Personal Financial Decision Making
Study Guide Questions
Course Introduction
Personal Financial Decision Making introduces students to the essential concepts and tools required to manage personal finances effectively. The course covers topics such as budgeting, saving, investing, credit management, insurance, retirement planning, and tax strategies. Students will learn how to analyze financial information, assess financial risks, and make informed decisions to achieve both short-term and long-term financial goals. Emphasis is placed on practical applications, critical thinking, and developing sound financial habits for lifelong financial well-being.
Recommended Textbook
Personal Finance An Integrated Planning Approach 8th Edition by Ralph R Frasca
Available Study Resources on Quizplus
16 Chapters
1996 Verified Questions
1996 Flashcards
Source URL: https://quizplus.com/study-set/3348
Page 2
Chapter 1: Financial Planning: Why Its Important to You
Available Study Resources on Quizplus for this Chatper
66 Verified Questions
66 Flashcards
Source URL: https://quizplus.com/quiz/66520
Sample Questions
Q1) The principle of diminishing marginal satisfaction explains why
A)many people don't like to save.
B)annual consumption almost always exceeds annual savings.
C)people can't seem to save more even though their incomes rise.
D)future consumption looks more appealing than current consumption as our current incomes increase.
Answer: D
Q2) Financial success is defined as adding to your net worth each year.
A)True
B)False
Answer: False
Q3) Inflation rates during the period 2000 - 2007 were generally under 5%.
A)True
B)False
Answer: True
Q4) Marginal analysis should be used whenever a decision involves alternative approaches to a problem.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2:
Available Study Resources on Quizplus for this Chatper
66 Verified Questions
66 Flashcards
Source URL: https://quizplus.com/quiz/66519
Sample Questions
Q1) The future value of $12,000 invested today at 6% interest compounded annually for 4 years is
A)$23,259.
B)$15,150.
C)$12,190.
D)$9,505.
Answer: B
Q2) An important part of goal planning is adjusting present values for expected inflation.
A)True
B)False
Answer: True
Q3) At a 12% interest rate,$2,000 invested today will be worth approximately $8,000 in about 12 years.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Financial Statement and Budgets: Where Are
You Now and Where Are You Going
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/66518
Sample Questions
Q1) For purposes of annual budgeting,it is better to
A)express goals very broadly to allow for flexibility.
B)ignore goals altogether and focus instead on savings.
C)express income goals concretely and expense goals broadly;this usually assures adequate savings.
D)express all goals concretely,which then reduces all goals to yearly consumption and savings targets.
Answer: D
Q2) Flexible expenses are best understood as those expenses over which you have little or no control.
A)True
B)False
Answer: False
Q3) If total assets are $80,000 and net worth is $20,000,the debt ratio is 1.33.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Taxes: the Governments Share of Your Rewards
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/66517
Sample Questions
Q1) State and local government taxes vary considerably from one area to another in the United States.
A)True
B)False
Q2) The IRS has authority to levy penalties,but it cannot charge interest on delinquent taxes.
A)True B)False
Q3) Which of the following items are not included in gross income for the calculation of your federal income taxes?
A)Wages and salaries
B)Dividends
C)Awards
D)Municipal bond interest
E)All of the above items are included in gross income.
Q4) Local income taxes may be taken as an itemized deduction on your federal tax return.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Liquidity Management: Managing Current
Assets and Current Liabilities
Available Study Resources on Quizplus for this Chatper
97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/66516
Sample Questions
Q1) John issued a check to Mary who signed it as a blank endorsement.Mary lost the check.If someone finds it,he/she could
A)sign his/her name under Monica's and cash the check.
B)write "for deposit only" under Monica's signature and deposit it to his/her account.
C)do nothing;the check must be made payable to him/her before it can be cashed.
D)do nothing;since he or she is neither a payer or payee.
Q2) Which of the following is not true of U.S.Series EE bonds?
A)The rate on new issues is set relative to the rates on other Treasury loans.
B)Taxes on on interest can be deferred until the bond is redeemed.
C)The interest income is taxed by states and local governments.
D)Some interest is forfeited if the bonds are redeemed before five years.
Q3) "Check 21" gives banks the option of returning actual checks or substitute checks.
A)True
B)False
Q4) A U.S.Series EE savings bond offers reasonably high rates and good liquidity.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Short-Term Credit Management: Consumer Credit
Available Study Resources on Quizplus for this Chatper
138 Verified Questions
138 Flashcards
Source URL: https://quizplus.com/quiz/66515
Sample Questions
Q1) The higher the rate of interest you can earn on your investments,the ________ it is to prepay an installment loan.
