Exam 1: Understanding the Financial Planning Process

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.

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

The three key groups in the economic environment are

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.

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

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. -[Inflation | Consumer Price Index] is the amount of goods and services each dollar buys at a given point in time.

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. -As the rate of inflation increases,the purchasing power of your dollars will [increase | decrease].

Personal financial management is important because it

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

Insurance provides a way to make money on unfortunate events.

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.

Financial goals should be

Family financial goals should be

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

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.

The most important financial planning for young people concerns

A primary determinant of your quality of life is