Question 1

An example of a personal opportunity cost would be:

Accepted Answer

A)  lost wages due to continuing as a full time student 
B)  higher earnings on savings that must be kept on deposit a minimum of six months. 
C)  time comparing several brands of personal computers 
D)  Interest lost by using savings to make a purchase 
E)  having to pay a tax penalty due to not having enough withheld from your monthly salary. 
A)  lost wages due to continuing as a full time student 
B)  higher earnings on savings that must be kept on deposit a minimum of six months. 
C)  time comparing several brands of personal computers 
D)  Interest lost by using savings to make a purchase 
E)  having to pay a tax penalty due to not having enough withheld from your monthly salary. C

Question 2

Which of the following would cause prices to drop?

Accepted Answer

A)  a demand for higher wages 
B)  increased production by business 
C)  increased taxes on business 
D)  a reduction in the money supply 
E)  high levels of demand by customers 
A)  a demand for higher wages 
B)  increased production by business 
C)  increased taxes on business 
D)  a reduction in the money supply 
E)  high levels of demand by customers B

Question 3

Assume the following future values will be received at the end of each year. What is the interest rate if the future value of these amounts at the end of year 3 is equal to $2,393? Yr. 1 = $500; Yr. 2 = $750; Yr. 3 = $1,000

Accepted Answer

A)  6.5% 
B)  6.8% 
C)  7.0% 
D)  8.0% 
E)  8.9% 
A)  6.5% 
B)  6.8% 
C)  7.0% 
D)  8.0% 
E)  8.9% D

Question 4

Who is most likely to benefit by inflation?

Accepted Answer

A)  retired people 
B)  lenders 
C)  borrowers 
D)  low-income consumers 
E)  government 
A)  retired people 
B)  lenders 
C)  borrowers 
D)  low-income consumers 
E)  government

Question 5

Increased demand for a product or service will usually result in lower prices for the item.

Accepted Answer

A) True 
 B)False

Question 6

Changes in income, values, and family situation make it necessary to:

Accepted Answer

A)  develop financial goals 
B)  implement the financial plan. 
C)  evaluate and revise your actions. 
D)  analyze your current personal and financial situation. 
E)  create a financial plan of action. 
A)  develop financial goals 
B)  implement the financial plan. 
C)  evaluate and revise your actions. 
D)  analyze your current personal and financial situation. 
E)  create a financial plan of action.

Question 7

Present value is also referred to as compounding.

Accepted Answer

A) True 
 B)False

Question 8

Simple interest is the interest computed based on the principle, excluding previously earned interest.

Accepted Answer

A) True 
 B)False

Question 9

Planning to buy a house is an example of a durable product goal.

Accepted Answer

A) True 
 B)False

Question 10

The amount of simple interest is determined by multiplying the amount in savings by the:

Accepted Answer

A)  annual interest rate. 
B)  time period. 
C)  number of months in a year. 
D)  time period and number of months. 
E)  annual interest rate and the time period. 
A)  annual interest rate. 
B)  time period. 
C)  number of months in a year. 
D)  time period and number of months. 
E)  annual interest rate and the time period.

Question 11

Risks associated with most financial decisions are difficult to measure.

Accepted Answer

A) True 
 B)False

Question 12

Increased consumer spending will usually cause:

Accepted Answer

A)  lower consumer prices. 
B)  reduced employment levels. 
C)  lower tax revenues. 
D)  lower interest rates. 
E)  higher employment levels. 
A)  lower consumer prices. 
B)  reduced employment levels. 
C)  lower tax revenues. 
D)  lower interest rates. 
E)  higher employment levels.

Question 13

Opportunity cost refers to:

Accepted Answer

A)  money needed for major consumer purchases. 
B)  the trade-off of a decision. 
C)  the amount paid for taxes when a purchase is made. 
D)  current interest rates. 
E)  evaluating different alternatives for financial decisions. 
A)  money needed for major consumer purchases. 
B)  the trade-off of a decision. 
C)  the amount paid for taxes when a purchase is made. 
D)  current interest rates. 
E)  evaluating different alternatives for financial decisions.

Question 14

Higher interest rates can be caused by:

Accepted Answer

A)  a lower money supply. 
B)  an increase in the money supply. 
C)  a decrease in consumer borrowing. 
D)  lower government spending. 
E)  increased saving and investing by consumers. 
A)  a lower money supply. 
B)  an increase in the money supply. 
C)  a decrease in consumer borrowing. 
D)  lower government spending. 
E)  increased saving and investing by consumers.

