Principles of Personal Finance
Midterm Exam
Course Introduction
Principles of Personal Finance introduces students to the fundamentals of managing individual and family financial resources. The course covers topics such as budgeting, saving, credit management, debt, investing, insurance, taxes, and retirement planning. Emphasis is placed on practical strategies for financial decision-making, understanding financial products and services, and setting short- and long-term financial goals. By the end of the course, students will be equipped with the knowledge and skills necessary to make informed personal finance decisions, avoid common financial pitfalls, and build a foundation for long-term financial well-being.
Recommended Textbook
Personal Finance 13th Edition by E. Thomas Garman
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17 Chapters
3061 Verified Questions
3061 Flashcards
Source URL: https://quizplus.com/study-set/1328 Page 2
Chapter 1: Understanding Personal Finance
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148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/26518
Sample Questions
Q1) A rising inflation rate is good news for
A)stock investors.
B)borrowers.
C)savers.
D)lenders.
Answer: B
Q2) Which of the following plans,often provided to workers by their employer,allows the employee to choose among a listing both tax-sheltered and non-tax-sheltered benefits?
A)Cafeteria plan
B)Flexible spending accounts
C)Employer-sponsored qualified retirement plans
D)Health savings account
Answer: A
Q3) The typical U.S.recession is marked by an average economic decline of 6 percent.
A)True
B)False
Answer: False
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Chapter 2: Career Planning
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76 Verified Questions
76 Flashcards
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Sample Questions
Q1) A career goal can be a specific job or field of work.
A)True
B)False
Answer: True
Q2) A résumé in a chronological format would position the first of your previous three jobs at the end of the experience section of the document.
A)True
B)False
Answer: True
Q3) After a job interview,you should immediately send thank-you notes expressing your appreciation for the opportunity to interview and restate your interest in the position.
A)True
B)False
Answer: True
Q4) You should not take the job if the geographic location is not what you want.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Financial Statements,tools,and Budgets
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150 Verified Questions
150 Flashcards
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Sample Questions
Q1) Financial planning is a single,customized plan regarding a person's financial affairs.
A)True
B)False
Answer: False
Q2) The balance sheet serves as an assessment of assets and liabilities at fair market value as of a specified date.
A)True
B)False
Answer: True
Q3) Financial planning is only for the rich.
A)True
B)False
Answer: False
Q4) For most people,the only way to increase net worth is to spend less than their income; people must save and invest.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Managing Income Taxes
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201 Verified Questions
201 Flashcards
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Sample Questions
Q1) A taxpayer who reported lottery winnings of $500 on his or her taxes could deduct a maximum of $500 in any offsetting gambling losses.
A)True
B)False
Q2) One must file a tax return to receive the earned income credit.
A)True
B)False
Q3) The IRS says you must do what a "reasonable business person" would do to make a profit when running your own business.
A)True
B)False
Q4) Tax which applies to income of a minor child earned off the assets is known as the A)kiddie tax.
B)value-added tax.
C)consumption tax.
D)regressive tax.
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Chapter 5: Managing Checking and Savings Accounts
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181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/26522
Sample Questions
Q1) It is possible to lose money on a certificate of deposit if the early withdrawal penalty is greater than the interest earned.
A)True
B)False
Q2) Amy and Lance are newlyweds.This is Lance's second marriage.Because of problems that occurred before his divorce (his ex-wife took all the money out of their joint accounts),he is more cautious than most about setting up joint accounts.Which type of account would you recommend for Amy and Lance?
A)Tenancy by the entirety
B)Tenancy in common
C)Trustee account
D)Joint tenancy account with right of survivorship
Q3) How can a person transfer money out of his or her checking account?
A)Write a check.
B)Use a debit card.
C)Make electronic funds transfers.
D)All of these.
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Page 7
Chapter 6: Building and Maintaining Good Credit
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136 Verified Questions
136 Flashcards
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Sample Questions
Q1) Under a tiered pricing system,creditors charge lower interest rates to lower-risk borrowers.
A)True
B)False
Q2) You should review your credit bureau reports at least once every three years.
A)True
B)False
Q3) Negative credit information (excluding bankruptcy) can generally be included on a credit file for ____ years.
