Question 1

Inflation is most harmful to people with incomes expected to increase.

Accepted Answer

A) True 
 B)False

Question 2

Annual earnings on a $500 Certificate of Deposit earning 4.50% would be

Accepted Answer

A)   $20.00
B)   $22.50
C)   $25.00
D)   $500.00
E)   $545.00F) None of the above
G) B) and E)

Question 3

Using the services of financial institutions or specialists (such as insurance agents or investment brokers) will be most evident in your effort to

Accepted Answer

A)   Develop financial goals.
B)   Evaluate and revise your actions.
C)   Analyze your current financial situation.
D)   Implement your financial plan.
E)   Create a financial plan of action.F) A) and B)
G) A) and C)

Question 4

Which of the following long-term goals is stated most clearly?

Accepted Answer

A)  Buy a car for less than $17,000 within 6 months
B)  Retire in 10 years at age 65
C)  Purchase a house with a mortgage no greater than $150,000 within 3 years
D)  Set up an emergency fund
E)  Invest $50 per month for the next 18 years for my nephew's college fundF) B) and D)
G) C) and D)

Question 5

John Jones was laid off from his job two months ago.He just received an offer for a position that pays 2/3 the salary of his old job.Why should he set up a financial plan?

Accepted Answer

A)   To increase the effectiveness of obtaining, using, and protecting his financial resources.
B)   To decrease control of his financial affairs regarding debt.
C)   To accept the loss of freedom from financial worries due to his new position.
D)   To learn how to manage with less savings.
E)   To find out why he was laid off.F) A) and E)
G) B) and D)

Question 6

Wanda Green wants to take out a 4 year loan to purchase a car.What type of computation would she use to calculate her monthly payments?

Accepted Answer

A)   Present value of a single amount
B)   Future value of a single amount
C)   Simple interest
D)   Present value of an annuity
E)   Future value of an annuityF) A) and B)
G) C) and D)

Question 7

Which of the following is an example of opportunity cost?

Accepted Answer

A)   Renting an apartment near school
B)   Saving money instead of taking a vacation
C)   Organizing income tax records
D)   Purchasing automobile insurance
E)   Using a personal computer for financial planningF) A) and D)
G) A) and E)

Question 8

If a $10,000 investment earns a 4 % annual return,what should its value be after one year?

Accepted Answer

A)   $4,000
B)   $4,100
C)   $10,000
D)   $10,040
E)   $10,400F) B) and D)
G) B) and C)

Question 9

An advantage of personal financial planning is:

Accepted Answer

A)   The use of low-interest savings
B)   Increased impulse spending
C)   Increased control of financial affairs
D)   More credit card debt
E)   Less monitoring of investmentsF) B) and E)
G) A) and B)

Question 10

If a $10,000 investment earns a 7% annual return,what should its value be after 5 years?

Accepted Answer

A)   $10,035
B)   $14,070
C)   $14,700
D)   $14,030
E)   $14,300F) C) and D)
G) A) and B)

Question 11

The major function of a financial plan is to

Accepted Answer

A)   Reduce taxes.
B)   Increase savings.
C)   Achieve financial goals.
D)   Improve your credit rating.
E)   Obtain adequate insurance protection.F) A) and C)
G) A) and E)

Question 12

The life situation of a household has little influence on personal financial planning decisions.

Accepted Answer

A) True 
 B)False

Question 13

Retirement planning includes thinking about your housing situation,recreational activities,and possible volunteer or part-time work.

Accepted Answer

A) True 
 B)False

Question 14

Present value computations are also referred to as

Accepted Answer

A)   Discounting.
B)   Add-on interest.
C)   Compounding.
D)   Simple interest.
E)   An annuity.F) B) and E)
G) C) and D)

Question 15

The stages that an individual goes through based on stages in the family and financial needs is called the

Accepted Answer

A)   Financial planning process
B)   Budgeting procedure
C)   Personal economic cycle
D)   Adult life cycle
E)   Tax planning processF) A) and E)
G) C) and E)

Question 16

What types of risks are commonly associated with personal financial decisions?
 How can these risks be evaluated and minimized to reduce personal and financial difficulties?

Accepted Answer

Common risks are inflation risk,interest...

Question 17

The rising of prices that causes changes in buying power is referred to as ____________ risk.

Accepted Answer

A)   interest-rate
B)   inflation
C)   income
D)   liquidity
E)   personalF) B) and E)
G) None of the above

Question 18

Purchasing a car is an example of a consumable-product goal.

Accepted Answer

A) True 
 B)False

Question 19

To calculate the time value of money,we need to consider all of the following except the

Accepted Answer

A)   amount of the savings.
B)   Annual interest rate.
C)   Length of time the money is invested.
D)   Type of investment.
E)   Principal.F) All of the above
G) A) and B)

Question 20

Which of the following goals would be the easiest to implement and measure?

Accepted Answer

A)   Invest $2,000 a year for retirement.
B)   Reduce our debt payments.
C)   Save funds for an annual vacation.
D)   Save $100 a month to create a $4,000 emergency fund.
E)   Spend less each month.F) None of the above
G) B) and E)

Exam 1: Personal Financial Planning in Action

If a $10,000 investment earns a 7% annual return,what should its value be after 5 years?

Correct AnswerverifiedShow Answer

Annual earnings on a $500 Certificate of Deposit earning 4.50% would be

Correct AnswerverifiedShow Answer

Purchasing a car is an example of a consumable-product goal.

Correct AnswerverifiedShow Answer

What types of risks are commonly associated with personal financial decisions? How can these risks be evaluated and minimized to reduce personal and financial difficulties?

Correct AnswerverifiedCommon risks are inflation risk,interest...View AnswerShow Answer

If a $10,000 investment earns a 4 % annual return,what should its value be after one year?

Correct AnswerverifiedShow Answer

Retirement planning includes thinking about your housing situation,recreational activities,and possible volunteer or part-time work.

Correct AnswerverifiedShow Answer

Which of the following goals would be the easiest to implement and measure?

Correct AnswerverifiedShow Answer

Which of the following is an example of opportunity cost?

Correct AnswerverifiedShow Answer

Which of the following long-term goals is stated most clearly?

Correct AnswerverifiedShow Answer

Wanda Green wants to take out a 4 year loan to purchase a car.What type of computation would she use to calculate her monthly payments?

Correct AnswerverifiedShow Answer

Present value computations are also referred to as

Correct AnswerverifiedShow Answer

To calculate the time value of money,we need to consider all of the following except the

Correct AnswerverifiedShow Answer

The major function of a financial plan is to

Correct AnswerverifiedShow Answer

Using the services of financial institutions or specialists (such as insurance agents or investment brokers) will be most evident in your effort to

Correct AnswerverifiedShow Answer

An advantage of personal financial planning is:

Correct AnswerverifiedShow Answer

The rising of prices that causes changes in buying power is referred to as ____________ risk.

Correct AnswerverifiedShow Answer

The life situation of a household has little influence on personal financial planning decisions.

Correct AnswerverifiedShow Answer

Inflation is most harmful to people with incomes expected to increase.

Correct AnswerverifiedShow Answer

The stages that an individual goes through based on stages in the family and financial needs is called the

Correct AnswerverifiedShow Answer

John Jones was laid off from his job two months ago.He just received an offer for a position that pays 2/3 the salary of his old job.Why should he set up a financial plan?

Correct AnswerverifiedShow Answer

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Common risks are inflation risk,interest...
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