FIN380 FINAL PRACTICE EXAMINATION
2026 QUESTIONS WITH ANSWERS GRADED
A+
• 30. The total amount of income tax you owe in one year is your tax: a.
liability. b. rate. c. refund. d. withholding. e. credit..
Answer: a. liability.
• Sanjay has decided to purchase a real estate property that is expected to
generate a net operating income (NOI) of $63,000 per year. With a 9% cap
rate, the property would have an estimated value of: Value of Property =
NOI per Year ÷ Cap Rate.
Answer: $700,000 $63,000 ÷ 0.09 = $700,000
• Which of the following statements regarding individual retirement accounts
(IRAs) is true?.
Answer: Withdrawals from Roth IRAs are tax free, so long as the account
has been open for 5 years and the individual is past the age of 59½.
• You have just bought 100 shares of ABC Corporation common stock at
$70.50 per share. The commission is calculated as 1.5% of the total value of
the transaction plus $30.00. How much must you pay the broker for the
entire transaction?.
Answer: $7,185.75 Market Transaction = 100 × $70.50 = $7,050.00
Commission = (0.015 × $7,050.00) + $30.00 = $135.75 Total Payment =
$7,050.00 + 135.75 = $7,185.75
• For which of the following would a portfolio containing 80% to 90% in
common stocks be appropriate?.
Answer: Zion and Seror, newlyweds in their mid-20s who have steady jobs
and are putting money aside for retirement
• 41. Which of the following is an advantage of giving gifts? a. There is no
tax exemption for charitable contributions. b. Annual inclusion amount
, increases with gifts. c. Marital deduction allows gifts to be tax free. d. Gift
tax exclusion attracts more estate tax. e. To avoid depreciation in value..
Answer: c. Marital deduction allows gifts to be tax free.
• All of the following statements regarding annuities are true EXCEPT:.
Answer: Most annuities do not have surrender penalties on withdrawals
made within the first few years of purchase.
• (T/F) Coming up with a sound asset allocation plan will likely have more of
an impact on long-term investment return than the specific securities you
hold in your portfolio..
Answer: True
• 14. If you purchase a house worth $110,000 and make a 10 percent down
payment, how much would 1 mortgage point cost at closing? a. $1,530 b.
$1,800 c. $765 d. $1,100 e. $990.
Answer: e. $990
• 10. ____________ are ongoing costs of home ownership. a. Closing costs b.
Down payments c. Taxes on capital gains d. Property taxes and insurance.
Answer: d. Property taxes and insurance
• 17. Low interest rates result in: a. encouraging a higher savings rate. b.
improving the standard of living. c. bringing more investment avenues. d.
facilitating a greater supply of money for borrowers. e. reducing the cost of
financing the federal budget deficit..
Answer: e. reducing the cost of financing the federal budget deficit.
• (T/F) While exchange traded funds (ETFs) offer many of the benefits of
mutual funds, they have tax-timing disadvantages not present with otherwise
comparable mutual funds..
Answer: False
• Damien plans to buy a share at $120 and hold it for 5 years. During this
period, he would receive average annual dividends of $4 a share. He expects
to receive $145 at the end of the 5-year period when he sells the share. What
are the keystrokes used to calculate the rate of return on the investment?.
, Answer: N=5, PV=-120, PMT=4, FV=145
• 33. An increase in the amount of the deductible will __________. a.
decrease the replacement cost of the insured property b. increase the
personal property floater coverage for the insured property c. decrease the
amount of insurance premiums d. increase the insurance coverage.
Answer: c. decrease the amount of insurance premiums
• 16. Maria has invested $200,000 in mutual funds and $20,000 in bonds. The
total value of her portfolio is _____. a. $130,000 b. $220,000 c. $250,000 d.
$400,000 e. $310,000.
Answer: b. $220,000
• (T/F) Your contributions to an IRA account may or may not be tax
deductible, depending in part on your level of income..
Answer: True
• 8. Lois, a 67-year-old, is receiving Social Security benefits. She received
$25,000 in interest and dividends this year. Her Social Security benefits
__________. a. are reduced to half because of these earnings b. are subject
to an earnings test c. are reduced by the federal tax paid on her interest
income d. are not reduced because of these earnings.
Answer: d. are not reduced because of these earnings
• 28. If you are a mutual fund investor who needs a steady income, you might
take advantage of a fund's: a. automatic reinvestment plans. b. systematic
withdrawal plans. c. exchange privileges. d. retirement plans. e. conversion
plans..
Answer: b. systematic withdrawal plans.
• Investing in real estate is attractive to investors because....
Answer: it permits a high degree of financial leverage
• Which of the following statements about obtaining Social Security benefits
is NOT correct?.
Answer: For full retirement benefits, workers today must be employed in a
job covered by Social Security at least 40 consecutive quarters.
