Family Financial Management
Final Exam Questions
Course Introduction
Family Financial Management explores the principles and practices involved in effectively managing financial resources within the context of the family unit. This course covers budgeting, saving, investing, debt management, risk management, insurance, taxation, and retirement planning, with an emphasis on decision-making processes that enhance family well-being and financial stability. Students examine the impact of economic, social, and cultural factors on family financial behaviors, learn to set and achieve financial goals, and develop practical skills for adapting to changing life circumstances and economic environments.
Recommended Textbook
Personal Finance 8th Edition by Arthur J. Keown
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17 Chapters
2679 Verified Questions
2679 Flashcards
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Page 2
Chapter 1: The Financial Planning Process
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110 Flashcards
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Sample Questions
Q1) Maiko lost her job and she was forced to sell a rental property because she did not have other funds (liquid,emergency,etc)available to meet her financial obligations.What financial principle best applies to this situation?
A)The time value of money
B)Waste not,want not-smart spending matters.
C)Mind games,financial personality,and your money
D)Stuff happens,the importance of liquidity.
Answer: D
Q2) Leticia is twenty-two years old and she has all of her savings in a Certificate of Deposit (CD)at the bank that currently pays an annual 1.5 percent yield.The account is protected by the FDIC so it is virtually risk free.She hopes to use her savings for a down payment on a new house in ten years.Inflation in house prices in her area has averaged 4 percent per year.What financial principle does she need to pay better attention to?
A)Nothing happens without a plan.
B)Waste not,want not,smart spending matters.
C)Risk and return go hand in hand.
D)All of the above are correct.
Answer: C
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Page 3
Chapter 2: Measuring Your Financial Health and Making a Plan
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124 Flashcards
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Sample Questions
Q1) To determine your net worth,subtract your liabilities from your positive net equity.
A)True
B)False
Answer: False
Q2) When measuring your current financial health it is important to create
A)positive net worth.
B)a personal balance sheet.
C)an income statement.
D)positive net income.
E)both B and C.
Answer: E
Q3) According to the Keown book,Mint and Level Money are two of the best smartphone apps for tracking your spending and setting up a budget.
A)True
B)False
Answer: True
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Chapter 3: Understanding and Appreciating the Time Value of Money
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134 Flashcards
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Sample Questions
Q1) The ________ Principle states that a dollar today is worth more than a dollar in the future.
A)Future value of money
B)Discounted value of money
C)Adjusted value of money
D)Time value of money
E)Annuity value of money
Answer: D
Q2) What is the present value of an annual payment of $3,600 discounted back 12 years at an annual rate of return of 5 percent?
A)$12,977.19
B)$31,907.71
C)$45,360.00
D)$57,301.66
Answer: B
Q3) Your money grows faster as the compounding period becomes longer.
A)True
B)False
Answer: False
Page 5
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Chapter 4: Tax Planning and Strategies
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138 Flashcards
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Sample Questions
Q1) Assets you own,including such items as stocks,bonds,or real estate,are commonly termed
A)capital assets.
B)monetary assets.
C)current assets.
D)intangible assets.
Q2) Tax credits reduce your taxes on a dollar-for-dollar basis.
A)True
B)False
Q3) What form did the Taylors have to use because they won a car?
A)1040EZ
B)1040A
C)1040 long
D)W-2
Q4) The percentage of the last dollar you earn that goes toward your taxes is your A)tax deferral rate.
B)base tax rate.
C)average tax rate.
D)marginal tax rate.
Q5) Name the sources of tax-free income.
Page 6
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Chapter 5: Cash or Liquid Asset Management
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121 Flashcards
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Sample Questions
Q1) Which one of the following is not a consideration in determining cost of a financial institution?
A)Rates
B)Fees
C)Location
D)Per-check charges
Q2) Four banking conveniences are listed below.Which one is not typical?
A)Safety deposit boxes
B)Online banking services
C)Direct deposit
D)Overdraft protection
E)All of the above are typical banking conveniences.
Q3) The ________ converts interest rates compounded for different periods into comparable annual rates,allowing you to compare interest rates easily.
A)APR
B)APY
C)YTD
D)YAY
Q4) List five features available through online and mobile banking.
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Chapter 6: Using Credit Cards: the Role of Open Credit
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167 Verified Questions
167 Flashcards
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Sample Questions
Q1) A 2016 TD Ameritrade survey found what percent of respondents said that credit card debt would make them less likely to date someone?
A)22
B)12
C)44
D)33
Q2) Which of the following is not a typical potential problem that can occur in a credit bureau file?
