Personal Financial Planning 14th Edition by Billingsley – Test Bank

Personal Financial Planning 14th Edition by Billingsley – Test Bank

1. Even if you do have money, you may still be better off using an installment loan for a big-ticket purchase.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-5 – LO: 7-5

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

TOPICS:

Bloom’s: Understanding

2. Consumer loans, like open account credit, result from a rather informal process.

a.

True

b.

False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Understanding

3. Loans against a life insurance policy do not have to be paid back.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Easy

LEARNING OBJECTIVES:

PFIN.BILL.17.7-2 – LO: 7-2

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

4. The most common use of consumer loans is to purchase automobiles.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Easy

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

5. From a financial planning perspective when considering a consumer loan, you should ask yourself how the purchase fits into long-term financial plans.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-3 – LO: 7-3

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Analyzing

6. When you take out a loan against the cash value of your life insurance policy, you’re really borrowing from yourself.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Challenging

LEARNING OBJECTIVES:

PFIN.BILL.17.7-2 – LO: 7-2

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Analyzing

7. Collateral is an item of value used to secure the principal portion of a loan.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Easy

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

8. The cash value of a life insurance policy can be used as a source of loan collateral.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Easy

LEARNING OBJECTIVES:

PFIN.BILL.17.7-2 – LO: 7-2

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

9. Consolidation loans are used to purchase new furniture and appliances when many items are needed at the same time.

a.

True

b.

False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Understanding

10. Consolidation loans are often used to help borrowers straighten out a critical financial situation.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

11. Borrowing to pay for a college education is a legitimate use of credit.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Easy

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Understanding

12. College costs have been escalating faster than the overall rate of inflation.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Easy

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

13. College costs have been escalating, but not as rapidly as the overall rate of inflation.

a.

True

b.

False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Easy

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

14. The student loans with the lowest rates of interest and the best loan terms are the PLUS loans.

a.

True

b.

False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Creating

15. The student loans with the best loan terms are the Stafford and Perkins loans.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Creating

16. PLUS loans are made to parents or legal guardians rather than to the student.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

17. Student loans are made by banks and other financial institutions, but students apply for these loans through their universities.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

18. In order to continue receiving student loans, the student must be making satisfactory progress in his academic program.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

19. 529 Plans are the newest type of student loans.

a.

True

b.

False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

20. Student loans are not dischargeable in Chapter 13 bankruptcy proceedings.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

21. Earnings on 529 college savings plans can be tax free when used for qualifying college education expenses.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Easy

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

22. Student loans are dischargeable in Chapter 7 bankruptcy proceedings.

a.

True

b.

False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Easy

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

23. Single-payment loans are often used as a form of interim financing.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-4 – LO: 7-4

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

24. Installment loans are typically repaid in one payment.

a.

True

b.

False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Understanding

25. Installment loans are typically repaid in monthly payments.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Understanding

26. The repayment period on most installment loans is six to twelve months.

a.

True

b.

False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

27. The majority of consumer loans are set up with fixed interest rates.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

28. When the market interest rate goes up, the rate on variable-rate loans goes up.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Easy

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Analyzing

29. Variable-rate loans are desirable if interest rates are expected to fall in the future.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Challenging

LEARNING OBJECTIVES:

PFIN.BILL.17.7-1 – LO: 7-1

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Analyzing

30. The lender can adjust the rate on variable-rate loans only on prespecified adjustment dates.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Easy

LEARNING OBJECTIVES:

PFIN.BILL.17.7-3 – LO: 7-3

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

31. Commercial banks are generally more selective in granting loans than finance companies.

a.

True

b.

False

ANSWER:

True

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-2 – LO: 7-2

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering

32. Credit unions dominate the consumer loan market.

a.

True

b.

False

ANSWER:

False

POINTS:

1

DIFFICULTY:

Moderate

LEARNING OBJECTIVES:

PFIN.BILL.17.7-2 – LO: 7-2

NATIONAL STANDARDS:

United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills

STATE STANDARDS:

United States – KS – DISC: Financial Markets and Inte – DISC: Financial Markets and Interest Rates
United States – AK – DISC: TVM

KEYWORDS:

Bloom’s: Remembering