose?
A) Credit union
B) Commercial bank
C) Savings institution
D) IRS
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Chapter 5: Consumer Credit: Credit Cards and Student Loans
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79 Verified Questions
79 Flashcards
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Sample Questions
Q1) Title loan lenders are required to show you their interest rates in annual percentages.
A)True
B)False
Q2) What is the payment option for a student loan for which payments are postponed or reduced,but interest will accrue?
A) Consolidation and refinancing
B) Deferment
C) Forbearance
D) Amortize payments
Q3) Which two Cs are the most important in the 5 Cs of credit?
A) Capital and collateral
B) Character and capacity
C) Capital and conditions
D) Character and conditions
Q4) What are the repayment options for student loans?
A) Student loan consolidation and refinancing
B) Deferment
C) Forbearance
D) All of these
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Chapter 6: Credit Bureau Reports and Identity Theft
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96 Flashcards
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Sample Questions
Q1) Why is it important to establish a credit history?
A) To demonstrate responsibility with credit
B) To experience perma-debt
C) To go into outstanding debt
D) None of these
Q2) Correcting an error on a credit report involves a simple phone call.
A)True
B)False
Q3) FICO scores range between
A) 100-900
B) 250-800
C) 300-850
D) 0-1000
Q4) To keep a good FICO score you should
A) Carry a high balance
B) Keep your balance under 1/3 of your limit
C) Keep your balance under ½ your limit
D) Pay every other bill
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Chapter 7: Auto and Home Loans
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83 Flashcards
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Sample Questions
Q1) Explain the advantages and disadvantages of renting and choose whether you would rent or buy and why.
Q2) Which of the following is more likely to charge you more money when you buy a car?
A) An ad in the paper
B) An ad on Craigslist
C) Your local car dealership
D) A sign in a car window
Q3) HELOC stands for:
A) Help equity line of counsel
B) Home equity line of credit
C) Home equity list of collateral
D) Help expenses loan occupational credit
Q4) If you have a loan on a vehicle you only have to have liability insurance.
A)True
B)False
Q5) Insurance doesn't impact your budget.
A)True
B)False
Q6) What types of mortgage loans are available and how do they differ?
Page 9
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Chapter 8: Debt, Foreclosure, and Bankruptcy
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Sample Questions
Q1) Chapter 7 bankruptcy is also known as wage earner bankruptcy.
A)True
B)False
Q2) What is the 10-second rule?
A) If you drop an item in a store,it's still safe to pick it up after 10 seconds
B) Hold an item for 10 seconds before you put it in your cart,asking yourself if you really need the item and can afford to pay for it
C) Put an item in your cart and if you don't want it after 10 seconds take it out
D) All of the choices are correct
Q3) Which type of bankruptcy involves the liquidation of assets with the proceeds distributed to the creditors?
A) Means test
B) Chapter 13
C) Chapter 7
D) Chapter 9
Q4) When you live paycheck-to-paycheck,you are close to financial trouble.
A)True
B)False
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10
Chapter 9: Tax Management
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Sample Questions
Q1) The military,fire departments,police departments,public schools,libraries,FEMA,and the Department of Homeland Security are examples of what?
A) Direct taxes
B) Regressive jobs
C) Property goods and services
D) Public goods and services
Q2) Taxes are a fee charged by the government based on which party is in office that year so as to finance the party's agenda.
A)True
B)False
Q3) Only U.S.citizens are required to file Form 1040EZ,Form 1040A,or Form 1040.
A)True
B)False
Q4) What is a fee charged by the government on a product,income,or activity?
A) Public goods and service tax
B) Direct tax
C) Regressive tax
D) Taxes
Q5) What is the difference between a direct tax and an indirect tax?
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Chapter 10: Insurance: Covering Your Assets
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Sample Questions
Q1) Minimum automobile liability insurance is:
A) Not something you need,but is a suggested amount over coverage
B) Is the same in every state
C) Is different in every state
D) Is sufficient to cover your legal responsibilities if you cause an accident
Q2) When purchasing homeowner's or renter's insurance,replacement value:
A) Only reimburses you for the amount originally spent to acquire personal property
B) Costs less than purchase price insurance
C) Will reimburse you for the amount required to replace your personal property at today's values
D) Will give you money to replace the property up to the value insured
Q3) Auto insurance premiums can be impacted by whether or not an auto has air bags and antilock brakes.
A)True B)False
Q4) Permanent life insurance is an account that builds cash value and is much less expensive than term life insurance.
A)True B)False
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Chapter 11: Investment Basics
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64 Verified Questions
64 Flashcards
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Sample Questions
Q1) What proportion of your income should be in savings?
A) 2-3 months of income
B) 6-9 months of income
C) 12 months of income
D) 10%
Q2) Where should Elena put her graduation gift money of $5,000 if she plans to use it to help fund a European trip in four years?
A) In a short-term,safe,insured,guaranteed investment
B) In an index mutual fund
C) In gold or other precious metals
D) Under her mattress
Q3) If your tax liability is 30% of your $50,000 salary and you contribute $2,000 to your 401(k)and your employer matches $2,000,what is your immediate ROI upon your decision to contribute $2,000 to your 401(k)?