A)You may be mixed up with someone else with a similar name.
B)Accounts may be listed as still open that are actually closed.
C)Accounts may be listed that you never had.
D)The wrong credit bureau handles your case.
E)A creditor may fail to report a payment or payments.
Q3) Which one of the following items of evaluation would Susan score the highest on?
A)Employment history
B)Annual income
C)Length of residence
D)None of the above
Q4) List five signs that you have the credit card habit.
Q5) What vital areas are typically evaluated in "scoring"?
Page 8
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Chapter 7: Student and Consumer Loans: the Role of Planned Borrowing
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124 Flashcards
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Sample Questions
Q1) What is the type of loan where the entire interest charge is subtracted from the loan principal before you receive the money,and at maturity you repay the entire principal?
A)Simple interest method
B)Partial amortization method
C)Discount method
D)Add-on method
E)None of the above
Q2) Name the advantages and disadvantages of an unsecured loan.
Q3) Which of these are possible options for most people who cannot pay their bills?
A)Get help from a credit counselor.
B)Obtain a debt consolidation loan.
C)Declare Chapter 13 personal bankruptcy.
D)Declare Chapter 7 personal bankruptcy.
E)All of the above are possible options.
Q4) A 529 plan is a tax-advantaged savings plan designed to encourage parents to save for future college costs for their children.The plan comes in two forms: pre-paid tuition plans and college savings plans.
A)True
B)False
Page 9
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Chapter 8: The Home and Automobile Decision
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217 Flashcards
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Sample Questions
Q1) Private mortgage insurance is designed to protect the A)borrower.
B)lender.
C)lien holder.
D)all of the above.
Q2) A mortgage for less than 80% of the appraised value of the home will not require PMI insurance because they default less often.
A)True
B)False
Q3) Which of the following is not a one-time fee connected with purchasing a house?
A)Down payment
B)Private mortgage insurance
C)Closing costs
D)Points
E)Origination fee
Q4) Stretching a car loan from 48 months to 60 months means the car will end up costing you more when you have paid in full.
A)True
B)False
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Chapter 9: Life and Health Insurance
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224 Flashcards
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Sample Questions
Q1) What is the purpose of companies such as A.M.Best,Moody's and Standard & Poor's?
A)They sell life insurance directly to consumers without agents.
B)They evaluate and rate the financial stability of the insurance industry.
C)They provide reinsurance coverage to the insurance industry.
D)They sell low cost term insurance via the Internet.
Q2) Define long-term care insurance and describe its basic features.
Q3) It should be everyone's goal to become self-insured when it comes to Life insurance.Explain how and why this should be?
Q4) Life insurance can be owned by individuals but cannot be owned by businesses? A)True
B)False
Q5) Compare and contrast the three basic types of HMOs.
Q6) Choose the option(s)available in the nonforfeiture clause of a cash-value life policy.
A)Exchange the policy for a paid-up term policy of equal face value.
B)Receive the policy's cash value.
C)Retain rights to a death benefit.
D)Exchange the policy's cash value for a paid-up policy with a reduced face value.
E)A,B,and D above
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Chapter 10: Property and Liability Insurance
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161 Flashcards
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Sample Questions
Q1) According to the Keown textbook,after a DUI conviction,how long will you increased rates continue?
A)3-5 years
B)8-10 years
C)1-2 years
D)6 months-1 year
Q2) Your best friend's apartment has just been robbed,and he had no insurance.What would you suggest to your friend to better protect himself from such losses in the future?
A)Purchase renter's insurance and add a personal articles floater.
B)Take out personal property replacement cost coverage.
C)Take a written and video tape inventory of your property.
D)Only B and C above
E)A,B,and C above
Q3) The minimum level of personal liability coverage per accident in a homeowner's policy is?
A)$50,000
B)$100,000
C)$250,000
D)$150,000
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Page 12
Chapter 11: Investment Basics
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325 Flashcards
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Sample Questions
Q1) How does the time dimension of investing relate to the concept of liquidity?
Q2) You have just purchased shares of stock from a stockbroker.These shares were previously traded on the NYSE.This trade took place in the
A)primary market.
B)secondary market.
C)tertiary market.
D)quaternary market.
E)none of the above.
Q3) Louis purchased $5,000 worth of stock three years ago and sold it today for $7,000.He received no dividends from this investment.Inflation averaged 4% during the three years he owned the stock.What was his annualized real rate of return on this investment?
A)4%
B)9.33%
C)13.33%
D)36%
E)40%
Q4) Interest rates are closely tied to the rate of inflation.
