Introduction to Personal Finance Test Questions
Course Introduction
Introduction to Personal Finance provides students with the foundational knowledge and practical skills necessary to make sound financial decisions throughout their lives. Covering essential topics such as budgeting, saving, credit management, investing, insurance, and retirement planning, the course empowers students to create and follow personal financial plans. Through real-world case studies, interactive activities, and the use of current financial tools, students gain insights into how to manage money responsibly, avoid common financial pitfalls, and set short- and long-term financial goals. The course is designed to build financial literacy and confidence for future financial independence and success.
Recommended Textbook
Personal Finance 12th Edition by E. Thomas Garman
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17 Chapters
3013 Verified Questions
3013 Flashcards
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Chapter 1: Understanding Personal Finance
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) Which form of compensation is not considered an employee benefit?
A) Paid holidays
B) Commissions
C) Health insurance
D) Retirement plan
Answer: B
Q2) ____ is the current value of an asset that will be received in the future.
A) Present value
B) Future value
C) A benefit
D) Inflation
Answer: A
Q3) Simple interest is always assumed in time value of money calculations.
A)True
B)False
Answer: False
Q4) The preferred stage of the economic cycle is the contraction phase.
A)True
B)False
Answer: False
Page 3
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Chapter 2: Career Planning
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76 Verified Questions
76 Flashcards
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Sample Questions
Q1) All are examples of nonsalary benefits except
A) tuition reimbursement.
B) paid sick leave.
C) child care.
D) bonus.
Answer: D
Q2) A résumé in a chronological format would position the first of your previous three jobs at the beginning of the document.
A)True
B)False
Answer: False
Q3) College majors in science,technology,engineering and mathematics are
A) referred to a STEM majors.
B) declining in importance among employers.
C) are among only a few that pay good salaries upon college graduation today.
D) less attractive to employers than vague majors that imply a broad range of skills.
Answer: A
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Page 4
Chapter 3: Financial Statements,tools,and Budgets
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) Financial planning focuses primarily on spending wisely.
A)True
B)False
Answer: False
Q2) Wendy Wilson,a successful college graduate,is currently employed in a position paying $49,500 a year.Wendy's annual living expenses are only $42,000 so she has accumulated $7,200 in monetary assets and $27,000 in investment assets since her graduation.Use the liquidity ratio to figure how long Wendy could pay expenses if she were to lose her job.
A) Less than three weeks
B) About two months
C) Approximately seven months
D) Approximately eleventh months
Answer: B
Q3) Rent and vehicle insurance payments are examples of
A) short-term liabilities.
B) variable expenses.
C) fixed expenses.
D) long-term liabilities.
Answer: C
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Chapter 4: Managing Income Taxes
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196 Verified Questions
196 Flashcards
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Sample Questions
Q1) The lifetime learning credit may be claimed for tuition and related expenses only for the first two years of postsecondary school.
A)True
B)False
Q2) Anne and Jose Romero are in the 28 percent marginal federal tax bracket.Two years ago they purchased 100 shares of ABC stock for $28 per share,paying commissions of $75.Last week they sold this stock for $35 per share and paid commissions of $50.How much is their taxable capital gain on this investment?
A) $825
B) $700
C) $575
D) $196
Q3) The IRS disallows deductions for expenses for business-related trips.
A)True
B)False
Q4) Personal income taxes are paid only on your taxable income.
A)True
B)False
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Page 6
Chapter 5: Managing Checking and Savings Accounts
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181 Verified Questions
181 Flashcards
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Sample Questions
Q1) A checking account that does not pay interest is called a
A) savings account.
B) money-market deposit account.
C) NOW account.
D) demand-deposit account.
Q2) Electronic funds transfers (EFTs)
A) can transfer funds electronically.
B) can be used in place of checks.
C) are paperless.
D) all of these.
Q3) Characteristics of a savings account include that
A) no fees are assessed as long as a low minimum balance ($50 to $250)is maintained.
B) account transactions are not accessible through ATMs.
