Course Introduction
Financial Literacy Review Questions
Financial Literacy introduces students to the fundamental concepts and skills necessary to manage personal finances effectively. The course covers topics such as budgeting, saving, banking, credit, loans, investing, insurance, retirement planning, and understanding financial risks. Students will learn to evaluate financial products, make informed financial decisions, and develop strategies to achieve financial goals. By exploring real-world scenarios and practical applications, students will gain the knowledge and confidence needed to navigate the complexities of the modern financial landscape and build a secure financial future.
Recommended Textbook
Personal Financial Planning 14th Edition by Randy Billingsley
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15 Chapters
2516 Verified Questions
2516 Flashcards
Source URL: https://quizplus.com/study-set/3416
Page 2
Chapter 1: Understanding the Financial Planning Process
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143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/67829
Sample Questions
Q1) A good financial plan completed when one is in their 30s will typically last a lifetime.
A)True
B)False
Answer: False
Q2) The average [self employed | retired] household has higher income.
Answer: A
Q3) [Inflation | Consumer Price Index] is the amount of goods and services each dollar buys at a given point in time.
Answer: C
Q4) The four stages of an economic cycle would not include A)trough.
B)expansion.
C)contraction.
D)peak.
E)stagnation.
Answer: E
Q5) The federal government's [fiscal | monetary] policy is used to stimulate or moderate economic growth.
Answer: B
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Chapter 2: Using Financial Statements and Budgets
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166 Verified Questions
166 Flashcards
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Sample Questions
Q1) Inflation this coming year is expected to be 4 percent.If Mr.Gonza earned $37,000 this year,how much must he earn the following year just to keep up with inflation and maintain the balance between his income and his increasing expenditures? (Show all work.)
Answer: $37,000 + .04($37,000)
$37,000 + $1,480 = $38,480 OR
$37,000 × 1.04 = $38.480
Q2) When a cash surplus exists on your income and expense statement,you can use it to
A)acquire assets.
B)pay off existing debts.
C)increase your savings.
D)increase your investments.
E)do any of the above.
Answer: E
Q3) The most difficult approach to handling a budget deficit is to [increase income | liquidate investments].
Answer: A
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Chapter 3: Preparing Your Taxes
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179 Verified Questions
179 Flashcards
Source URL: https://quizplus.com/quiz/67831
Sample Questions
Q1) Interest you paid on your [car | house] loan could be taken as an itemized deduction on your tax return.
Answer: B
Q2) If your AGI is less than $100,000 and you do not itemize deductions,the IRS will compute your taxes for you.
A)True
B)False Answer: True
Q3) Tax avoidance is a legal means to minimize tax liabilities.
A)True
B)False
Answer: True
Q4) The tax year corresponds to the April 15 filing deadline,with a new tax year beginning April 16th.
A)True
B)False Answer: False
Q5) The standard deduction directly reduces the taxpayer's [taxable income | taxes due].
Answer: A
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Chapter 4: Managing Your Cash and Savings
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175 Verified Questions
175 Flashcards
Source URL: https://quizplus.com/quiz/67832
Sample Questions
Q1) One could expect to earn a higher rate of interest on a certificate of deposit than on a checking account.
A)True
B)False
Q2) Savings banks are mainly found in the northeastern United States.
A)True
B)False
Q3) A lump sum deposit of $8,000 left in the bank for 12 years at 9% compounded annually will result in an ending balance of (select the closest answer)
A)$11,600.
B)$16,640.
C)$22,500.
D)$52,938.
E)$96,000.
Q4) Debit and ATM card transactions are linked to your checking account. A)True
B)False
Q5) Banks must notify customers [30 | 60] days before lowering rates on deposit accounts or certificates of deposit.
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Chapter 5: Making Automobile and Housing Decisions
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179 Verified Questions
179 Flashcards
Source URL: https://quizplus.com/quiz/67833
Sample Questions
Q1) 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
Q2) The most popular mortgage loan for financing a home purchase is a
A)30-year fixed-rate mortgage.
