Exam 1: The Financial Planning Process

Suppose you have just retired, have accumulated many luxury goods over the years, still owe a mortgage on your home, still have unpaid travel expenses on your credit cards, and have helped your adult children financially. Your spouse has recently passed away, and you miss his/her contribution to the household income. Which step in the personal financial planning process have you neglected?

Which of the following falls under the category of mind games and your money?

According to the Rockerfeller Foundation report, which of the following issues do Americans rank as number one in terms of causing the most concern?

It is important to take a close look at the recent economic downturn as a means to understand how vulnerable American's finances are.

Most individuals will reach their financial goals without planning or budgeting.

The major reason to make a financial plan is to

Suppose that you are a 20-year-old college student. What stage of the financial life cycle are you currently in?

Diversification allows you to reduce risk, but still provides consistently high returns.

Maiko lost her job and she was forced to sell a rental property because she did not have other funds (liquid, emergency, etc) available to meet her financial obligations. What financial principle best applies to this situation?

Step 3 of the personal financial planning process is to "Develop a Plan of Action." According to your text, which of the following is not one of the "common concerns" that should guide all financial plans?

Explain the essence and importance of each of the stages in the financial life cycle.

Probably the most important determinant of your future earnings will be

Maria is very proud of herself for having $3,000 in her savings account that pays 3 percent interest. She currently has a balance of $1,800 on her credit card account that charges 18 percent interest. Maria thinks she is making a wise financial decision by keeping her money in her savings account instead of paying off her credit card balance. What financial principle from Chapter One would you use to give her good advice?

Proper financial planning can help you use your current income to achieve your long term financial goals

Evaluating your financial health consists of

The most important aspect of choosing a career is the amount of income that career will generate over your lifetime.

Which of the following adheres to the financial principle "just do it?"

The sub-prime mortgage mess is dominating the news. Many people signed up for adjustable rate mortgages and now they can't afford their payments. Many of these people were misled by the lender. Which financial principle from chapter one most applies?

Chapter 1 discusses ten principles that form the foundation of personal finance. The principle that considers the importance of insurance is the ________ principle.

In order for your financial plan to be realistic and attainable it needs to be based upon your