Question 1

Differentiate between short-term,intermediate,and long-term goals.Give examples.

Accepted Answer

Short-term goals can be accomplished within one year,such as taking a vacation.Intermediate goals take between one and ten years to reach,such as saving for a college education or the down payment on a house.Long-term goals take more than ten years to accomplish.Retirement planning is a common long-term goal.

Question 2

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

Accepted Answer

A) True 
 B)False  False

Question 3

On his goals worksheet,James has written down his short-term goals for the next year.He has prioritized his goals and determined a feasible due date by which he wants to achieve his goals.According to the textbook,the final step James needs to complete in the 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 that 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. 
A)  determine an appropriate cost for each of his listed goals. 
B)  post his goals worksheet on his refrigerator so that 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. A

Question 4

What elements are included in a solid financial plan?

Accepted Answer

A solid personal financial pla

Question 5

In Chapter 1,Principle 3 espouses the time value of money.Why is this principle so important to financial planning?

Accepted Answer

A)  The principle allows us to determine how much money we will need to achieve our future goals. 
B)  The principle shows us how inflation impacts our money over time. 
C)  The principle helps us determine our savings needs today, in order to meet our future retirement goals. 
D)  The principle shows us how important time and interest rates are to the accumulation of wealth. 
E)  All of the above. 
A)  The principle allows us to determine how much money we will need to achieve our future goals. 
B)  The principle shows us how inflation impacts our money over time. 
C)  The principle helps us determine our savings needs today, in order to meet our future retirement goals. 
D)  The principle shows us how important time and interest rates are to the accumulation of wealth. 
E)  All of the above.

Question 6

In the typical consumer's financial life cycle,one difference between stage 2 and stage 3 is that in stage 3 you will earn more than you spend,whereas in stage 2 you will spend more than you earn.

Accepted Answer

A) True 
 B)False

Question 7

The term that considers having money readily available when you need it is the concept of

Accepted Answer

A)  flexibility. 
B)  liquidity. 
C)  equity. 
D)  solvency. 
E)  none of the above. 
A)  flexibility. 
B)  liquidity. 
C)  equity. 
D)  solvency. 
E)  none of the above.

Question 8

Many people who signed up for adjustable-rate mortgages during the sub-prime mortgage debacle were no longer able to afford their payments.Many of these people were misled by their lenders.Which financial principle from Chapter 1 most applies?

Accepted Answer

A)  The best protection is knowledge. 
B)  Mind games, financial personality, and your money 
C)  Stuff happens, or the importance of liquidity. 
D)  The time value of money 
A)  The best protection is knowledge. 
B)  Mind games, financial personality, and your money 
C)  Stuff happens, or the importance of liquidity. 
D)  The time value of money

Question 9

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

Accepted Answer

A)  budget. 
B)  income level. 
C)  number of tax deductions, exemption, exclusions, and credits. 
D)  balance sheet. 
E)  none of the above. 
A)  budget. 
B)  income level. 
C)  number of tax deductions, exemption, exclusions, and credits. 
D)  balance sheet. 
E)  none of the above.

Question 10

Estate-planning tools such as wills,living wills,health proxies,powers of attorney,and record-keeping should all be in place to help protect you,your assets,and your heirs.

Accepted Answer

A) True 
 B)False

Question 11

Which statement is true about managing personal finances?

Accepted Answer

A)  The ability to manage finances is a skill with which you are born. 
B)  Personal finance courses are commonly offered in high school. 
C)  Financial difficulties can be a major cause of marital problems. 
D)  Personal financial management is not a skill worth learning. 
A)  The ability to manage finances is a skill with which you are born. 
B)  Personal finance courses are commonly offered in high school. 
C)  Financial difficulties can be a major cause of marital problems. 
D)  Personal financial management is not a skill worth learning.

Question 12

Why do individuals need to plan for their finances?

Accepted Answer

Without financial planning individuals w

Question 13

Based on the Life Cycle of Financial Planning,when would be a good time to review and possibly adjust an effective financial plan?

Accepted Answer

A)  A really effective financial plan doesn't need to be adjusted. 
B)  When you get married 
C)  When you have children 
D)  When the stock market goes up 
E)  Both B and C are correct answers. 
A)  A really effective financial plan doesn't need to be adjusted. 
B)  When you get married 
C)  When you have children 
D)  When the stock market goes up 
E)  Both B and C are correct answers.

Question 14

The economic downturn that began in 2008 demonstrated that many Americans have sufficient emergency funds.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)  The sunk cost effect 
B)  Mental accounting 
C)  Viewing your tax refund as "mad money" 
D)  All of the above 
A)  The sunk cost effect 
B)  Mental accounting 
C)  Viewing your tax refund as "mad money" 
D)  All of the above

Question 16

Chapter 1 discusses 10 principles that form the foundation of personal finance.The principle that considers the importance of insurance is the ________ principle.

