Exam 1: The Financial Planning Process

Which stage in the Financial Life Cycle is the longest in terms of years?

All else being equal, an increase in inflation will cause investors to require a higher rate of return on an asset.

Why do individuals need to plan for their finances?

During this recent economic downturn twenty-three percent of households reported a drop of at least twenty-five percent of their annual household income.

Charlie is sixty-four years old and is looking forward to his retirement next year. He currently has all of his 401K retirement money invested in the stock market. What financial principle from Chapter One does he need to understand better?

For the typical consumer, one difference between the stage 2 in the Financial Life Cycle and stage 3 in the Financial Life Cycle is that:

You need to review your progress, reevaluate, and revise your plan (step 5) because

When you are involved in ________ planning, you are planning for your eventual death and the distribution of your wealth to your heirs.

What is the relationship between earnings, education, and standard of living?

Bert bought a used car last month for $1,200. He just found out he needs a new transmission that will cost $1,800 to install. He is asking you for advice as to what he should do. What financial principle from Chapter One would you use to base your advice on?

Without recognizing ________ it is impossible to understand compound interest, which allows investments to grow over time.

According to your text what percentage of Americans could only go 2 weeks without experiencing financial hardships?

What is the main factor in determining your potential income level?