Suppose that you just completed your first year of college with RM11,000 in loans and plan to borrow the maximum each year from now until graduation. You have never accounted for the way you spend your money, do not have a budget, and want to insure that you will be able to repay your loans after college. What is the most important thing you can do right now? A Talk to your parents about an allowance. B Visit your career counsellor at college. C Ask a friend who took the Personal Finance course for advice. D Immediately begin to develop a personal finance plan.

2. When you are involved in ___________, you are planning for your eventual death and the distribution of your wealth onto your heirs. A Long term planning. B Beneficiary planning. C Estate planning. D Actuarial planning.

3. Richard started saving RM800 per month for his retirement when he was fifty-five years old and he is still working today at age seventy. John started saving RM50 per month when he was twenty-two years old and he retired at age sixty-five and is enjoying his retirement years. What financial principles did John understand very well? A Time value of money. B Risk and return go hand in hand. C Nothing happens without a plan. D All of the above. 4. What is your primary goal when managing liquid assets? A Maximize your return on investments. B Minimize your transaction costs. C Maintain liquidity. D All of the above.

5. Mary is 38 years old and many of her friends have gotten into trouble using their credit cards to buy things they cant afford. She feels luck that here grandmother told her that credit is evil and she should always pay cash for everything. So far, Mary has never had credit in her name and even paid cash for her car. From a Personal Finance perspective, what advice would you give to Mary? A Nothing, it looks like we all could take advice from her. B Make sure that you keep a lot of money in liquid investments in case of an emergency. C Its great that you dont owe any money but you really need to establish credit in your name so you will have it if you need in the future. D None of the above is good advice for Mary.

6. You just obtained an add-on interest loan of RM2,000 from a local bank. The interest rate is 12% annually and the repayment period is one year. What is your monthly payment? A RM166.67. B RM186.67. C RM240. D RM256.78

7. Calculate the interest on RM6,000 loan borrowed at 9% simple interest for 9 months. A RM405. B RM360. C RM270. D RM450. 8. Brendas husband Bob died last week. Her agent told her she could receive the death proceeds tax free and a monthly check until her death. He is talking about the ________ settlement option. A Lump-sum. B Life annuity. C Interest-only. D Instalment-payment.

9. You are going to purchase a new car and finance it for 60 months. You are worried that your spouse wont be able to payoff this debt if you die. What would be your best option to protect them from this debt? A Purchase a 5 year term policy for the amount of the loan. B Purchase whole life insurance for the amount of the loan. C Purchase credit life insurance from the Lender for the amount of the loan. D None of the above.

10. Lisa invests RM1,000 in XYZ stock. Two years later she sold the stock for RM1,200. During the time she owned the stock, she received a total of RM80 in dividends. What was her total return on investment? A 8%. B 20%. C 28% D 10%.

11. The main goal of personal financial planning is A saving and investing for future needs. B reducing a personal tax liability. C achieving personal economic satisfaction. D saving, spending and borrowing based on current needs.

12. When you are working, you should be managing your finances for retirement planning, which of the following is NOT a goal of your retirement planning? A maintaining your standard of living. B effectively passing wealth on to heirs. C a vacation home or boat. D travel.

13. Investments are distinguished from savings on the basis of A length of time held. B initial dollar outlay. C depreciation. D level of risk and expected return. 14. Which of the following is an example of a liquid asset: A RM1,350 that the Johnsons have in a saving account. B The RM14,250 yacht the Lees own. C A balance of RM500 the Smiths have on their Visa card. D RM65,000 mortgage the Harriss have on their home.

15. Chris and Ava have just bought their first house together. They used all their savings for the deposit and took out a fixed-rate mortgage. If the general level of interest rate rise, how will their budget be affected? A their budget will get worse. B there will be no change to their budget. C their budget will improve. D not enough information to answer the question.

16. Public Bank has agreed to loan you RM50,000 at 4% for 5 years to purchase a car under hire purchase agreement. What is the monthly payment? A RM12,000 B RM1,000. C RM2,000. D RM10,000.

17. Which of the following outstanding debts would be most prudent to pay off first? A RM5,000 borrowed from your parents at a zero interest rate. B A RM2,000 debt on a credit card charging an 18% annual interest rate. C A home equity loan of RM10,000 which has an effective interest rate of 6%. D A student loan of RM40,000 with a fixed interest rate of 4%, 18. The opportunity cost of holding money is A the inverse of the price level multiplied by the interest rate. B the price level. C real GDP. D the interest rate.

19. Assume a 30 day month to calculate your average daily balance for your credit card bill. Your daily balance for the first 10 days was RM1200, for the next 10 days was RM900, and for the last 10 days was RM700. What will your average daily balance be at the end of the month? A RM933.33. B RM93.33. C RM453.33. D RM553.33

20. Which of the following characterize secured loans? A they are typically easier to get. B interest rates tend to be lower than unsecured loan. C they reduce the lenders risk. D all of the above.

21.Being financially secure involves balancing what you earn with A your investments B what you spend C your retirement plans D your current level of debt

22. What are common factors found in an effective financial plan? A effective financial plans should be flexible to allow for changes in your situation B effective financial plans should provide sufficient liquidity to meet unexpected needs C effective financial plans should provide insurance protection from catastrophic events D all of the above are necessary in an effective financial plan

23. What should you do with your goals on a frequent basis throughout your lifetime? A prioritize them B modify them C put them in writing D all of the above 24. When you are involved in _______ planning, you are planning for your eventual death and the distribution of your wealth onto your heirs. A long term planning B beneficiary planning C estate planning D actuarial planning

25. What would happen to your net worth if you sold a tangible asset you owned for RM1,000 and use the money to pay off your credit card balance for RM1,000? A since your liabilities decreased, your net worth would increase byRM1,000 B since your assets decreased, your net worth would increase by RM1,000 C your net worth would increase by RM500 D none of the above are correct

26. As a future graduation present, your uncle has just placed RM6,000 in a bank account that will earn 6%. How much will be on deposit when you graduate in four years? A RM7,574.86 B RM7,731.55 C RM6,752.56 D RM6,247.70

27. Of the following, which one is NOT an advantage of a certificate of deposit as a cash management alternative? A high interest rate B wide selection of maturities C low transaction costs D liquidity 28. What is the maximum that you would be willing to loan your brother for RM100 if he promises to pay you back at the end of the year? You want to earn 12%. A RM82.00 B RM89.29 C RM92.73 D RM88.00

29. Assuming the interest rate charged on your credit card is 18% and your average daily balance this month was RM1,000, what will your interest or finance charges for the month be? A RM18 B RM6 C RM15 D RM50

30. Which of the following is NOT a consideration in determining the amount of homeowners insurance a person needs? A cover the entire replacement cost in the event of a complete loss B match the insurance coverage of similar homes in your neighborhood C protect against the effect of inflation eroding away your coverage D purchase flood or earthquake coverage if you are in one of these areas