A)three
B)five
C)seven
D)ten
Q4) The three digit code on the back of a credit card that helps protect against unauthorized use of the card is called its card verification value
A)True
B)False
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8
Chapter 7: Credit Cards and Consumer Loans
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166 Verified Questions
166 Flashcards
Source URL: https://quizplus.com/quiz/26524
Sample Questions
Q1) Which of the following should not be done when you find an error on your credit card statement?
A)Pay the remaining amount owed in full to isolate a disputed item.
B)Withhold payment for the disputed item(s).
C)Send a written notice of the error to the credit card issuer.
D)Send all original documentation to the credit card issuer.
Q2) A finance charge is the dollar cost of credit or the cost of borrowing.
A)True
B)False
Q3) Vickie wants to borrow $5,000 for three years.She will repay the $5,000 plus the finance charges in one lump sum at the end of the three-year period.If the lender charges her 12 percent add-on interest,how much will Vickie pay in finance charges?
A)$600
B)$1,800
C)$6,800
D)$5,600
Q4) The APR is approximately double the add-on rate on an installment loan.
A)True
B)False
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Chapter 8: Vehicles and Other Major Purchases
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145 Verified Questions
145 Flashcards
Source URL: https://quizplus.com/quiz/26525
Sample Questions
Q1) Companies that offer written express warranties must do so under the provisions of which federal act?
A)Magnuson-Moss Warranty Act
B)Taft-Hartley Act
C)Marshall Act
D)New Car Lemon Act
Q2) Sellers should not be used as information sources in preshopping research since they have a vested interest in selling you their products and services.
A)True
B)False
Q3) Redress means to right the wrong.
A)True
B)False
Q4) Leases work best for people who plan to buy a new vehicle every five to seven years.
A)True
B)False
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Page 10
Chapter 9: Obtaining Affordable Housing
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217 Verified Questions
217 Flashcards
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Sample Questions
Q1) A loan amortization schedule will reveal that with each subsequent payment,the portion of each monthly payment that goes towards interest increases while the portion that goes towards the principal decreases.
A)True
B)False
Q2) Assuming Janice and Ronald are willing to accept the higher risk of the loan 4 adjustable-rate mortgage (ARM),what is the highest possible interest rate they would be paying after three years?
A)4.75 percent
B)5.75 percent
C)7.75 percent
D)9.75 percent
Q3) Which of the following is (are) typical when a mortgage is assumed?
A)The buyer obtains the loan at a rate of interest below current market rates.
B)The mortgage is not assumable if there is a due-on-sale clause.
C)The buyer takes responsibility for the mortgage payments.
D)All of these.
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Chapter 10: Managing Property and Liability Risk
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209 Verified Questions
209 Flashcards
Source URL: https://quizplus.com/quiz/26527
Sample Questions
Q1) The process of collecting on your property losses begins with ____ and ends with your ____.
A)contacting your insurance representative; signing a release
B)contacting your insurance representative; receiving payment for the loss
C)filing an insurance claim; signing a release
D)filing an insurance claim; receiving payment for the loss
Q2) Individuals who enter into,change,and cancel insurance policies on behalf of an insurance company that they represent are referred to as insurance
A)brokers.
B)agents.
C)facilitators.
D)underwriters.
Q3) Most insurance underwriting is done by the insurance company rather than the insurance agent.
A)True
B)False
Q4) The law of large numbers increases risk for the insurance company.
A)True
B)False
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Chapter 11: Managing Health Expenses
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136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/26528
Sample Questions
Q1) Medicaid pays for the costs of custodial nursing home care.
A)True
B)False
Q2) A ____ power of attorney takes effect when a incapacitating medical condition occurs.
A)limited
B)durable
C)special
D)partial
Q3) Persons who have a high-deductible health plan can make tax-sheltered deposits into an investment account called a _______ from which they can pay medical expenses.
A)individual health account
B)health savings account
C)tax-sheltered annuity
D)itemized deduction plan
Q4) A guaranteed renewability clause that also is noncancelable will make sure that the insurer will not drop you should your health decline
A)True
B)False
Page 13
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Chapter 12: Life Insurance Planning
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215 Verified Questions
215 Flashcards
Source URL: https://quizplus.com/quiz/26529
Sample Questions
Q1) Given Antonio and Trina's need for life insurance and their tight budget,which type of life insurance should the Tysons purchase?