A)True
B)False
Page 13
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Chapter 12: Investing in Stocks
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190 Flashcards
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Sample Questions
Q1) The ________ is the date on which the board of directors announces the amount of the dividend.
A)announcement date
B)declaration date
C)dividend date
D)ex-dividend date
E)maturity date
Q2) Capital appreciation refers to an increase in the selling price of your shares of stock.
A)True
B)False
Q3) If your portfolio is very diversified then the beta is of no use to you.
A)True
B)False
Q4) Because every company is almost certain to experience a bad year or two,holding on to stock for only one year
A)is not a very sound investment decision.
B)is a very sound investment decision.
C)is a good idea for those who may need to liquidate their investment quickly.
D)diversifies one's portfolio risk.
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Chapter 13: Investing in Bonds and Other Alternatives
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149 Flashcards
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Sample Questions
Q1) Coupon interest rates determine?
A)The rate to price the bond
B)Annual cash flow from the bond
C)How much investors are willing to pay
D)What the bond can be called at
Q2) The largest single player and payer in the bond market
A)is corporate America.
B)are municipal bond issuers.
C)is the U.S.government.
D)are foreign firms.
E)are schools and county governments.
Q3) What,if any,are the pros and cons of speculating in precious metals,precious gems,and collectibles?
Q4) Why might you consider investing in bonds?
A)Bonds reduce risk through diversification.
B)Bonds produce steady income.
C)Bonds can be safe investment if held to maturity.
D)All of the above
Q5) Provide a list of direct and indirect real estate investments.Which one is best for the average investor?
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Chapter
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141 Flashcards
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Sample Questions
Q1) Bernie has followed the three steps to begin mutual fund investing and is ready to make the purchase.What are his choices in buying?
A)Use a broker.
B)Use a financial advisor.
C)Buy direct.
D)Buy through a mutual fund supermarket.
E)All of the above
Q2) Mutual funds provide an inexpensive way for investors to diversify and gain access to professional management.
A)True
B)False
Q3) When comparing which mutual fund to invest in,which of the following would be important to consider?
A)Load
B)Net asset value
C)Expense ratio
D)All of the above are correct.
E)Only A and C are correct.
Q4) Briefly describe the cost involved in mutual funds.
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Chapter 15: Retirement Planning
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Sample Questions
Q1) Defined-benefit pension plans are generally ________ and they lack ________.
A)contributory;divesting
B)noncontributory;divesting
C)contributory;portability
D)noncontributory;portability
E)vested;portability
Q2) The Keogh plan is a retirement plan for individuals who work for large multinational corporations.
A)True
B)False
Q3) In 2017,a worker received 1 Social Security credit for every ________ dollars in earnings?
A)$1
B)$1,000
C)$1,300
D)$1,500
Q4) What investment goals should a person have when determining where to put their 401k monies in their account?
Q5) Discuss the basic considerations when facing retirement.
Q6) What are the major differences between the new IRAs and the traditional IRA?
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Chapter 16: Estate Planning: Saving Your Heirs Money and Headaches
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Sample Questions
Q1) The federal estate tax exemption is $5.49 million per person.Recently,lawmakers ruled that the exempted amount held by the first to die would be transferable to the surviving spouse.Therefore,a married couple can now avoid federal estate taxes with combined assets of up to $10.98 million even without good estate planning.
A)True
B)False
Q2) Someone who receives assets or money from a person after death is called the deceased's
A)receptor.
B)receptee.
C)obtainee.
D)beneficiary.
E)none of the above.
Q3) Identify three advantages and three disadvantages of revocable living trusts.
Q4) What should you do once your will has been drawn up?
Q5) The main purpose of probate is to make sure the beneficiaries are treated equally.
A)True B)False
18
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Chapter 17: Financial Life Eventsfitting the Pieces Together
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Sample Questions
Q1) According to U.S.News and World Reports,the required investment for a medium income family to raise and support a child for 22 years is approximately
A)$52,000.
B)$197,704.
C)$1,000,000.
D)$1,450,000.
E)$3,000,000.
Q2) Sam wants to start saving for retirement.She wants to have $85,000 per year for 25 years in retirement that will start in 40 years.How much must she deposit in equal annual amounts for the next 20 years if she can earn 9% over the life of her investment?
A)$16,319
B)$8,752
C)$2,912
D)$4,325
Q3) A budget is essential for a recent college graduate with no dependents.
A)True
B)False
Q4) How can someone plan for a divorce?
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