B)15-year fixed rate mortgage.
C)convertible ARM.
D)two-step ARM.
E)growing equity mortgage.
Q3) With a [closed-end | open-end] lease,you turn in the car at the end of the term and have no additional financial obligation as a result of the residual value.
Q4) In the same geographic area,the cost of a [ stand-alone home | condo] will usually be lower.
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Page 7
Chapter 6: Using Credit
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) Unsecured lines of credit provide tax advantages if you itemize deductions.
A)True
B)False
Q2) The most common form of open account credit is the debit card.
A)True
B)False
Q3) Credit card users can often avoid finance charges entirely by paying their total balances by the stated due date.
A)True
B)False
Q4) When paying for something with a check,don't give your ____ number.
A)Social Security
B)credit card
C)driver's license
D)a and b
E)a, b, and c
Q5) The amount of finance charges one pays on a credit card depends only on APR and the amount one charges.
A)True
B)False
Page 8
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Chapter 7: Using Consumer Loans
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148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/67835
Sample Questions
Q1) Which of the following are recommended if you loan money to a friend or relative?
A)Charge a market rate of interest.
B)Have a lawyer draft a loan contract.
C)Put the agreement in writing.
D)Make the loan due within one year or less.
E)All of the these apply.
Q2) Home equity loans are similar to other installment loans except
A)interest rates are generally higher.
B)the interest paid is generally tax deductible.
C)your home is used as collateral.
D)they are typically unsecured debts.
E)b and c
Q3) Your budget should be considered [before | after] taking on a large consumer loan.
Q4) Student loans are not dischargeable in Chapter 13 bankruptcy proceedings.
A)True
B)False
Q5) It is [legal | illegal] for a lender to charge a prepayment penalty.
Q6) Loans to relatives and friends should be [verbal | written] agreements.
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Chapter 8: Insuring Your Life
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) With traditional whole life policies sold by an agent,sales commissions and marketing expenses account for between 100% and 150% of the first year's premium.
A)True
B)False
Q2) In determining available resources that would be available after death,you would generally not consider
A)social security benefits.
B)earning potential of surviving children.
C)earning potential of surviving spouse.
D)savings.
E)market value of home in which survivors will reside.
Q3) The beneficiary [will | will not] have to pay income taxes on the proceeds from a life insurance policy.
Q4) Using the needs approach,we look at the survivors' needs if the income producer dies [tomorrow | before his life expectancy].
Q5) A life insurance policy should contain which of the following? [policy description | co-insurance clause].
Q6) If a loss is certain to occur,there is [a | no] risk.
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Chapter 9: Insuring Your Health
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Many health insurance policies offer only reduced benefits for treatment of mental disorders.
A)True
B)False
Q2) Disability income benefits are taxable when the policy premiums were paid by the [employer | employee].
Q3) An elimination period in disability income insurance is most closely analogous to which of the following cost-sharing provisions in health insurance?
A)deductible
B)coinsurance
C)limit
D)cap
Q4) Medicare deductibles and co-insurance amounts are revised annually to reflect changing medical costs.
A)True
B)False
Q5) When there is a co-insurance or participation clause in a health insurance policy,the amount the insurance will pay is computed [before | after] the deductible is paid.
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Chapter 10: Protecting Your Property
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168 Verified Questions
168 Flashcards
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Sample Questions
Q1) To save premium costs,one should decrease her deductible and liability coverage on a homeowners' policy.
A)True
B)False
Q2) Which Homeowners' policy is best suited for a resident of a rented apartment to cover that person's personal property?
A)HO-3
B)HO-4
C)HO-5
D)HO-8
E)A Homeowners' policy will not apply since the real estate involved is not owned by the insured.
Q3) [Most | Few] tenants carry renters insurance.
Q4) The principle of indemnity does not apply to life and health insurance.
