Question 1

In Chapter One, Principle Three deals with the time value of money. Why is this principle so important to financial planning?

Accepted Answer

A)   It allows us to determine how much money we will need to achieve our future goals.
B)   It shows us the impact of inflation on our money over time.
C)   It helps us determine our savings needs today in order to meet our retirement goals.
D)   It shows us how important time and interest rates are in accumulating wealth.
E)   all of the above are important in financial planning.

Question 2

After retirement starts, which aspect of financial planning becomes paramount?

Accepted Answer

A)   maintaining a regular pattern of saving
B)   long-term borrowing commitments
C)   estate planning
D)   effects of inflation

Question 3

The concept that emphasizes that people should not put all their eggs in one basket is

Accepted Answer

A)   the time dimension of investing.
B)   the curse of competitive investment markets.
C)   diversification reduces risk .
D)   the farmers analogy.
E)   liquidity is first.

Question 4

When comparing two different investment opportunities the investor should always choose the investment that minimizes the total amount of taxes paid.

Accepted Answer

A) True 
 B)False

Question 5

What are common factors found in an effective financial plan?

Accepted Answer

A)   Effective financial plans should be flexible to allow for changes in your situation
B)   Effective financial plans should provide sufficient liquidity to meet unexpected needs
C)   Effective financial plans should provide insurance protection from catastrophic events
D)   Effective financial plans should help you minimize paying taxes
E)   All of the above are necessary in an effective financial plan

Question 6

If liquid funds are not available, an unexpected need, such as a job loss or injury may force you to

Accepted Answer

A)   cash in a longer-term investment.
B)   borrow money fast.
C)   take on unexpected debt repayments.
D)   all of the above.

Question 7

Once a sound financial plan is in place, there should be no need to ever change it.

Accepted Answer

A) True 
 B)False

Question 8

A well-educated and trained employee is virtually guaranteed job security in today's corporations. Therefore he or she doesn't need to worry about keeping his or her skills updated and current.

Accepted Answer

A) True 
 B)False

Question 9

This course/text will assist you in accomplishing six financial objectives. What are they?

Accepted Answer

1.Manage the unplanned.
2.Accu...

Question 10

A solid understanding of personal finance will

Accepted Answer

A)   enable you to protect yourself from an incompetent investment advisor.
B)   allow you to take advantage of changes in the economy.
C)   give you the ability to make intelligent investments.
D)   help you understand the importance of planning for your financial future.
E)   all of the above

Question 11

The economic downturn that began in 2008 had which negative consequences?

Accepted Answer

A)   There was a dramatic increase in unemployment rates.
B)   Financial markets were disrupted.
C)   Consumers found it difficult to borrow money from lending institutions.
D)   All consumers increased their wealth.
E)   Only A, B and C are correct.

Question 12

Jacob has written down his short-term goals for the next year on his goals worksheet. So far he has priortized his goals, and he has determined a feasable due date by which he wants to have achieved his goals; according to the textbook, the final step Jacob needs to complete in his goals process is to ________

Accepted Answer

A)   determine an appropriate cost for each of his listed goals.
B)   post his goals worksheet on his refrigerator so he can see it every day.
C)   contact his financial advisor for approval of his goals.
D)   email himself a copy of the goals worksheet in case he loses the paper copy of the worksheet. A

Question 13

A financial plan is only concerned with your future earnings and expenses. An examination of your current financial situation is not so important.

Accepted Answer

A) True 
 B)False  False

Question 14

Which one of the following is not one of the five basic steps in personal financial planning?

Accepted Answer

A)   Evaluate your financial health.
B)   Define your financial goals.
C)   Develop a plan of action.
D)   Let an accountant review your plan.
E)   Implement your plan.

Question 15

Which of the following steps are considered to be part of the personal financial planning process as outlined in the text?

Accepted Answer

A)   Evaluate your financial health.
B)   Define your financial goals.
C)   Develop a plan of action.
D)   Implement your plan.
E)   All of the above. E

Question 16

Chapter 1 discusses ten principles that form the foundation of personal finance. The principle that considers the value of compound interest is the ________ principle.

Accepted Answer

A)   all risk is not equal
B)   pay yourself first
C)   competitive inflation adjustment
D)   time value of money
E)   none of the above

Question 17

Being financially secure involves balancing what you earn with

Accepted Answer

A)   your investments.
B)   what you spend.
C)   your retirement plans.
D)   your current level of debt.

Question 18

In 2008, the Bear Stearns Company collapsed could not be saved and was sold to JP Morgan Chase for $10 per share, a price far below its pre-crisis 52-week high of $133.20 per share. Prior to the collapse, many of the company's employees had all of their retirement money invested only in Bear Stearns common stock. This was a very risky financial strategy for just such a reason: What if the company dissolves? What financial principle from Chapter One did they need to understand better?

