Introduction to Financial Planning Test Bank
Course Introduction
Introduction to Financial Planning offers students a comprehensive overview of the foundational concepts and practices involved in managing personal finances and achieving financial goals. The course covers key topics such as budgeting, saving, investing, tax planning, insurance, retirement and estate planning, and debt management. Students will learn to develop a personal financial plan, analyze various financial products and services, and understand the ethical and legal considerations in financial decision-making. Through real-world examples and practical exercises, this course prepares students to make informed financial decisions for themselves and advise others with confidence.
Recommended Textbook
Focus on Personal Finance 5th Edition by
Jack R. Kapoor
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14 Chapters
1546 Verified Questions
1546 Flashcards
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Page 2
Chapter 1: Personal Financial Planning in Action
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86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/60778
Sample Questions
Q1) Robert Brown is interested in attending a concert next weekend. Unfortunately, he is scheduled to work. If he finds a substitute for his shift so he can attend the concert, what kind of cost is he incurring?
A) Personal opportunity cost relating to health
B) Personal opportunity cost relating to time
C) Personal opportunity cost relating to abilities
D) Personal opportunity cost relating to knowledge
E) Unexpected personal opportunity cost
Answer: B
Q2) Susan Smith has a goal of "saving $25 per month for a TV". Considering the SMART approach, Susan's goal lacks
A) Measurable terms
B) A realistic perspective
C) An action-orientation
D) A specific objective
E) A time frame
Answer: E
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Chapter 2: Money Management Skills
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102 Verified Questions
102 Flashcards
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Sample Questions
Q1) Which of the following is a deduction to determine take-home pay?
A) Interest earned on savings
B) Commissions
C) Dividends
D) Salary
E) Social Security taxes
Answer: E
Q2) Which of the following are two personal financial statements that you create yourself?
A) Budget and credit card statements
B) Personal balance sheet and cash flow statement
C) Checkbook and budget
D) Tax returns
E) Bank statement and a balance sheet
Answer: B
Q3) The current financial position of an individual or family is a common starting point for financial planning.
A)True
B)False
Answer: True
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Chapter 3: Taxes in Your Financial Plan
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) A tax due on the purchase of gasoline is called a(n)
A) Estate tax.
B) Excise tax.
C) Income tax.
D) Real estate property tax.
E) Inheritance tax.
Answer: B
Q2) Connie thinks that her salary and tax rate for next year will be lower than for this year. What step should she take to minimize her taxes in the current year?
A) Accelerate receipt of income.
B) Delay deductions.
C) Practice tax evasion.
D) Accelerate deductions.
E) None of these will allow her to minimize her taxes.
Answer: D
Q3) Federal income tax returns must be filed by April 1 of each year.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Financial Services: Saving Plans and Payment Accounts
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) Harvey needed some cash quickly, so he received a short-term loan based on the value of an old ring. Where did he go?
A) A commercial bank
B) A check-cashing outlet
C) A pawnshop
D) A payday loan company
E) A rent-to-own center
Q2) Which of the following is NOT correct?
A) Check 21 decreases the processing time for checks.
B) Check 21 allows a substitute check to be an equivalent of the original check.
C) A substitute check is a digital reproduction of the original paper check.
D) Check 21 increases the fees banks can charge for checking accounts.
E) All of the above are correct.
Q3) A school ID that includes prepaid amounts for school lunches is called a debit card.
A)True
B)False
Q4) A loan from a pawnshop will be more expensive than one from a bank.
A)True
B)False
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Chapter 5: Consumer Credit: Advantages, Disadvantages,
Sources, and Costs
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) Credit files can include all of the following except
A) Employer, position, and income.
B) Previous address.
C) Spouse's name, Social Security number, employer, and income.
D) Race or nationality.
E) Checks returned for insufficient funds.
Q2) If you purchase something with a credit card, the finance charges you pay on an item could end up being more than the item is worth.
A)True
B)False
Q3) In the five Cs of credit, capacity refers to the borrower's trustworthiness and stability. A)True
B)False
Q4) Credit bureaus get their information from all of the following sources except A) Banks.
B) Credit card companies.
C) Finance companies.
D) References.
E) Stores.
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Chapter 6: Consumer Purchasing Strategies and Wise
Buying of Motor Vehicles
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116 Verified Questions
116 Flashcards
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Sample Questions
Q1) Karen bought a mixer. She received a warranty that covers only certain aspects of the product. If the product fails, she may be required to pay part of the costs for shipping or repairs. Which of the following warranties does she have?
A) "As-is" warranty
B) Express warranty
C) Full warranty
D) Implied warranty
E) Limited warranty
Q2) One of the best ways to compare prices of food packages of different sizes is to use rebate pricing.
A)True
B)False
Q3) Abigail checked out brands and prices of blue jeans at several stores. She was impulse shopping.
A)True
B)False
Q4) A lawyer is necessary when you appear in small claims court.
A)True
B)False
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Chapter 7: Selecting and Financing Housing
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97 Verified Questions
97 Flashcards
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Sample Questions
Q1) Carrie bought a house five years ago for $150,000. At that time she borrowed $140,000 from her bank. The house is now worth $162,000. Her PMI will automatically be dropped when her mortgage balance drops to
A) $117,000.
B) $122,000.
C) $140,000.
D) $150,000.
E) $162,000.