C) no printed receipts are provided to document account transactions.
D) it permits the frequent deposit or withdrawal of funds.
Q4) Time deposits specify a period that the savings must be left on deposit,such as six months or three years.
A)True
B)False
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Chapter 6: Building and Maintaining Good Credit
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) A debt-to-equity method provides a quick idea of one's financial solvency.The larger the ratio,the riskier the likelihood of repayment.
A)True
B)False
Q2) The credit scores needed for credit approval vary from lender to lender.
A)True
B)False
Q3) When debts were accumulated in both names,divorce decrees have a legal effect on who technically owes which debts.
A)True
B)False
Q4) It is a smart move to consolidate all your student loans into one loan once you graduate from college.
A)True
B)False
Q5) The Truth in Lending Act requires lenders to state the finance charge both in dollars and as an annual percentage rate (APR).
A)True
B)False
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Chapter 7: Credit Cards and Consumer Loans
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) The interest rate on variable-rate credit cards is usually tied to some form of prime interest rate.
A)True
B)False
Q2) Credit card companies can change the rules of the account if they give the borrower 45 days notice of the change.
A)True
B)False
Q3) A borrower who has failed to make a payment of principal or interest when due or meet any other requirement of a credit agreement is said to be in foreclosure.
A)True
B)False
Q4) If you make the minimum payment on a credit card account,it will take six years or more to pay off the balance even if the card is never used again.
A)True
B)False
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Chapter 8: Vehicles and Other Major Purchases
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) Balloon auto loans were developed by lenders in response to the popularity of auto leasing.
A)True B)False
Q2) To be most successful in negotiating,one must be willing to walk away from the deal if it does not fit your expectations and desires.
A)True
B)False
Q3) A _______ _________ report lists prior ownership,odometer readings,accident reports,flood damage,total-loss information,and any title fraud on a used vehicle
A) vehicle history
B) lemon record
C) buyer pattern
D) insurance history
Q4) Buying without fully considering priorities and alternatives is called A) impulse buying.
B) unplanned purchasing.
C) money saving.
D) planned buying.
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Chapter 9: Obtaining Affordable Housing
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214 Verified Questions
214 Flashcards
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Sample Questions
Q1) A buyer's agent or broker serves as the buyer's representative in the real estate negotiations and transaction.
A)True
B)False
Q2) Lenders charge a loan origination fee to pay for the cost of
A) processing the mortgage loan.
B) investigating the borrower's credit rating.
C) the title search.
D) an appraisal of the property.
Q3) The purpose of a biweekly loan is to
A) shorten the repayment period of a loan.
B) enhance the tax advantages of home ownership.
C) pay smaller monthly payments.
D) slow equity buildup.
Q4) Which real estate agent works solely for the home buyer?
A) Dual agent
B) Buyer's agent
C) Listing agent
D) Selling agent
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Chapter 10: Managing Property and Liability Risk
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202 Verified Questions
202 Flashcards
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Sample Questions
Q1) Most of the HO forms of homeowner's insurance policies provide all-risk protection on the house and named-peril protection on the personal property.
A)True
B)False
Q2) Risk is the uncertainty about whether a financial loss will occur and how large the loss will be.
A)True B)False
Q3) To meet the replacement-cost requirement,a homeowner must insure his or her home for at least 80 percent of its replacement value.
A)True
B)False
Q4) Individual insurance buyers benefit whether or not they suffer a loss because risk reduction is a benefit.
A)True B)False
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Page 12
Chapter 11: Managing Health Expenses
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) Long-term custodial care is covered by
A) Medicare.
B) Medicaid.
C) major medical insurance.
D) All of these.
Q2) Who most needs long-term care insurance protection?
A) low-income,low-wealth persons
B) middle-income persons
C) high-income,high-wealth persons
D) All persons need long-term care insurance protection.
Q3) The period of time each year when you can make changes in your selection of health care plans available from your employer is called a(n)
A) benefit period.
B) waiting period.
C) open-enrollment period.
D) eligibility window.