Accepted Answer

A)   Risk and return go hand in hand
B)   Nothing happens without a plan
C)   The time value of money
D)   Just do it

Question 19

Today, most Americans over the age of 65 have adequate savings and income available to them during retirement.

Accepted Answer

A) True 
 B)False

Question 20

Factors that impact the returns of all assets in the market such as the national unemployment rate or inflation rate are a type of risk that can be eliminated through diversification.

Accepted Answer

A) True 
 B)False

Exam 1: The Financial Planning Process

In Chapter One, Principle Three deals with the time value of money. Why is this principle so important to financial planning?

Correct Answer
verified

After retirement starts, which aspect of financial planning becomes paramount?

Correct Answer
verified

The concept that emphasizes that people should not put all their eggs in one basket is

Correct Answer
verified

When comparing two different investment opportunities the investor should always choose the investment that minimizes the total amount of taxes paid.

Correct Answer
verified

What are common factors found in an effective financial plan?

Correct Answer
verified

If liquid funds are not available, an unexpected need, such as a job loss or injury may force you to

Correct Answer
verified

Once a sound financial plan is in place, there should be no need to ever change it.

Correct Answer
verified

A well-educated and trained employee is virtually guaranteed job security in today's corporations. Therefore he or she doesn't need to worry about keeping his or her skills updated and current.

Correct Answer
verified

This course/text will assist you in accomplishing six financial objectives. What are they?

Correct Answer
verified
1.Manage the unplanned.
2.Accu...
View Answer

A solid understanding of personal finance will

Correct Answer
verified

The economic downturn that began in 2008 had which negative consequences?

Correct Answer
verified

Correct Answer
verified
A

A financial plan is only concerned with your future earnings and expenses. An examination of your current financial situation is not so important.

Correct Answer
verified
False

Which one of the following is not one of the five basic steps in personal financial planning?

Correct Answer
verified

Which of the following steps are considered to be part of the personal financial planning process as outlined in the text?

Correct Answer
verified
E

Chapter 1 discusses ten principles that form the foundation of personal finance. The principle that considers the value of compound interest is the ________ principle.

Correct Answer
verified

Being financially secure involves balancing what you earn with

Correct Answer
verified

Correct Answer
verified

Today, most Americans over the age of 65 have adequate savings and income available to them during retirement.

Correct Answer
verified

Factors that impact the returns of all assets in the market such as the national unemployment rate or inflation rate are a type of risk that can be eliminated through diversification.

Correct Answer
verified

Exam 1: The Financial Planning Process

In Chapter One, Principle Three deals with the time value of money. Why is this principle so important to financial planning?

Correct AnswerverifiedShow Answer

After retirement starts, which aspect of financial planning becomes paramount?

Correct AnswerverifiedShow Answer

The concept that emphasizes that people should not put all their eggs in one basket is

Correct AnswerverifiedShow Answer

When comparing two different investment opportunities the investor should always choose the investment that minimizes the total amount of taxes paid.

Correct AnswerverifiedShow Answer

What are common factors found in an effective financial plan?

Correct AnswerverifiedShow Answer

If liquid funds are not available, an unexpected need, such as a job loss or injury may force you to

Correct AnswerverifiedShow Answer

Once a sound financial plan is in place, there should be no need to ever change it.

Correct AnswerverifiedShow Answer

A well-educated and trained employee is virtually guaranteed job security in today's corporations. Therefore he or she doesn't need to worry about keeping his or her skills updated and current.

Correct AnswerverifiedShow Answer

This course/text will assist you in accomplishing six financial objectives. What are they?

Correct Answerverified1.Manage the unplanned.2.Accu...View AnswerShow Answer

A solid understanding of personal finance will

Correct AnswerverifiedShow Answer

The economic downturn that began in 2008 had which negative consequences?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA

A financial plan is only concerned with your future earnings and expenses. An examination of your current financial situation is not so important.

Correct AnswerverifiedFalse

Which one of the following is not one of the five basic steps in personal financial planning?

Correct AnswerverifiedShow Answer

Which of the following steps are considered to be part of the personal financial planning process as outlined in the text?

Correct AnswerverifiedE

Chapter 1 discusses ten principles that form the foundation of personal finance. The principle that considers the value of compound interest is the ________ principle.

Correct AnswerverifiedShow Answer

Being financially secure involves balancing what you earn with

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Today, most Americans over the age of 65 have adequate savings and income available to them during retirement.

Correct AnswerverifiedShow Answer

Factors that impact the returns of all assets in the market such as the national unemployment rate or inflation rate are a type of risk that can be eliminated through diversification.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
1.Manage the unplanned.
2.Accu...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
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False

Correct Answer
verified

Correct Answer
verified
E

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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