Q2) Veronica has had a variable-rate mortgage for several years. Unfortunately, the monthly mortgage payments have not covered her interest owed. As a result, her home equity is decreasing because of
A) ARM.
B) FHA loan.
C) Negative amortization.
D) Buy-down.
E) VA loan.
Q3) An advantage of renting is pride of ownership.
A)True
B)False
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Page 9
Chapter 8: Home and Automobile Insurance
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) Motor vehicle crashes cost over ______ in lost wages and medical bills every year.
A) $10,000
B) $750,000
C) $12 million
D) $150 billion
E) $2 trillion
Q2) Insurance that covers valuable items, such as an expensive musical instrument, is called
A) Buildings and other structures coverage.
B) Homeowner's insurance.
C) Personal property floater.
D) Household inventory insurance.
E) Personal liability insurance.
Q3) One of the four questions that should be asked when developing a risk management plan is "What do I need to insure?"
A)True
B)False
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Page 10
Chapter 9: Health and Disability Insurance
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) The insurance that helps pay hospital, surgical, medical, and other bills with a low deductible is known as a(n)
A) Basic health insurance policy.
B) Individual policy.
C) Comprehensive major medical policy.
D) Hospital indemnity policy.
E) Dread disease policy.
Q2) FSAs and HSAs provide tax advantages for health care expenses.
A)True
B)False
Q3) A deductible is a set amount you must pay toward medical expenses before the insurance company pays benefits.
A)True
B)False
Q4) With a guaranteed renewable provision in a health insurance policy, the insurer is permitted to raise premiums for all members of a group.
A)True
B)False
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Page 11
Chapter 10: Financial Planning With Life Insurance
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91 Verified Questions
91 Flashcards
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Sample Questions
Q1) When you buy life insurance, you are making a contract with the company issuing the policy where you agree to pay a premium periodically and the company agrees to pay a death benefit.
A)True
B)False
Q2) Jeanne wants to purchase a life insurance policy with guaranteed premiums. What kind of policy would she want to purchase?
A) Dividend policy
B) Nonparticipating policy
C) Mutual policy
D) Participating policy
E) Stock policy
Q3) Of the following, which one is the most positive feature of whole life insurance for a person who wants a more structured way to save?
A) You must pay interest on any loans.
B) You pay premiums each year for the rest of your life.
C) It is more expensive than term insurance.
D) It builds cash value.
E) It is permanent life insurance.
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Page 12
Chapter 11: Investing Fundamentals and Bonds
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140 Verified Questions
140 Flashcards
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Sample Questions
Q1) The taxable equivalent yield for a municipal bond will be lower than the tax-exempt yield for that bond.
A)True
B)False
Q2) If your main focus is to have your investments increase in value, you are most concerned with
A) Income.
B) Growth.
C) Liquidity.
D) Business failure risk.
E) Market risk.
Q3) Market risk is associated with some investments and indicates that periods of economic expansion are followed by periods of recession.
A)True
B)False
Q4) To investors, liquidity is the ability to buy or sell an investment quickly without substantially affecting the investment's value.
A)True
B)False
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Chapter 12: Investing in Stocks
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142 Verified Questions
142 Flashcards
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Sample Questions
Q1) Corporate earnings are reported in the firm's annual report, or are obtained from a professional advisory service or accessing a website such as Yahoo! Finance.
A)True
B)False
Q2) Alberta owns 100 shares of stock of ABC Company, and Bobby owns 200 shares of the same stock. If ABC Company pays a $5 dividend to all stockholders with a record date of Friday, June 15, then
A) Alberta will receive the same amount as Bobby if they owned the stock two business days before the record date.
B) Both will receive the dividend as long as they sell their stock three days before the record date.
C) Alberta will receive half as much as Bobby if they owned the stock two business days before the record date.
D) Both will receive the dividend if they bought the stock on the record date.
E) Alberta and Bobby will receive the same amount if they bought the shares at least one month before the record date.
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Chapter 13: Investing in Mutual Funds
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85 Verified Questions
85 Flashcards
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Sample Questions
Q1) Payments to a fund's shareholders that result from the sale of securities in the fund's portfolio are
A) Capital gain distributions.
B) Income dividends.
C) Capital gains.
D) Mutual fund money.
E) Fund taxes.
Q2) Thomas wants to invest in a fund that invests in stock, bonds, and money market instruments. Which of the following will meet his needs?
A) Asset allocation funds
B) Aggressive growth funds
C) Junk bond funds
D) Midcap funds
E) Short-term corporate bond funds
Q3) For individuals, stocks and bonds ar a better investment choice than mutual funds, because money is pooled from many investors for stocks and bonds.
A)True
B)False
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Chapter 14: Starting Early: Retirement and Estate Planning
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118 Verified Questions
118 Flashcards
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Sample Questions
Q1) When Paul leaves his job at Acme Bending Company, he may choose to move his 401(k) balance to a plan called a rollover IRA.
A)True
B)False
Q2) If you were born in 1960 or later, you will first become eligible to receive Social Security benefits at age 67.
A)True
B)False
Q3) In 1974 ERISA was passed. What does ERISA stand for?
A) Employee Retirement Income Security Act
B) Employer Retirement Income Security Act
C) Employee Retirement Investment Security Act
D) Employer Retiring Investment Stock Act
E) Entity Retirement Investment Security Act
Q4) A(n) ______ administers a trust.
A) beneficiary
B) executor
C) grantor
D) guardian
E) trustee
Page 16
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