Q4) Medicaid is a health care program for low income individuals.
A)True
B)False
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Chapter 12: Life Insurance Planning
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214 Verified Questions
214 Flashcards
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Sample Questions
Q1) The needs-based approach is not as accurate as the multiple-of-earnings approach.
A)True
B)False
Q2) Endorsements are amendments and additions to the basic insurance policy.
A)True
B)False
Q3) Affordability is a benefit of layering term life insurance policies.
A)True
B)False
Q4) People with hazardous occupations (police officers)or dangerous hobbies (skydivers)are sometimes required to pay higher insurance premiums.
A)True
B)False
Q5) The face value of an insurance policy is never received by the beneficiary when the interest income settlement option is chosen.
A)True
B)False
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Chapter 13: Investment Fundamentals
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173 Flashcards
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Sample Questions
Q1) Common or preferred stocks are often called equities.
A)True
B)False
Q2) Four strategies of portfolio management for long-term investors are portfolio diversification,asset allocation,buy-and-hold,and A) dollar-cost averaging.
B) real return on investment.
C) market risk.
D) leverage.
Q3) A conservative investor would be least likely to invest in A) blue-chip corporate stock.
B) high-quality corporate bonds.
C) balanced mutual funds.
D) growth mutual funds.
Q4) Conservative investors are fairly comfortable during rising and falling market conditions.
A)True
B)False
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Page 15
Chapter 14: Investing in Stocks and Bonds
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351 Verified Questions
351 Flashcards
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Sample Questions
Q1) All interest received on a zero-coupon bond is taxed in the year of maturity.
A)True
B)False
Q2) Of the following sources of information to investors,which is the least helpful in terms of solid,objective information?Of the following sources of information to investors,which is the least helpful in terms of solid,objective information?
A) Prospectus
B) 10-K
C) Annual report
D) SEC filings
Q3) The numbers in the YTD% Change column of the stock quotes report the year to date as a percentage change in the price.
A)True
B)False
Q4) Buying a security with the hope that it will go up in value is called buying long.
A)True
B)False
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Chapter 15: Investing Through Mutual Funds
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) Low-load mutual funds usually have sales charges of ____ percent.
A) 1 to 3
B) 3 to 5
C) 5 to 7
D) 7 to 9
Q2) Mutual funds will accept direct transfers of a portion of a worker's paycheck towards the purchase of shares in the mutual fund.
A)True
B)False
Q3) Which type of investor in mutual funds would be least likely to be concerned about back-end loads?
A) someone about to retire who is moving money from their employer-based retirement plan into an IRA they will manage themselves.
B) the parent of a 15-year old who is investing for the child's college expenses.
C) young to middle-age workers investing through their employer-based retirement plan.
D) any investor who plans on selling their recently purchased shares in the next three years.
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Chapter 16: Real Estate and High-Risk Investments
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) Commercial property purchased to rent to other is designed for residential living such as houses,duplexes,apartments,mobile homes,and condominiums.
A)True
B)False
Q2) Advantages of real estate investing include
A) low financial risk.
B) simplicity compared to alternative investments.
C) minimal time requirement to manage.
D) None of these.
Q3) A disadvantage of real estate investment is
A) financial risk.
B) large initial investment.
C) illiquidity.
D) All of these.
Q4) A future is a type of forward contract that is standardized usually in terms of All of these.
A) size of contract.
B) quality of product to be delivered.
C) delivery date.
D) All of these.
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Chapter 17: Retirement Planning
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257 Verified Questions
257 Flashcards
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Sample Questions
Q1) To be fully insured for Social Security retirement benefits,a worker must have ____ Social Security credits.
A) 6
B) 10
C) 40
D) 50
Q2) ____ means that on termination of employment,an employee can keep his or her savings in a tax-sheltered account by transferring the retirement funds from the employer's account to another account without penalty.
A) ERISA
B) Rollover
C) Portability
D) Vesting
Q3) If you die intestate,your state of residence will decide how your assets are divided.
A)True
B)False
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Page 19