Principles of Finance Exam Bank
Course Introduction
Principles of Finance introduces the fundamental concepts and tools used to make financial decisions in business settings. The course covers topics such as the time value of money, risk and return, valuation of financial assets, capital budgeting, financial statement analysis, and the functioning of financial markets. Students will learn how to assess investment opportunities, understand the cost of capital, and evaluate the financial health of organizations. Emphasis is placed on quantitative analysis and the application of financial principles to real-world business scenarios.
Recommended Textbook
Personal Financial Planning 13th Edition by Lawrence
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15 Chapters
2759 Verified Questions
2759 Flashcards
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Page 2
J. Gitman
Chapter 1: Understanding the Financial Planning Process
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142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/64933
Sample Questions
Q1) Two persons with equal average propensities to consume will not necessarily have equal standards of living because of differences in income.
A)True
B)False
Answer: True
Q2) Wealth is the key consideration is establishing financial goals as it is the measure of value in financial transactions.
A)True
B)False
Answer: False
Q3) Martha is 80 and has a very high net worth.Her most important financial concern is probably her
A) career.
B) employee benefits.
C) estate.
D) insurance.
E) savings.
Answer: C
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Chapter 2: Using Financial Statements and Budgets
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184 Verified Questions
184 Flashcards
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Sample Questions
Q1) If your expenses exceed your income,the bottom line of your income/expense statement will show a [surplus | deficit].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement. Answer: B
Q2) Financial planning and budgeting [do | do not] mean the same thing.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Answer: B
Q3) Which of the following is among the four categories accounting for almost three-quarters of consumer spending?
A) Personal insurance and pensions
B) Clothing
C) Utilities
D) Entertainment
E) Medical Answer: A
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Page 4
Chapter 3: Preparing Your Taxes
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200 Verified Questions
200 Flashcards
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Sample Questions
Q1) A tax credit could result from [owning a home | adopting a child].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Answer: B
Q2) Excise taxes are similar to [real estate | sales] taxes.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Answer: B
Q3) [Both you and your employer | Only your employer] will make social security contributions based on your wages.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Answer: A
Q4) The Medicare portion of the Social Security tax is paid on 100% of earnings.
A)True
B)False
Answer: True
Page 5
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Chapter 4: Managing Your Cash and Savings
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193 Verified Questions
193 Flashcards
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Sample Questions
Q1) You make a promise to keep funds on deposit for a stated period of time when you open a [MMDA | CD].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q2) A bank customer would expect to be able to write checks on his regular checking account and on his [certificate of deposit | money market fund].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) Joe and Mary have a tenants in common savings account.When Joe dies,his portion of the account [will | will not] automatically go to Mary.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q4) A [checking | savings] account is called a demand deposit account.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
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Chapter 5: Making Automobile and Housing Decisions
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220 Verified Questions
220 Flashcards
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Sample Questions
Q1) The down payment is typically the only substantial housing cost that must be paid at the time of the purchase.
A)True
B)False
Q2) Terms of renting a housing unit may be contained in a contract called a
A) deposit requirement.
B) renewal option.
C) lease.
D) housing code.
E) housing standard.
Q3) Anna purchased a vehicle six years ago for $25,000.She recently sold it for $5,000.Over the years,she paid a total of $5,800 on auto insurance,$4,800 on gas and maintenance,and $2,500 in interest.What was her depreciation cost on this vehicle?
A) $ 5,000
B) $10,800
C) $15,000
D) $20,000
E) $25,000
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7
Chapter 6: Using Credit
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178 Verified Questions
178 Flashcards
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Sample Questions
Q1) The market value of your house is $175,000 and you have a first mortgage balance of $100,000.If a lender requires a 80% loan-to-market value ratio,how large could your home equity loan be?
Q2) 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.
Q3) When comparing credit cards,a person who pays his total outstanding balance off monthly would want a card with A) a low required minimum payment percentage. B) a low interest rate. C) an adequate grace period.
D) no annual fee
E) c and d
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Page 8
Chapter 7: Using Consumer Loans
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) Regarding student loans,which of the following is true?
A) They are available only for undergraduate.
B) Parents (or legal guardians)must cosign.
C) There is a limit on how much can be borrowed.
D) There is a limit on the number of loans one can have.
E) Interest does not have to be repaid.
Q2) Installment loans are typically repaid in one payment.
A)True
B)False
Q3) Collateral is an item of value used to secure the principal portion of a loan.
A)True
B)False
Q4) Credit life insurance [is | is not] a good financial deal from the perspective of the borrower.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q5) Cash value loans are available from all types of life insurance policies.
A)True
B)False
9
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Chapter 8: Insuring Your Life
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157 Verified Questions
157 Flashcards
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Sample Questions
Q1) Cash value is an important component of whole life,universal life,and variable life but is never a component of term insurance.
A)True
B)False
Q2) Group life insurance is usually term life insurance.
A)True
B)False
Q3) The beneficiary [will | will not] have to pay income taxes on the proceeds from a life insurance policy.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q4) When you stop making premium payments on a whole life policy,the protection is immediately forfeited.
A)True
B)False
Q5) The return on term life insurance policies receive favorable tax treatment. A)True
B)False
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Chapter 9: Insuring Your Health
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) The medicare coinsurance payment is usually
A) 0%
B) 10%
C) 20%
D) 50%
E) None of the above
Q2) [Men | Women] are more likely to need long-term care insurance.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) Which of the following is(are)characteristic of Social Security disability income benefits?
A) 1-year waiting period
B) "own occ" definition of disability
C) disability expected to last 1 year,or be fatal
D) a and b
E) a,b,and d
Q4) Long-term care insurance can cover both nursing home and home health care.
A)True
B)False
Page 11
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Chapter 10: Protecting Your Property
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194 Verified Questions
194 Flashcards
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Sample Questions
Q1) Comprehensive automobile coverage refers to
A) complete coverage including liability,medical payments,and damage to your auto.
B) coverage for damage to an insured automobile from perils other than collision.
C) coverage that adds items of property such as CB radios and telephones that are ordinarily excluded
D) coverage for bodily injuries suffered in an automobile accident.
E) none of the above.
Q2) If you hit a deer with your car,payment will come from your [collision | comprehensive] protection.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) Auto insurance companies may offer premium discounts for
A) being a good student.
B) installing anti-theft devices.
C) taking a defensive driving course.
D) all of these.
E) none of these.
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12
Chapter 11: Investment Planning
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196 Verified Questions
196 Flashcards
Source URL: https://quizplus.com/quiz/64943
Sample Questions
Q1) Which of the following types of brokers is most likely to involve an investor trading electronically from his or her personal computer?
A) Full service broker
B) Bank broker
C) Futures broker
D) Online broker
E) Market maker
Q2) Which of the following securities/investment acts regulates the sale of mutual fund shares?
A) The Securities Act of 1933
B) the Securities and Exchange Act of 1934
C) The Investment Company Act of 1940
D) The Sarbanes/Oxley Act of 2002
E) The Securities and Protection Act of 1970
Q3) When you sell short,the proceeds of the sale will be [held until the sale is covered | given to you immediately after the sale].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
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Page 13
Chapter 12: Investing in Stocks and Bonds
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194 Verified Questions
194 Flashcards
Source URL: https://quizplus.com/quiz/64944
Sample Questions
Q1) A stocks beta is an indication of its relationship to the general market.
A)True
B)False
Q2) When evaluating a stock as a possible investment,one must consider
A) the current market price.
B) the expected capital gain.
C) the expected dividend income.
D) one's investment goals.
E) all of the above
Q3) The Smith family owns 200 shares of Elta stock.The company declared a 5% stock dividend.The Smiths now own
A) 200 shares.
B) 205 shares.
C) 210 shares.
D) 420 shares.
E) 410 shares.
Q4) Stocks with high betas will have larger price gains and losses than those with low betas.
A)True
B)False
Page 14
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Chapter 13: Investing in Mutual Funds
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) Mutual funds may be bought and sold through
A) mutual savings banks and brokerage firms.
B) funds salespeople and mutual savings banks.
C) brokerage firms and fund salespeople.
D) brokerage firms and funds exchange.
E) fund exchange and fund salespeople.
Q2) There are [more | fewer] mutual funds than there are stocks listed on the New York Stock Exchange.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) Growth-and-Income funds invest most of their capital in common stocks.
A)True
B)False
Q4) Closed-ended mutual funds are guaranteed,they cannot lose value. A)True
B)False
Q5) Back-ended load funds offer more liquidity to investors than no-load funds.
A)True
B)False
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Chapter 14: Planning for Retirement
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225 Verified Questions
225 Flashcards
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Sample Questions
Q1) The [Roth | traditional] IRA is typically recommended for people in their 30s or 40s.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q2) Roth IRAs are the only IRAs that have the potential to produce tax-free earnings.
A)True
B)False
Q3) Gordon and Lisa estimate that they will need $1,875,000 in 40 years for their retirement years.If they can earn 8 percent annually on their funds,how much do they need to save annually?
A) $7,238
B) $7,987
C) $8,103
D) $9,234
E) $9,875
Q4) Annuity proceeds are limited to the life of one person.
A)True
B)False
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Page 16
Chapter 15: Preserving Your Estate
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177 Verified Questions
177 Flashcards
Source URL: https://quizplus.com/quiz/64947
Sample Questions
Q1) A joint tenancy with right of survivorship may consist of
A) a parent and child.
B) a husband and wife.
C) a brother and sister.
D) none of these.
E) any of these.
Q2) An estate plan is good only as long as it fits the needs,desires,and circumstances of the parties involved.
A)True
B)False
Q3) In most states,divorce creates an automatic revocation or modification of a will.
A)True
B)False
Q4) You are married with a 3-year old child.If you die without leaving a will,in most states [your spouse will inherit your entire estate | your spouse and child will share your estate].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
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