Principles of Personal Finance Exam Bank
Course Introduction
Principles of Personal Finance introduces students to the fundamental concepts and practical strategies necessary to manage personal financial resources effectively. Topics covered include budgeting, saving and investing, credit management, insurance, retirement planning, taxes, and protecting against financial risk. Through real-life examples and hands-on activities, students gain confidence in making sound financial decisions, understanding the impact of financial choices, and developing lifelong money management skills crucial for personal and professional success.
Recommended Textbook
PFIN 6 6th Edition by Randall Billingsley
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15 Chapters
1162 Verified Questions
1162 Flashcards
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Chapter 1: Understanding the Financial Planning Process
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110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/51975
Sample Questions
Q1) The average propensity to consume is commonly viewed as a key determinant of standard of living.
A)True
B)False
Answer: False
Q2) Tangible assets are earning assets that are held for the returns they promise.
A)True
B)False
Answer: False
Q3) People with low incomes tend to be:
A)educated.
B)very old.
C)childless.
D)married.
E)very skillful.
Answer: B
Q4) Fee-only financial planners charge commission for the products they sell.
A)True
B)False
Answer: False
Page 3
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Chapter 2: Using Financial Statements and Budgets
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102 Verified Questions
102 Flashcards
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Sample Questions
Q1) Which of the following portions of a mortgage loan is recorded as a liability on the balance sheet?
A)Interest only
B)Sum of the interest paid and the outstanding balance
C)Sum of the interest due and the outstanding balance
D)Outstanding principal portion only
E)Principal portion and interest paid
Answer: D
Q2) Assume that your total income for the current year is $35,000.Your total expenses including taxes of $5,000 is $30,000.Your savings ratio is:
A)7.5%.
B)10.0%.
C)12.5%.
D)13.3%.
E)16.7%.
Answer: E
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Chapter 3: Preparing Your Taxes
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81 Flashcards
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Sample Questions
Q1) Which of the following is subject to federal income tax?
A)The tax credit earnings on a Roth IRA
B)Municipal bond interest
C)Child-support payments
D)Alimony received
E)Personal exemptions
Answer: D
Q2) Tax preparers must be licensed by either the state or the federal government.
A)True
B)False
Answer: False
Q3) You are preparing your own tax return.The least costly source for getting your questions answered would be:
A)the IRS office toll-free number.
B)an enrolled agent.
C)a tax accountant.
D)a tax lawyer.
E)the local post office.
Answer: A
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Page 5
Chapter 4: Managing Your Cash and Savings
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83 Verified Questions
83 Flashcards
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Sample Questions
Q1) The more frequently a bank compounds interest,_____ for a given nominal rate will be.
A)the higher the stated interest rate
B)the lower the inflation rate
C)the higher the effective rate
D)the lower the yield rate
E)the higher the normal rate
Q2) When a savings bank is a mutual association,it is owned by the:
A)borrowers.
B)creditors.
C)depositors.
D)management.
E)local government.
Q3) Money market mutual funds:
A)allow check writing above a stipulated minimum amount.
B)are federally insured.
C)have floating maturity dates.
D)are offered by savings and loan associations (S&Ls)and credit unions.
E)pay interest 1 to 3 percent lower than those paid by regular savings account.
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Page 6
Chapter 5: Making Automobile and Housing Decisions
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72 Verified Questions
72 Flashcards
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Sample Questions
Q1) Phil and Christina are recently married and are unsure of where they will be relocated after Christina finishes her residency in 9 months.Based on this information,which of the following housing recommendations would be most appropriate for them?
A)Renting a home
B)Buying a condominium
C)Sharing a single-family dwelling
D)Leasing a cooperative apartment
E)Purchasing a trailer
Q2) Henry has $2,500 for a down payment and thinks he can afford monthly payments of $400.If he can finance a vehicle with an 8 percent,3-year loan from a local bank,what is the maximum amount Henry can spend on the car? (Round the answer to the nearest units place.)
A)$12,765
B)$14,400
C)$14,079
D)$15,265
E)$16,879
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Chapter 6: Using Credit
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113 Verified Questions
113 Flashcards
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Sample Questions
Q1) Which of the following is a result of excess unused credit capacity?
A)Wise spending of credit
B)FICO score reduced
C)Easy loan approval
D)Safety from identity theft
E)Safety from bankruptcy
Q2) Saving is preferred to borrowing when providing for financial emergencies.
A)True
B)False
Q3) Which of the following does a lender look at before granting credit to a borrower?
A)The political interests of the borrower
B)The friend circle of the borrower
C)The age of the borrower
D)The religious affiliations of the borrower
E)The lifestyle of the borrower
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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85 Verified Questions
85 Flashcards
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Sample Questions
Q1) To qualify for a subsidized Stafford loan,you must:
A)own a few financial assets to repay the loan.
B)make satisfactory academic progress.
C)have parents who are graduates.
D)have parents who are capable of repaying the loan.
E)be in default on any other student loans.
Q2) Loans obtained by life insurance policyholders from their insurance companies are to be repaid on the repayment dates.
A)True
B)False
Q3) Which of the following is true of a consumer loan?
A)A consumer loan is used chiefly to make repeated purchases of relatively low-cost goods and services.
B)A consumer loan results from a rather informal process and involves no negotiated contracts.
C)A consumer loan provides credit cards and checks to the consumers.
D)A consumer loan provides revolving credit to the consumers.
E)A consumer loan is used to finance the purchase of goods that are far too expensive.
