Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

A strong economy leads to higher levels of employment.

Accepted Answer

A) True 
 B)False

Question 3

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 average [self employed | retired] household has higher income.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 4

Personal financial management is important because it

Accepted Answer

A)   controls inflation.
B)   limits consumption.
C)   uses money as an end.
D)   makes personal financial goals easier to achieve.
E)   lessens economic differences among individuals.

Question 5

Utility refers to

Accepted Answer

A)   the satisfaction you receive from purchasing something.
B)   how much money you receive during the year.
C)   the total of your spending for the year.
D)   the value of your investments at any given time.
E)   none of these.

Question 6

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 financial crisis of 2008 and 2009 is best characterized as a [recession | depression].

Accepted Answer

The answer of Choose the word or phrase in [...

Question 7

Your house is an example of a tangible asset.

Accepted Answer

A) True 
 B)False

Question 8

Average propensity to consume refers to how much of your money you plan to save in your financial plan.

Accepted Answer

A) True 
 B)False

Question 9

The individual consumer is

Accepted Answer

A)   a member of the business group.
B)   the party around which the personal financial environment is centered.
C)   an important force in government.
D)   an advocacy group.
E)   relatively unimportant to business or government.

Question 10

Utility refers to the amount of satisfaction a person gets from buying certain items.

Accepted Answer

A) True 
 B)False

Question 11

Investments are distinguished from savings on the basis of

Accepted Answer

A)   length of time held.
B)   initial dollar outlay.
C)   depreciation.
D)   voting rights.
E)   level of risk and expected return.

Question 12

The last step in the financial planning process is to

Accepted Answer

A)   develop financial plans and strategies to achieve goals.
B)   use financial statements to evaluate results of plans and budgets, taking corrective action as required.
C)   implement financial plans and strategies.
D)   redefine goals and revise plans and strategies as personal circumstances change
E)   periodically develop and implement budgets to monitor and control progress toward goals.

Question 13

A financial goal that would be important in all stages of the life cycle is creating and maintaining an emergency fund.

Accepted Answer

A) True 
 B)False

Question 14

The amount of goods and services each dollar buys at a given point in time is:

Accepted Answer

A)   inflation
B)   consumer price index (CPI) 
C)   purchasing power
D)   none of the above

Question 15

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 primary determinant of your standard of living is your [wealth | propensity to consume].

Accepted Answer

The answer of Choose the word or phrase in [...

Question 16

The main reason to do personal financial planning is to

Accepted Answer

A)   minimize overall costs.
B)   minimize overall utility.
C)   assign monetary value to consumption.
D)   maximize overall utility.
E)   stabilize overall utility.

Question 17

Tax planning is most commonly done to

Accepted Answer

A)   reduce debt balances.
B)   change income patterns to avoid taxes.
C)   minimize taxes.
D)   pay extra taxes.
E)   learn the tax code.

Question 18

Financial goals should be

Accepted Answer

A)   specific.
B)   attainable.
C)   prioritized.
D)   all of these
E)   none of these

Question 19

A good financial plan completed when one is in their 30s will typically last a lifetime.

Accepted Answer

A) True 
 B)False

Question 20

While you are still working,you should be managing your finances for retirement planning.Which of the following is not a goal of your retirement planning?

Accepted Answer

A)   maintaining your standard of living
B)   effectively passing wealth on to heirs
C)   a vacation home or boat
D)   travel

Exam 1: Understanding the Financial Planning Process

Personal financial management is important because it

Correct AnswerverifiedShow Answer

The amount of goods and services each dollar buys at a given point in time is:

Correct AnswerverifiedShow Answer

Your house is an example of a tangible asset.

Correct AnswerverifiedShow Answer

The individual consumer is

Correct AnswerverifiedShow Answer

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 financial crisis of 2008 and 2009 is best characterized as a [recession | depression].

Correct AnswerverifiedShow Answer

The main reason to do personal financial planning is to

Correct AnswerverifiedShow Answer

Tax planning is most commonly done to

Correct AnswerverifiedShow Answer

Investments are distinguished from savings on the basis of

Correct AnswerverifiedShow Answer

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 primary determinant of your standard of living is your [wealth | propensity to consume].

Correct AnswerverifiedShow Answer

The last step in the financial planning process is to

Correct AnswerverifiedShow Answer

A financial goal that would be important in all stages of the life cycle is creating and maintaining an emergency fund.

Correct AnswerverifiedShow Answer

While you are still working,you should be managing your finances for retirement planning.Which of the following is not a goal of your retirement planning?

Correct AnswerverifiedShow Answer

Average propensity to consume refers to how much of your money you plan to save in your financial plan.

Correct AnswerverifiedShow Answer

Utility refers to the amount of satisfaction a person gets from buying certain items.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A strong economy leads to higher levels of employment.

Correct AnswerverifiedShow Answer

Utility refers to

Correct AnswerverifiedShow Answer

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 average [self employed | retired] household has higher income.

Correct AnswerverifiedShow Answer

A good financial plan completed when one is in their 30s will typically last a lifetime.

Correct AnswerverifiedShow Answer

Financial goals should be

Correct AnswerverifiedShow Answer

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