A)more appealing
B)less appealing
C)There is no connection between the two.
D)The connection can be made more specific;any time your investment rate exceeds the loan APR,you should prepay the loan.
Q2) The law requires that the proceeds from a home equity loan be used only for the renovation of a single family dwelling.
A)True
B)False
Q3) A low-cost source of credit may be your whole life insurance policy.
A)True
B)False
Q4) Based upon your credit report,the credit bureau will determine who may receive a credit card.
A)True
B)False
Page 8
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Consumer Durables: the Personal Auto
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/66514
Sample Questions
Q1) "Arbitration" is an industry term for
A)negotiations on the sale price of a car.
B)calculating finance charges on an auto lease.
C)calculating cost reductions on an auto lease.
D)settling disputes through the decision of an impartial third party.
Q2) A "full warranty"
A)means that all of the component parts receive the same protection.
B)means those parts covered by the "full warranty" receive what is called "lemon protection."
C)means the warranty covers the product's full or complete service life.
D)can be defined in whatever way the manufacturer wishes.
Q3) If a buyer relies upon a seller to select a product for an intended purpose,there is an implied warranty that the seller's selection will prove suitable.
A)True
B)False
Q4) Arbitration should be avoided because it is a slow and costly process.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Housing: the Cost of Shelter
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/66513
Sample Questions
Q1) Renting is generally the least costly alternative
A)for those who move often.
B)when property taxes are high.
C)for smaller families.
D)when interest rates are low.
Q2) The federal government has recently established more stringent regulations on subprime mortgages.
A)True
B)False
Q3) Banks generally prefer foreclosure to rescheduling payments on the home mortgage.
A)True
B)False
Q4) The real estate agent typically represents
A)only himself or herself,and neither the buyer or the seller of the home.
B)only the real estate agency,and neither the buyer or the seller of the home.
C)the seller of the home.
D)the buyer of the home.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Financial Markets and Instruments: Learning the Investment Environment
Available Study Resources on Quizplus for this Chatper
117 Verified Questions
117 Flashcards
Source URL: https://quizplus.com/quiz/66512
Sample Questions
Q1) Which item below is not true of the New York Stock Exchange?
A)It is the largest organized exchange in the world.
B)Companies must meet certain requirements to have their shares listed there.
C)In addition to stocks,bonds are also traded there.
D)The Exchange guarantees secrecy after a transaction is completed,all its relevant details are destroyed.
Q2) Which one of the items below is not an investment advisory service?
A)Moody's
B)Barron's
C)Value Line
D)Standard and Poor's
Q3) Higher income individuals will tend to prefer investments that avoid or defer taxes.
A)True
B)False
Q4) An order for 1,850 shares of stock involves
A)one block lot,8 round lots,and one odd lot.
B)one block lot and one odd lot.
C)18 round lots and one odd lot.
D)one round lot and one odd lot.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Investment Basics: Understanding Risk and Return
Available Study Resources on Quizplus for this Chatper
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/66511
Sample Questions
Q1) You have just read the annual report of a mutual fund.It boasted of a 26% return and advertised that it had beat the market return last year by three percentage points.In doing some research you discover the fund had a beta of +1.5 and the return on risk-free Treasury securities was 15.0%.Assuming a market risk premium of 8.0% should be used to evaluate performance means that
A)the fund's performance was impressive;three percentage points is significant,given the above data.
B)the fund's performance was good,but not impressive;it beat the market,but only by one percentage point not three.
C)the fund's performance was no better than what you would have expected.
D)the fund's performance was actually a percentage point less than what you would have expected.
Q2) Evidence shows that the return on U.S.Treasury bills was negative.
A)True
B)False
Q3) Risk is often viewed as a range of investment returns.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Stocks and Bonds: Your Most Common Investments
Available Study Resources on Quizplus for this Chatper
186 Verified Questions
186 Flashcards
Source URL: https://quizplus.com/quiz/66510
Sample Questions
Q1) Which of the following statement concerning Treasury bonds is true?
A)They are priced and sold at auction.
B)Interest accumulates and is paid out at maturity.
C)They are more risky than comparable maturity private bonds.
D)They have higher rates than comparable municipal bonds.
Q2) If ACR's expected total return is 25% and its required rate of return is 20%,you should A)buy the stock.
B)not buy the stock.
C)buy the stock,but only if its dividend yield is 5% or greater.
D)sell the stock,if you already own it.