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Chapter 8: Insuring Your Life
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Sample Questions
Q1) A life insurance policy can be structured so that the death benefits are paid directly to a named beneficiary,which means that _____.
A)the life insurance proceeds are paid directly to named beneficiaries after payment of state or federal income taxes
B)the cash benefits from your life insurance policy cannot be claimed by creditors
C)the life insurance proceeds are invested as premiums for the life insurance of the beneficiary
D)the cash benefits are remitted to the beneficiary only after the beneficiary pays estate taxes
E)the life insurance company makes additional payments to the family of the insured so that they continue to live comfortably
Q2) The life insurance needs of beneficiaries are secondary since most proceeds are paid to policyholders.
A)True
B)False
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Chapter 9: Insuring Your Health
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69 Verified Questions
69 Flashcards
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Sample Questions
Q1) In a traditional indemnity (fee-for-service)plan,:
A)the health care provider and the insurer are separate.
B)the insurer always pays directly to the health care provider.
C)the lower the deductible,the lower the premium.
D)the insured receives comprehensive health care services from a designated group of doctors only.
E)the health care provider contracts with the insured's employee union to provide health insurance benefits.
Q2) Dependent children ___________ will usually be covered by your health insurance policy.
A)regardless of age
B)up to a stated maximum age
C)up to two in number
D)regardless of their employment
Q3) When purchasing a long-term-care policy,___________.
A)the optional renewability provision is recommended
B)the guaranteed renewability provision is recommended
C)the non-renewability provision is recommended
D)the automatic renewability at reduced premium is recommended
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Page 11
Chapter 10: Protecting Your Property
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Sample Questions
Q1) Earthquakes are covered under most homeowner's insurance policies.
A)True
B)False
Q2) The best way to buy automobile insurance is through __________.
A)an insurance agent
B)a state insurance commission
C)an auto dealer
D)a finance company
Q3) A $100,000/$300,000 bodily injury liability automobile policy could pay up to a total of __________ to all injured victims in one accident.
A)$100,000
B)$400,000
C)$300,000
D)$200,000
Q4) The __________ is a good homeowner's policy for a condominium owner.
A)HO-2
B)HO-3
C)HO-4
D)HO-6
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Chapter 11: Investment Planning
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79 Flashcards
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Sample Questions
Q1) __________ have no maturity date.
A)Common stocks
B)Bonds
C)Corporate deposits
D)Insurance policies
Q2) A young investor with a secure job is:
A)more concerned about current income.
B)more able to bear risk.
C)less oriented toward investments with capital gains.
D)less interested in stock markets.
E)more skillful in tax evasion.
Q3) The __________ of securities in a worksheet of investments will help in calculating the cumulative return on investments.
A)type
B)market value
C)description
D)date of purchase
Q4) Financial ratios of a company are included in its annual stockholders' report.
A)True
B)False
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Chapter 12: Investing in Stocks and Bonds
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86 Flashcards
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Sample Questions
Q1) Earnings per share indicates to the stockholders the amount of dividends earned.
A)True
B)False
Q2) The current net income of Sigma Inc.is $8 million,market price of the stock is $65,and sales is $50 million? Which of the following is the net profit margin of Sigma Inc.?
A)10%
B)28%
C)16%
D)8%
E)22%
Q3) Bonds provide for investment returns primarily in the form of growth.
A)True
B)False
Q4) __________ risk results from the behavior of investors in the securities markets that may cause security prices to fluctuate.
A)Market
B)Business
C)Purchasing power
D)Event
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Chapter 13: Investing in Mutual Funds, ETFS and Real Estate
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48 Flashcards
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Sample Questions
Q1) Having money taken at regular intervals from your paycheck and put into a mutual fund is an example of:
A)an automatic investment plan.
B)an authorized deduction plan.
C)a systematic withdrawal plan.
D)a conversion privilege.
E)a retirement plan.
Q2) The current market value of all the securities a mutual fund owns,less any liabilities,on a pershare basis is known as the fund's:
A)compounded value.
B)par value.
C)net asset value.
D)book value.
E)liquidation value.
Q3) Exchange traded funds (ETFs)invest __________.
A)in high-tax securities
B)at no transaction cost
C)in narrow market segments
D)in a fixed number of shares only
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Page 15
Chapter 14: Planning for Retirement
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Sample Questions
Q1) The period during which premiums are paid for the purchase of an annuity is called the _____.
A)installment period
B)accumulation period
C)survivor period
D)distribution period
E)contract period
Q2) Which of the following pension plans enables an employee to estimate what his or her pension payment would be upon retirement?
A)A Keogh plan
B)A profit-sharing plan
C)A defined benefit plan
D)A defined contribution plan
E)A 401(k)plan
Q3) Single premium annuities result in a lump-sum payment of benefits.
A)True
B)False
Q4) The third step in retirement planning is to formulate an investment program.
A)True
B)False
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Chapter 15: Preserving Your Estate
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Sample Questions
Q1) The person setting up a trust is called the __________.
A)grantor
B)trustee
C)attorney
D)beneficiary
Q2) Which of the following best describes a situation of intestacy?
A)Having insufficient medical insurance during a period of illness
B)Dying without heirs
C)Being physically challenged
D)Dying without a valid will
E)Dying without any probate property
Q3) _____ would be a first-level death-related cost.
A)Funeral expenses
B)Federal estate taxes
C)Probate expenses
D)Inheritance taxes
E)Administrative costs
Q4) The taxable estate is less than the adjusted gross estate.
A)True
B)False
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