Accepted Answer

A)  agency problem - beware the sales pitch 
B)  all risk is not equal 
C)  time value of money 
D)  protect yourself against major catastrophes 
E)  none of the above 
A)  agency problem - beware the sales pitch 
B)  all risk is not equal 
C)  time value of money 
D)  protect yourself against major catastrophes 
E)  none of the above

Question 17

One purpose of financial planning is to help you legally reduce the amount of taxes you have to pay on your earnings.

Accepted Answer

A) True 
 B)False

Question 18

Probably the most important determinant of your future earnings will be

Accepted Answer

A)  your highest level of education obtained. 
B)  the size of the company where you will work. 
C)  your seniority with your company. 
D)  joining a labor union. 
A)  your highest level of education obtained. 
B)  the size of the company where you will work. 
C)  your seniority with your company. 
D)  joining a labor union.

Question 19

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

Question 20

Suppose that you are a 21-year-old college student.What stage of the financial life cycle are you currently in?

Accepted Answer

A)  Stage 1: wealth accumulation 
B)  Stage 2: the golden years 
C)  Stage 3: the retirement years 
D)  Stage 4: the formative years 
E)  Stage 5: the educational years 
A)  Stage 1: wealth accumulation 
B)  Stage 2: the golden years 
C)  Stage 3: the retirement years 
D)  Stage 4: the formative years 
E)  Stage 5: the educational years

Differentiate between short-term,intermediate,and long-term goals.Give examples.

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

On his goals worksheet,James has written down his short-term goals for the next year.He has prioritized his goals and determined a feasible due date by which he wants to achieve his goals.According to the textbook,the final step James needs to complete in the goals process is to

What elements are included in a solid financial plan?

In Chapter 1,Principle 3 espouses the time value of money.Why is this principle so important to financial planning?

In the typical consumer's financial life cycle,one difference between stage 2 and stage 3 is that in stage 3 you will earn more than you spend,whereas in stage 2 you will spend more than you earn.

The term that considers having money readily available when you need it is the concept of

Many people who signed up for adjustable-rate mortgages during the sub-prime mortgage debacle were no longer able to afford their payments.Many of these people were misled by their lenders.Which financial principle from Chapter 1 most applies?

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

Estate-planning tools such as wills,living wills,health proxies,powers of attorney,and record-keeping should all be in place to help protect you,your assets,and your heirs.

Which statement is true about managing personal finances?

Why do individuals need to plan for their finances?

Based on the Life Cycle of Financial Planning,when would be a good time to review and possibly adjust an effective financial plan?

The economic downturn that began in 2008 demonstrated that many Americans have sufficient emergency funds.

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

Chapter 1 discusses 10 principles that form the foundation of personal finance.The principle that considers the importance of insurance is the ________ principle.

One purpose of financial planning is to help you legally reduce the amount of taxes you have to pay on your earnings.

Probably the most important determinant of your future earnings will be

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

Suppose that you are a 21-year-old college student.What stage of the financial life cycle are you currently in?

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

Exam 1: The Financial Planning Process

Differentiate between short-term,intermediate,and long-term goals.Give examples.

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

On his goals worksheet,James has written down his short-term goals for the next year.He has prioritized his goals and determined a feasible due date by which he wants to achieve his goals.According to the textbook,the final step James needs to complete in the goals process is to

What elements are included in a solid financial plan?

In Chapter 1,Principle 3 espouses the time value of money.Why is this principle so important to financial planning?

In the typical consumer's financial life cycle,one difference between stage 2 and stage 3 is that in stage 3 you will earn more than you spend,whereas in stage 2 you will spend more than you earn.

The term that considers having money readily available when you need it is the concept of

Many people who signed up for adjustable-rate mortgages during the sub-prime mortgage debacle were no longer able to afford their payments.Many of these people were misled by their lenders.Which financial principle from Chapter 1 most applies?

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

Estate-planning tools such as wills,living wills,health proxies,powers of attorney,and record-keeping should all be in place to help protect you,your assets,and your heirs.

Which statement is true about managing personal finances?

Why do individuals need to plan for their finances?

Based on the Life Cycle of Financial Planning,when would be a good time to review and possibly adjust an effective financial plan?

The economic downturn that began in 2008 demonstrated that many Americans have sufficient emergency funds.

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

Chapter 1 discusses 10 principles that form the foundation of personal finance.The principle that considers the importance of insurance is the ________ principle.

One purpose of financial planning is to help you legally reduce the amount of taxes you have to pay on your earnings.

Probably the most important determinant of your future earnings will be

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

Suppose that you are a 21-year-old college student.What stage of the financial life cycle are you currently in?

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters