Question 1

____________ risk refers to the danger of changes in buying power during times of rising or falling prices.

Accepted Answer

A)  Liquidity
B)  Income
C)  Personal
D)  Inflation
E)  Interest RateF) C) and E)
G) None of the above

Question 2

The first step of the financial planning process is to:

Accepted Answer

A)  develop financial goals.
B)  implement the financial plan.
C)  determine your current financial situation.
D)  review and revise your financial plan.
E)  create a financial action plan.F) B) and D)
G) A) and C)

Question 3

A major activity in the planning component of financial planning is:

Accepted Answer

A)  selecting insurance coverage.
B)  evaluating investment alternatives.
C)  gaining occupational training and experience.
D)  allocating current resources for spending through budgeting.
E)  establishing a line of credit.F) A) and C)
G) A) and B)

Question 4

Who is most likely to benefit from inflation?

Accepted Answer

A)  Retired people
B)  Lenders
C)  Borrowers
D)  Low-income consumers
E)  GovernmentF) C) and E)
G) B) and C)

Question 5

Which type of computation would a person use to determine the current value of a desired amount in the future?

Accepted Answer

A)  Simple interest
B)  Future value of a single amount
C)  Future value of a series of deposits
D)  Present value of a single amount
E)  Compound interestF) B) and D)
G) A) and B) D

Question 6

Higher prices are likely to result from:

Accepted Answer

A)  lower demand by consumers.
B)  increased production by business.
C)  lower interest rates.
D)  increased demand by consumers without increased supply.
E)  an increase in the supply of a product.F) B) and C)
G) None of the above

Question 7

As Cynthia Tyler plans to set aside funds for her young children's college education,she is setting a(n) ____________ goal.

Accepted Answer

A)  intermediate
B)  long-term
C)  short-term
D)  intangible
E)  durableF) A) and E)
G) A) and B) B

Question 8

Developing financial goals does not involve:

Accepted Answer

A)  Analyzing your financial values several times a year
B)  Differentiating your needs from your wants
C)  Allowing others to decide which goals you should pursue
D)  Creating specific financial goals
E)  None of theseF) A) and D)
G) B) and E)

Question 9

One aspect of financial planning is to buy stocks,bonds and mutual funds with the potential for long term growth.Which aspect of financial planning does this deal with?

Accepted Answer

A)  Borrowing
B)  Spending
C)  Managing Risk
D)  Investing
E)  Retirement and Estate PlanningF) All of the above
G) A) and D)

Question 10

Lynn Roy has decided to take retirement from her job and use the time she has earned to travel around the world.She has decided to start her trip around the world in Europe by train and bus and will use her savings to pay for her trip.Which step in the financial planning process does this scenario demonstrate?

Accepted Answer

A)  Developing her financial goals
B)  Identifying alternative courses of action
C)  Evaluating her alternatives
D)  Implementing her financial plan
E)  Reviewing and revising her financial planF) None of the above
G) A) and B)

Question 11

What is meant by the term "Time Value of Money?"

Accepted Answer

Time value of money refers to the increa...

Question 12

If you desire your savings to double in 6 years,what rate of return would you need to earn?

Accepted Answer

A)  6 percent
B)  8 percent
C)  9 percent
D)  10 percent
E)  12 percent Rule of 72, 72/x = 6, 6X = 72, 72/6 = 12F) B) and E)
G) B) and D)

Question 13

When identifying alternative courses of action,possible courses of action include:

Accepted Answer

A)  Continue with the same course of action
B)  Expand the past situation
C)  Change the past situation
D)   Take an old course of action
E)  All of theseF) None of the above
G) C) and D)

Question 14

When prices are increasing at a rate of 6 percent,the cost of products would double in about how many years?

Accepted Answer

A)  7.2 years
B)  10 years
C)  6 years
D)  12 years
E)  18 yearsF) A) and B)
G) C) and D) D

Question 15

During __________,even though prices decline,spending slows because consumers expect prices to continue to decline.

Accepted Answer

A)  deflation
B)  depreciation
C)  appreciation
D)  economic recovery
E)  inflationF) A) and B)
G) A) and E)

Question 16

The following are examples of intangible goals,except:

Accepted Answer

A)  obtaining a college degree.
B)  going on a cruise vacation.
C)  buying a house.
D)  losing weight.
E)  getting more sleep.F) A) and E)
G) A) and C)

Question 17

Trade balance is defined as the difference between a country's exports and its imports.

Accepted Answer

A) True 
 B)False

Question 18

The changing cost of money when borrowing is referred to as ____________ risk.

Accepted Answer

A)  Interest Rate
B)  Inflation
C)  Income
D)  Liquidity
E)  PersonalF) B) and C)
G) A) and B)

Question 19

Opportunity cost refers to:

Accepted Answer

A)  money needed for major consumer purchases.
B)  what a person gives up by making a choice.
C)  the amount paid for taxes when a purchase is made.
D)  current interest rates.
E)  evaluating different alternatives for financial decisions.F) B) and D)
G) C) and D)

Question 20

The annual price increase for consumer goods and services measured by the Bureau of Labor Statistics is called ________.

Accepted Answer

A)  deflation
B)  inflation
C)  the consumer price index
D)  the price calculator
E)  the goods indexF) A) and D)
G) A) and B)

Exam 1: Personal Finance Basics and the Time Value of Money

____________ risk refers to the danger of changes in buying power during times of rising or falling prices.

Correct Answer
verified

The first step of the financial planning process is to:

Correct Answer
verified

A major activity in the planning component of financial planning is:

Correct Answer
verified

Who is most likely to benefit from inflation?

Correct Answer
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Which type of computation would a person use to determine the current value of a desired amount in the future?

Correct Answer
verified
D

Higher prices are likely to result from:

Correct Answer
verified

As Cynthia Tyler plans to set aside funds for her young children's college education,she is setting a(n) ____________ goal.

Correct Answer
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B

Developing financial goals does not involve:

Correct Answer
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One aspect of financial planning is to buy stocks,bonds and mutual funds with the potential for long term growth.Which aspect of financial planning does this deal with?

Correct Answer
verified

Correct Answer
verified

What is meant by the term "Time Value of Money?"

Correct Answer
verified
Time value of money refers to the increa...
View Answer

If you desire your savings to double in 6 years,what rate of return would you need to earn?

Correct Answer
verified

When identifying alternative courses of action,possible courses of action include:

Correct Answer
verified

When prices are increasing at a rate of 6 percent,the cost of products would double in about how many years?

Correct Answer
verified
D

During __________,even though prices decline,spending slows because consumers expect prices to continue to decline.

Correct Answer
verified

The following are examples of intangible goals,except:

Correct Answer
verified

Trade balance is defined as the difference between a country's exports and its imports.

Correct Answer
verified

The changing cost of money when borrowing is referred to as ____________ risk.

Correct Answer
verified

Opportunity cost refers to:

Correct Answer
verified

The annual price increase for consumer goods and services measured by the Bureau of Labor Statistics is called ________.

Correct Answer
verified

Exam 1: Personal Finance Basics and the Time Value of Money

____________ risk refers to the danger of changes in buying power during times of rising or falling prices.

Correct AnswerverifiedShow Answer

The first step of the financial planning process is to:

Correct AnswerverifiedShow Answer

A major activity in the planning component of financial planning is:

Correct AnswerverifiedShow Answer

Who is most likely to benefit from inflation?

Correct AnswerverifiedShow Answer

Which type of computation would a person use to determine the current value of a desired amount in the future?

Correct AnswerverifiedD

Higher prices are likely to result from:

Correct AnswerverifiedShow Answer

As Cynthia Tyler plans to set aside funds for her young children's college education,she is setting a(n) ____________ goal.

Correct AnswerverifiedB

Developing financial goals does not involve:

Correct AnswerverifiedShow Answer

One aspect of financial planning is to buy stocks,bonds and mutual funds with the potential for long term growth.Which aspect of financial planning does this deal with?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is meant by the term "Time Value of Money?"

Correct AnswerverifiedTime value of money refers to the increa...View AnswerShow Answer

If you desire your savings to double in 6 years,what rate of return would you need to earn?

Correct AnswerverifiedShow Answer

When identifying alternative courses of action,possible courses of action include:

Correct AnswerverifiedShow Answer

When prices are increasing at a rate of 6 percent,the cost of products would double in about how many years?

Correct AnswerverifiedD

During __________,even though prices decline,spending slows because consumers expect prices to continue to decline.

Correct AnswerverifiedShow Answer

The following are examples of intangible goals,except:

Correct AnswerverifiedShow Answer

Trade balance is defined as the difference between a country's exports and its imports.

Correct AnswerverifiedShow Answer

The changing cost of money when borrowing is referred to as ____________ risk.

Correct AnswerverifiedShow Answer

Opportunity cost refers to:

Correct AnswerverifiedShow Answer

The annual price increase for consumer goods and services measured by the Bureau of Labor Statistics is called ________.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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D

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B

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Time value of money refers to the increa...
View Answer

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D

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