A)Limited-pay term life
B)Guaranteed renewable term
C)Whole life
D)Variable-universal life
Q2) A typical life insurance agent would use a premium quote service to help you find a low-cost life insurance policy.
A)True
B)False
Q3) The rate at which cash value accumulates depends on the rate of return earned.
A)True
B)False
Q4) Variable life insurance is also called flexible-premium variable life insurance.
A)True
B)False
Q5) If one is adequately insured,there is no need for a multiple indemnity clause. A)True
B)False
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Chapter 13: Investment Fundamentals
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172 Verified Questions
172 Flashcards
Source URL: https://quizplus.com/quiz/26530
Sample Questions
Q1) Generally investments with high capital gains potential also pay high current income.
A)True
B)False
Q2) Typically the lowest commissions are charged on investments in A)bonds.
B)real estate.
C)options and futures contracts. D)stocks.
Q3) ____ is not part of the steps in the investment planning process.
A)Determine current amount of investment assets
B)Change asset allocations monthly
C)Identify what could stop you from succeeding D)Rebalance investment portfolio regularly
Q4) The real rate of return on an investment is the yield minus the effect of taxes only. A)True
B)False
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Page 15
Chapter 14: Investing in Stocks and Bonds
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352 Verified Questions
352 Flashcards
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Sample Questions
Q1) The first step in selecting which bond to invest in is to look for the highest yield to maturity.
A)True
B)False
Q2) Genie Corporation recently declared a three-for-one stock split.Before the split the stock was worth $100 per share.If you owned 100 shares before the split occurred,you now own ____ shares worth approximately ____ per share.
A)200; $33
B)200; $50
C)300; $50
D)300; $33
Q3) Companies that consistently pay out higher than average cash dividends are classified as ____ stocks.
A)income
B)blue-chip
C)Growth
D)defensive
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Chapter 15: Mutual Funds and Exchange Traded Funds
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176 Verified Questions
176 Flashcards
Source URL: https://quizplus.com/quiz/26532
Sample Questions
Q1) The SEC requires that a mutual fund's profile prospectus include an estimate of the future rate of return for the fund.
A)True
B)False
Q2) Open-end mutual fund shares have good liquidity because
A)they act very much like a bank account.
B)the fund company will buy back the shares whenever requested.
C)there are no redemption fees.
D)you can always find another investor willing to purchase your shares.
Q3) A money market fund will have an income rather than growth objective.
A)True
B)False
Q4) The type of mutual fund that is unmanaged is called a(n) ____ fund.
A)index
B)sector
C)money market
D)emerging market
Q5) A basis point is one hundredth of one percent.
A)True
B)False
17
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Chapter 16: Real Estate and High-Risk Investments
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112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/26533
Sample Questions
Q1) High-risk investments include
A)collectibles.
B)options.
C)futures contracts.
D)All of these
Q2) The cost of financing investment property is shared by the government due to tax deductions on interest expenses.
A)True
B)False
Q3) Successful investors in speculative investments must always be alert to market developments regarding their investments.
A)True
B)False
Q4) Most investors prefer to show a negative cash flow on a real estate investment.
A)True
B)False
Q5) The IRS allows interest and real estate tax deductions on a second home. A)True
B)False
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Chapter 17: Retirement and Estate Planning
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269 Verified Questions
269 Flashcards
Source URL: https://quizplus.com/quiz/26534
Sample Questions
Q1) Surviving relatives have an obligation to repay the decedent's creditors for debts that exceed the assets of the estate.
A)True
B)False
Q2) Like all tax-sheltered retirement accounts,an IRA is not an investment but rather a tax-sheltered account in which to make and hold investments.
A)True
B)False
Q3) The grantor is the person designated to control and manage any assets in a trust.
A)True
B)False
Q4) If you want to maintain the right to change the terms or cancel a trust that you have created you should use an irrevocable trust.
A)True
B)False
Q5) One can create a trust without an attorney.
A)True B)False
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