A) 30%
B) 60%
C) 130%
D) 286%
Q4) Why is it recommended that investors work to balance a portfolio?
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Chapter 12: Mutual Funds
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Sample Questions
Q1) _________________ are funds that invest in companies from foreign countries.
A) Global funds
B) International funds
C) Exclusive funds
D) Balanced mutual funds
Q2) Mutual funds are now regulated by the _________________.
A) Investment Company Act of 1940
B) Treasury Department
C) FDIC
D) NCUI
Q3) A _________________ mutual fund is a fund in which the companies market their funds online (no sales force or financial planners)and do not charge a fee.
A) Front-end load
B) Back-end load
C) No load
D) Exclusive
Q4) List how an actively managed fund differs from an index fund.
Q5) List the benefits of mutual funds.
Q6) Explain how mutual funds are classified.
Q7) Describe how dividends and capital gains are distributed in a mutual fund.
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Chapter 13: Stocks
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Sample Questions
Q1) What is the current ratio if the short-term asset balance is $15,000,000 and the short-term liabilities balance is $500,000?
A) 33%
B) 30%
C) 300%
D) 1/3
Q2) The rights of common stock allow you to _________________.
A) Veto the board of directors' vote
B) Attend the annual shareholders meeting
C) Trump the vote of bondholders
D) Receive an SEC annual report
Q3) Assume that stock prices on multiple broad market indexes have decreased 15% over the last two months.How much more must the market indexes drop before the market is determined to be a bear market?
A) 0%
B) 5%
C) 10%
D) 15%
Q4) Explain how investment clubs work.
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Chapter 14: Bonds
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73 Flashcards
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Sample Questions
Q1) Which is not one of the three biggest credit rating companies for those issuing bonds?
A) Bloomberg
B) Fitch
C) Moody's
D) Standard & Poor's
Q2) Municipal bonds are:
A) Generally taxable by federal and most state and local taxes
B) Generally taxable by federal taxes but exempt from most state and local taxes
C) Generally exempt from federal taxes and most state and local taxes
D) Generally exempt from federal taxes but taxable by state and local governments
Q3) www.TreasuryDirect.gov is _________________.
A) Only for major investors who can buy U.S.government bonds
B) The only place to buy Treasury bills,notes,and bonds
C) Too complicated for the common person to understand
D) Where anyone can go to purchase EE-Bonds,I-Bonds,and Treasury bills,notes,and bonds
Q4) Explain why investments in corporate bonds do not have as favorable tax advantages as investments in Treasuries or municipal bonds.
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Chapter 15: Real Estate Investments
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Sample Questions
Q1) A real estate investment trust pools funds from a group of individuals and invests it in real estate.
A)True
B)False
Q2) If selling rental property and buying a like property,the IRS allows you to reinvest
_________________ of the equity from the sale of the property to a like property within 45 days of the sale,thus deferring the gain.
A) None
B) 50%
C) 75%
D) 100%
Q3) A(n)_________________ collects funds from a group of individuals and invests it in real estate.
A) "Flipping" crew
B) REIT
C) ROI
D) None of options are correct
Q4) Which type of real estate investment focuses on short-term gains?
Q5) What are the steps to flipping real estate?
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Chapter 16: Retirement and Estate Planning
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Sample Questions
Q1) A(n)_________________ is a document that outlines your preferences or your directions for the administration and the withdrawal or withholding of life-sustaining medical treatment in the event of terminal illness or permanent unconsciousness.
A) Advance directive
B) Durable power of attorney for health care
C) Living will
D) Power of attorney
Q2) Which of the following is an executor allowed to do?
A) Distribute the assets of the estate
B) Make final decisions on burial details
C) Contradict what is said in the will
D) All of the options are correct
Q3) Which of the following is not an example of an individual retirement account?
A) Roth 401(k)plan
B) Traditional IRA
C) Roth IRA
D) Spousal IRA
Q4) What are the pros and cons involved in deciding when to start drawing Social Security benefits?
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Chapter 17: Financial Planning for Life
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Sample Questions
Q1) Jamil is being frugal if he _________________.
A) Wraps his girlfriend's present in newspaper because he doesn't want to buy wrapping paper
B) Uses coupons when he goes for ice cream
C) Doesn't use the heat during the winter to save on the electric bill
D) Buys expensive clothes to make people think he's successful
Q2) To simplify material things that are physically and mentally exhausting,you should
A) Prioritize,minimize,and socialize
B) Balance,prioritize,and minimize
C) Organize,energize,and economize
D) Prioritize,spiritualize,and minimize
Q3) Which is not a way to create balance in your life?
A) Reduce your obligations
B) Eliminate the nonessentials
C) Think back to your values
D) Get more money
Q4) Who is in control of your destination?
Q5) When setting priorities,what are two important considerations?
Q6) What is the purpose of reviewing your budget monthly?
Page 19
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