A)True B)False
Q5) Most insurance companies [will | will not] offer good student discounts on car insurance premiums.
Q6) Uninsured motorist insurance is relatively [expensive | inexpensive].
Page 12
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Chapter 11: Investment Planning
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162 Verified Questions
162 Flashcards
Source URL: https://quizplus.com/quiz/67839
Sample Questions
Q1) An unmarried investor with few responsibilities should be able to accept ____ better than two people who are married with young children.
A)return
B)risk
C)maturity
D)diversification
E)balance
Q2) Securities markets include
A)capital and money markets.
B)primary and secondary markets.
C)stock exchanges.
D)all of these.
E)none of these.
Q3) The collection of investments you select to meet your investment goals is called your [portfolio | allocation].
Q4) The Securities Investor Protection Corporation insurance guarantees the dollar value of your securities will not dip below a certain level.
A)True
B)False
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Chapter 12: Investing in Stocks and Bonds
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184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/67840
Sample Questions
Q1) The lower the P/E ratio,the [less | more] confidence investors are said to have in the corporation.
Q2) Your convertible bond has a conversion ratio of 15.The current market price of the common stock is $50/share.The conversion value of this bond is
A)$150.
B)$500.
C)$650.
D)$750.
E)$900.
Q3) Bond prices are impacted by both the direction and magnitude of market interest rate changes.
A)True
B)False
Q4) TIPS are appropriate for investors who are conservative and concerned about inflation.
A)True
B)False
Q5) The possibility that a corporation might fail is [economic | business] risk.
Q6) More speculative investors would prefer stocks with [higher | lower] betas.
Page 14
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Chapter 13: Investing in Mutual Funds
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176 Verified Questions
176 Flashcards
Source URL: https://quizplus.com/quiz/67841
Sample Questions
Q1) Open-ended mutual funds companies buy their shares back from investors at NAV.
A)True
B)False
Q2) Redeeming your mutual fund shares might result in a charge called
A)a back-end load.
B)a front-end load.
C)a redemption tax.
D)a management fee.
E)none of these.
Q3) Both load and no-load funds will always charge a
A)transaction fee.
B)12b-1 fee.
C)management fee.
D)fee on the sale of the shares.
E)redemption fee.
Q4) The lower the R<sup>2</sup>,the closer the relationship between an ETF and its associated target index.
A)True
B)False
Q5) Value funds look for stocks with relatively [high | low] dividend yields.
Page 15
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Chapter 14: Planning for Retirement
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205 Verified Questions
205 Flashcards
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Sample Questions
Q1) The number of new retirement plans started among small businesses is growing.
A)True
B)False
Q2) Even the best retirement plan needs to be reviewed every few years.
A)True
B)False
Q3) Dr.Johnson is surgeon at University Hospital.She will pay ____ taxes on all of her $170,000 salary.
A)Social Security
B)Medicare
C)Medicaid
D)a and b
E)a, b, and c
Q4) About 40% of all full-time workers are covered by company-financed retirement plans.
A)True
B)False
Q5) A retiree's principal source of retirement income is Social Security.
A)True
B)False
Page 16
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Chapter 15: Preserving Your Estate
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177 Verified Questions
177 Flashcards
Source URL: https://quizplus.com/quiz/67843
Sample Questions
Q1) You would create a [living | testamentary] trust to be used during your lifetime.
Q2) When you die intestate,you have given the court or state the privilege of determining A)tax deadlines.
B)burial arrangements.
C)guardians of dependents.
D)beneficiary needs.
E)divisions of estate to charities.
Q3) A will should be destroyed after a codicil is written.
A)True
B)False
Q4) Property held in different states does not complicate the estate planning process. A)True B)False
Q5) If a person dies intestate (without a valid will),the estate is distributed according to established state laws of intestate succession.According to Utah's probate code (as described in Exhibit 15.4 of your textbook),what is the estate distribution for a spouse with no offspring?
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