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Exam 1: Understanding the Financial Planning Process

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Question 1

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Insurance provides a way to make money on unfortunate events.

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Your propensity to consume is the percentage of each dollar of income,on the average,that is spent for current needs rather than savings.

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INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -[Tax | Liability and insurance] planning is introduced early in the life cycle.

Consumer choices ultimately determine the kinds of goods and services businesses will provide.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -[Stocks | Your house] would be considered to be real property.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -[Inflation | Consumer Price Index] is the amount of goods and services each dollar buys at a given point in time.

Wealth can be defined as the total value of all the things you own.

Family financial goals should be

A successful financial plan will be based on a person's goals.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -As the rate of inflation increases,the purchasing power of your dollars will [increase | decrease].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -Income tends to [increase | decrease] between the ages of 55 and 75.

Personal financial management is important because it

A primary determinant of your quality of life is

Employee benefits can typically be transferred to a new job when one changes employers.

Financial goals should be

It is possible to draw up one financial plan that will work for most people.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -The best way to achieve your financial objectives is to [save every extra dollar you can | develop a sound financial plan].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -Your [level of education | age] will usually have no effect on your earning capacity.

The three key groups in the economic environment are

The most important financial planning for young people concerns