2026 QUESTIONS WITH ANSWERS GRADED
A+
• 30. The total amount of income tax you owe in one year is your tax: a.
liability. b. rate. c. refund. d. withholding. e. credit..
Answer: a. liability.
• Sanjay has decided to purchase a real estate property that is expected to
generate a net operating income (NOI) of $63,000 per year. With a 9% cap
rate, the property would have an estimated value of: Value of Property =
NOI per Year ÷ Cap Rate.
Answer: $700,000 $63,000 ÷ 0.09 = $700,000
• Which of the following statements regarding individual retirement accounts
(IRAs) is true?.
Answer: Withdrawals from Roth IRAs are tax free, so long as the account
has been open for 5 years and the individual is past the age of 59½.
• You have just bought 100 shares of ABC Corporation common stock at
$70.50 per share. The commission is calculated as 1.5% of the total value of
the transaction plus $30.00. How much must you pay the broker for the
entire transaction?.
Answer: $7,185.75 Market Transaction = 100 × $70.50 = $7,050.00
Commission = (0.015 × $7,050.00) + $30.00 = $135.75 Total Payment =
$7,050.00 + 135.75 = $7,185.75
• For which of the following would a portfolio containing 80% to 90% in
common stocks be appropriate?.
Answer: Zion and Seror, newlyweds in their mid-20s who have steady jobs
and are putting money aside for retirement
• 41. Which of the following is an advantage of giving gifts? a. There is no
tax exemption for charitable contributions. b. Annual inclusion amount
, increases with gifts. c. Marital deduction allows gifts to be tax free. d. Gift
tax exclusion attracts more estate tax. e. To avoid depreciation in value..
Answer: c. Marital deduction allows gifts to be tax free.
• All of the following statements regarding annuities are true EXCEPT:.
Answer: Most annuities do not have surrender penalties on withdrawals
made within the first few years of purchase.
• (T/F) Coming up with a sound asset allocation plan will likely have more of
an impact on long-term investment return than the specific securities you
hold in your portfolio..
Answer: True
• 14. If you purchase a house worth $110,000 and make a 10 percent down
payment, how much would 1 mortgage point cost at closing? a. $1,530 b.
$1,800 c. $765 d. $1,100 e. $990.
Answer: e. $990
• 10. ____________ are ongoing costs of home ownership. a. Closing costs b.
Down payments c. Taxes on capital gains d. Property taxes and insurance.
Answer: d. Property taxes and insurance
• 17. Low interest rates result in: a. encouraging a higher savings rate. b.
improving the standard of living. c. bringing more investment avenues. d.
facilitating a greater supply of money for borrowers. e. reducing the cost of
financing the federal budget deficit..
Answer: e. reducing the cost of financing the federal budget deficit.
• (T/F) While exchange traded funds (ETFs) offer many of the benefits of
mutual funds, they have tax-timing disadvantages not present with otherwise
comparable mutual funds..
Answer: False
• Damien plans to buy a share at $120 and hold it for 5 years. During this
period, he would receive average annual dividends of $4 a share. He expects
to receive $145 at the end of the 5-year period when he sells the share. What
are the keystrokes used to calculate the rate of return on the investment?.
, Answer: N=5, PV=-120, PMT=4, FV=145
• 33. An increase in the amount of the deductible will __________. a.
decrease the replacement cost of the insured property b. increase the
personal property floater coverage for the insured property c. decrease the
amount of insurance premiums d. increase the insurance coverage.
Answer: c. decrease the amount of insurance premiums
• 16. Maria has invested $200,000 in mutual funds and $20,000 in bonds. The
total value of her portfolio is _____. a. $130,000 b. $220,000 c. $250,000 d.
$400,000 e. $310,000.
Answer: b. $220,000
• (T/F) Your contributions to an IRA account may or may not be tax
deductible, depending in part on your level of income..
Answer: True
• 8. Lois, a 67-year-old, is receiving Social Security benefits. She received
$25,000 in interest and dividends this year. Her Social Security benefits
__________. a. are reduced to half because of these earnings b. are subject
to an earnings test c. are reduced by the federal tax paid on her interest
income d. are not reduced because of these earnings.
Answer: d. are not reduced because of these earnings
• 28. If you are a mutual fund investor who needs a steady income, you might
take advantage of a fund's: a. automatic reinvestment plans. b. systematic
withdrawal plans. c. exchange privileges. d. retirement plans. e. conversion
plans..
Answer: b. systematic withdrawal plans.
• Investing in real estate is attractive to investors because....
Answer: it permits a high degree of financial leverage
• Which of the following statements about obtaining Social Security benefits
is NOT correct?.
Answer: For full retirement benefits, workers today must be employed in a
job covered by Social Security at least 40 consecutive quarters.