Q3) Book value is often a poor estimate of a company's fundamental value. A)True
B)False
Q4) After-tax profits must be paid to stockholders as dividends. A)True
B)False
Q5) A bond's coupon rate is the interest it pays each year.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Mutual Fundsother Pooling Arrangements:
Simplifying, Maybe Improving Investment Performance
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/66509
Sample Questions
Q1) For a fee a HOLR can be converted into the underlying shares.
A)True
B)False
Q2) The following returns were earned last year: Fund A,10%,Fund B,20%,the overall market,11%.Fund A's beta was 0.8 while Fund B's was 2.0.Therefore,both funds would have been good investments.
A)True
B)False
Q3) If you are seeking moderate growth and moderate current return,you should select A)a money market fund.
B)an income fund.
C)a balanced fund.
D)a mixed fund.
Q4) If you are comparing fund expenses for two funds with different objectives,it is better to reference the expenses against each fund's earnings rather than its assets.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Property and Liability Insurance: Protecting Your Lifestyle Assets
Available Study Resources on Quizplus for this Chatper
154 Verified Questions
154 Flashcards
Source URL: https://quizplus.com/quiz/66508
Sample Questions
Q1) Which one of the following coverages is provided only through a federal government-sponsored program?
A)Flood insurance
B)Earthquake insurance
C)Lightning insurance
D)Liability insurance
Q2) Adverse selection exists when those with higher risk obtain insurance coverage.
A)True
B)False
Q3) An inflation guard endorsement on a homeowner's insurance policy
A)periodically increases the face amount of dwelling protection to reflect changes market value.
B)ensures that insurance premiums will not rise faster than the general price level.
C)ensures that insurance premiums will not rise faster than the average price of a new home.
D)indexes copayments to the cost of living.
Q4) Indemnification returns you to your pre-loss financial status.
A)True
B)False
15
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: Health Care and Disability Insurance: Protecting Your Earning Capacity
Available Study Resources on Quizplus for this Chatper
137 Verified Questions
137 Flashcards
Source URL: https://quizplus.com/quiz/66507
Sample Questions
Q1) A health maintenance organization (HMO)
A)is a provider of health care and not an insurer of health care.
B)is an insurer of health care and not a provider of health care.
C)is both an insurer and provider of health care.
D)functions as a middleman between the insurer and the provider of health care.
Q2) In the jargon of the insurance industry,"UCR" stands for
A)Urgent Care Reimbursement.
B)Usual Customary and Reasonable.
C)Usual Care Reimbursement.
D)Usual Customary and Responsible.
Q3) Over the past twenty years,the cost of medical care has
A)risen about twice as much as the average price of all other prices.
B)matched the rise in the average price of all other goods.
C)remained relatively constant.
D)steadily fallen because of technological advances in medical treatment.
Q4) The hospital insurance preferred by the author is
A)indemnity insurance.
B)holistic insurance.
C)service-benefit insurance.
D)expense insurance.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Life Insurance and Estate Planning: Protecting Your Dependents
Available Study Resources on Quizplus for this Chatper
186 Verified Questions
186 Flashcards
Source URL: https://quizplus.com/quiz/66506
Sample Questions
Q1) Unfunded estate liquidity may exist at death if
A)you have a life insurance protection gap.
B)you need to plan for the retirement need of your survivors.
C)your survivors have insufficient cash to pay immediate death related expenses.
D)you do not have the correct type of life insurance.
Q2) You can avoid current taxes on a withdrawal of cash value if
A)you are over age 59 1/2.
B)you are under age 59 1/2.
C)you switch your investment earnings into another policy and fill out an 1035 exchange form.
D)you assign the proceeds to a nonrevocable trust.
Q3) Probate costs are associated with the validation of your will and the transfer of your estate.
A)True
B)False
Q4) Leaving a close relative out of your will may later provide a basis for contesting the validity of the will.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Retirement Planning: Planning for Your
Long-Term Needs
Available Study Resources on Quizplus for this Chatper
119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/66505
Sample Questions
Q1) The future viability of the Social Security system will depend upon how wisely the government invests our Social Security tax revenues.
A)True
B)False
Q2) The primary difference between fixed and variable annuities is that
A)variable annuities have variable monthly payments during the accumulation period.
B)the investment return on fixed annuities doesn't change.
C)the value of the variable annuity can both increase and decrease.
D)the annuity starting date can be changed for the variable annuity.
Q3) Social Security normal retirement age is set to increase for future retirees.
A)True
B)False
Q4) IRA funds may be withdrawn without penalty at
A)age 59-1/2.
B)age 64-1/2.
C)age 69-1/2.
D)any age.
To view all questions and flashcards with answers, click on the resource link above. Page 18