Principles of Financial Planning Exam Practice Tests
Course Introduction
Principles of Financial Planning introduces students to the foundational concepts and tools used in effective financial management for individuals and organizations. The course covers key topics such as budgeting, forecasting, investment strategies, risk management, retirement planning, tax considerations, and estate planning. Emphasis is placed on setting financial goals, understanding the time value of money, managing debt, and developing comprehensive financial plans. Through real-world case studies and practical exercises, students gain the knowledge and analytical skills needed to make informed financial decisions and support long-term financial well-being.
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) A stronger economy leads to [higher employment | lower employment].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Answer: A
Q2) An economy will usually go into a _________ after a peak.
A) Convolution
B) Expansion
C) Contraction
D) Recession
E) Depression
Answer: C
Q3) The four stages of an economic cycle would not include
A) depression.
B) expansion.
C) recession.
D) recovery.
E) stagnation.
Answer: E
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Page 3
Chapter 2: Using Financial Statements and Budgets
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184 Verified Questions
184 Flashcards
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Sample Questions
Q1) A budget is a detailed financial forecast.
A)True
B)False
Answer: True
Q2) A detailed forecast used to monitor and control expenses is called a [financial plan | income/expenditures statement].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Answer: A
Q3) One should quickly make important financial decisions soon after a financial shock,such as death or divorce.
A)True
B)False
Answer: False
Q4) Financial planning is necessary only if you earn a lot of money.
A)True
B)False
Answer: False
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Chapter 3: Preparing Your Taxes
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200 Verified Questions
200 Flashcards
Source URL: https://quizplus.com/quiz/64935
Sample Questions
Q1) The standard or itemized deduction,reduces the taxpayer's [taxable income | taxes due].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Answer: A
Q2) A special tax provision reduced the social security portion for the individual taxpayer by 2% in 2011 and 2012.
A)True
B)False
Answer: True
Q3) You are more likely to have your tax return audited if you work for a for-profit company,compared to a non-profit organization.
A)True
B)False
Answer: False
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Chapter 4: Managing Your Cash and Savings
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193 Verified Questions
193 Flashcards
Source URL: https://quizplus.com/quiz/64936
Sample Questions
Q1) It costs financial institutions more for their customers to perform [ATM transactions | Internet transactions.]
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q2) Credit unions are generally [small | large] institutions when compared with commercial banks and savings and loans.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) The nominal rate of interest will be lower than the effective rate of interest when an account compounds monthly.
A)True
B)False
Q4) The rate of return on a Series EE savings bond changes semiannually.
A)True
B)False
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Chapter 5: Making Automobile and Housing Decisions
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220 Verified Questions
220 Flashcards
Source URL: https://quizplus.com/quiz/64937
Sample Questions
Q1) If the maximum loan-to-value ratio that a lender will accept on a $100,000 loan is 80 percent,then the borrower must make a down payment of at least
A) $100,000.
B) $ 80,000.
C) $ 50,000.
D) $ 20,000.
E) none of these.
Q2) 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
Q3) Most lenders do not want your monthly installment loan payments to exceed [36 | 50] percent of your monthly income.
A)for the first item
B)for the second item
C)if neither item will correctly complete the
Q4) Renting affords more flexibility than home ownership.
A)True
B)False
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Chapter 6: Using Credit
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178 Verified Questions
178 Flashcards
Source URL: https://quizplus.com/quiz/64938
Sample Questions
Q1) The following information provides insight to a lender about the applicant's credit worthiness except:
A) personal/family matters
B) housing
C) employment
D) income
E) all of the above provide insight
Q2) Credit cards with very low minimum balance requirements are in the consumer's best interest.
A)True
B)False
Q3) The majority of reduction in consumer indebtedness is due to home and consumer loan defaults.
A)True
B)False
Q4) Using credit is the ideal way to provide for financial emergencies.
A)True
B)False
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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) The legal method of getting an employer to pay a portion of the borrower's wages to the lender is known as wage [withholding | garnishment].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q2) Borrowing from relatives is [highly | seldom] recommended by financial advisors.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) Variable rate loans are desirable if interest rates are expected to fall in the future.
A)True
B)False
Q4) To get a government-backed student loan,one should contact his [bank | university].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
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Chapter 8: Insuring Your Life
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157 Verified Questions
157 Flashcards
Source URL: https://quizplus.com/quiz/64940
Sample Questions
Q1) The right of the policyholder to the cash value of a whole life policy is a nonforfeiture right.
A)True
B)False
Q2) ____ is not a type of term insurance.
A) Limited pay
B) Decreasing
C) Convertible
D) Renewable
E) Annual
Q3) Using the needs approach,we look at the survivors' needs if the income producer dies [tomorrow | before his life expectancy].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q4) The life insurance needs of beneficiaries are secondary since most proceeds are paid to living policyholders.
A)True
B)False
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Chapter 9: Insuring Your Health
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164 Verified Questions
164 Flashcards
Source URL: https://quizplus.com/quiz/64941
Sample Questions
Q1) Disability income insurance will provide income to a disabled or ill person
A) without a waiting period.
B) with unlimited funds for years.
C) with a waiting period before income is received.
D) with payments made to the recipient for up to age 70.
E) none of the above.
Q2) Some surgical expense insurance pays a specific amount for a list of various types of surgery.
A)True
B)False
Q3) Hospital insurance policies will pay for all hospital expenditures most of the time.
A)True
B)False
Q4) The amount of health insurance reimbursement actually paid may be reduced by [internal limits | co-payment caps].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
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Page 11
Chapter 10: Protecting Your Property
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194 Verified Questions
194 Flashcards
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Sample Questions
Q1) A house with a replacement value of $110,000 is currently insured for $90,000.The house has suffered a $15,000 loss from windstorm damage.The insurance company will pay the full $15,000 less the deductible.
A)True
B)False
Q2) Section I of the homeowner's insurance policy covers
A) the home only.
B) the house and the garage.
C) negligence of an insured.
D) the home and its contents.
E) negligence and the house.
Q3) Maximum liability policy limits are determined by
A) state law.
B) auto type.
C) the insured's choice.
D) court proceedings.
E) none of these.
Q4) Fire is an example of a hazard.
A)True
B)False
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Chapter 11: Investment Planning
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196 Verified Questions
196 Flashcards
Source URL: https://quizplus.com/quiz/64943
Sample Questions
Q1) Portfolio management involves making decisions in order to
A) buy low and sell high.
B) maximize risk and return.
C) accept risk.
D) own stocks in bear markets.
E) meet your investment needs and objectives.
Q2) NYSE Euronext is a part of the broker market totaling about [40% | 80%] of world equity markets.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) [Depositing a lump sum and letting it grow | Making monthly deposits to your investment] would be the least costly way to reach a financial goal.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q4) A limit order may be used either to buy or to sell.
A)True
B)False
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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) Sunshine Mining Bonds have a $1,000 face value,pay $95 annual interest,mature in 2004,and are currently quoted at $1,302.50.The coupon rate of interest is
A) 8.500%.
B) 9.500%.
C) 13.025%.
D) 13.052%.
E) can't tell from the information given.
Q2) Companies with a great deal of long-term debt would rate fairly high in ____ risk.
A) market
B) event
C) business
D) financial
E) liquidity
Q3) Convertible preferred stock can be exchanged for common stock.
A)True
B)False
Q4) Tech stocks represent stocks in the technology and utility sectors.
A)True
B)False
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Chapter 13: Investing in Mutual Funds
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174 Verified Questions
174 Flashcards
Source URL: https://quizplus.com/quiz/64945
Sample Questions
Q1) Loads are transaction charges for mutual funds.
A)True
B)False
Q2) A closed-end investment company that invests in various types of real estate and mortgages is a
A) hybrid real estate investment trust.
B) blind pool syndicate.
C) real estate general partnership.
D) hybrid limited partnership.
E) mortgage real estate investment trust.
Q3) Open ended mutual funds can be traded on an intraday basis.
A)True
B)False
Q4) Dividend income and capital gains distributions are taxed at identical tax rates.
A)True
B)False
Q5) A fund's objective must be stated in its prospectus.
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 amount of your social security contribution depends on A) age and income.
B) income and current tax rate.
C) age and current tax rate.
D) current income and retirement income goal.
E) employer's contribution and current tax rate.
Q2) Julie's employer has a defined benefits retirement plan which pays 3.2 percent of her last year's salary for each year of employment.Julie estimates her final salary will be $85,000 and she will have worked for 20 years.What is her expected retirement benefit?
Q3) If your employer matches your 401(k)contributions,you should contribute at least [the maximum allowed for tax deferrable | the amount matched by your employer].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q4) It is legal for employers to reduce an employee's pension as a result of receiving Social Security benefits.
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) An appropriate trust to set up with a disabled child being the beneficiary would be the [Special Needs | Minor's Section 2503(c)] trust.
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q2) The person setting up a trust is called the [grantor | trustee].
A)for the first item
B)for the second item
C)if neither item will correctly complete the statement.
Q3) Which of the following are requirements of a valid will
A) mental capacity
B) freedom of choice
C) proper execution
D) all of the above
E) none of the above
Q4) Life insurance comprises a large portion of most individuals probate estates.
A)True
B)False
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Page 17