Question 15

Which of the following goals would be the easiest to implement and measure its accomplishment?

Accepted Answer

A)  "Reduce our debt payments." 
B)  "Save funds for an annual vacation." 
C)  "Save $100 a month to create a $4,000 emergency fund." 
D)  "Clear credit card debt 
E)  "Invest $2,000 a year for retirement." 
A)  "Reduce our debt payments." 
B)  "Save funds for an annual vacation." 
C)  "Save $100 a month to create a $4,000 emergency fund." 
D)  "Clear credit card debt 
E)  "Invest $2,000 a year for retirement."

Question 16

You wish to accumulate $15,000 within five years. How much would you have to save each year for five years to attain your goal? Assume an annual interest rate of 4%. Savings occur at the end of each year.

Accepted Answer

A)  $2,662 
B)  $2,769 
C)  $2,905 
D)  $3,000 
E)  $3,500 
A)  $2,662 
B)  $2,769 
C)  $2,905 
D)  $3,000 
E)  $3,500

Question 17

Present value is the current value of an amount of money desired in the future based on an interest rate and a certain time period.

Accepted Answer

A) True 
 B)False

Question 18

Present value computations is also called discounting.

Accepted Answer

A) True 
 B)False

Question 19

Financial planning does not have specific techniques that will be effective for every individual and household.

Accepted Answer

A) True 
 B)False

Question 20

An individual invests $5,000 at a rate of 5% per annum. What will be its value in 10 years' time?

Accepted Answer

A)  $7,500 
B)  $7,927 
C)  $8,144 
D)  $9,000 
E)  $9,542 
A)  $7,500 
B)  $7,927 
C)  $8,144 
D)  $9,000 
E)  $9,542

An example of a personal opportunity cost would be:

Which of the following would cause prices to drop?

Assume the following future values will be received at the end of each year. What is the interest rate if the future value of these amounts at the end of year 3 is equal to $2,393? Yr. 1 = $500; Yr. 2 = $750; Yr. 3 = $1,000

Who is most likely to benefit by inflation?

Increased demand for a product or service will usually result in lower prices for the item.

Changes in income, values, and family situation make it necessary to:

Present value is also referred to as compounding.

Simple interest is the interest computed based on the principle, excluding previously earned interest.

Planning to buy a house is an example of a durable product goal.

The amount of simple interest is determined by multiplying the amount in savings by the:

Risks associated with most financial decisions are difficult to measure.

Increased consumer spending will usually cause:

Opportunity cost refers to:

Higher interest rates can be caused by:

Which of the following goals would be the easiest to implement and measure its accomplishment?

You wish to accumulate $15,000 within five years. How much would you have to save each year for five years to attain your goal? Assume an annual interest rate of 4%. Savings occur at the end of each year.

Present value is the current value of an amount of money desired in the future based on an interest rate and a certain time period.

Present value computations is also called discounting.

Financial planning does not have specific techniques that will be effective for every individual and household.

An individual invests $5,000 at a rate of 5% per annum. What will be its value in 10 years' time?

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

The Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source Credit: the Costs of Credit Alternatives

The Finances of Housing

Home and Automobile Insurance

Life, Health, and Disability Insurance

Fundamentals of Investing

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

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Exam 1: Personal Financial Planning: An Introduction

An example of a personal opportunity cost would be:

Which of the following would cause prices to drop?

Assume the following future values will be received at the end of each year. What is the interest rate if the future value of these amounts at the end of year 3 is equal to $2,393? Yr. 1 = $500; Yr. 2 = $750; Yr. 3 = $1,000

Who is most likely to benefit by inflation?

Increased demand for a product or service will usually result in lower prices for the item.

Changes in income, values, and family situation make it necessary to:

Present value is also referred to as compounding.

Simple interest is the interest computed based on the principle, excluding previously earned interest.

Planning to buy a house is an example of a durable product goal.

The amount of simple interest is determined by multiplying the amount in savings by the:

Risks associated with most financial decisions are difficult to measure.

Increased consumer spending will usually cause:

Opportunity cost refers to:

Higher interest rates can be caused by:

Which of the following goals would be the easiest to implement and measure its accomplishment?

You wish to accumulate $15,000 within five years. How much would you have to save each year for five years to attain your goal? Assume an annual interest rate of 4%. Savings occur at the end of each year.

Present value is the current value of an amount of money desired in the future based on an interest rate and a certain time period.

Present value computations is also called discounting.

Financial planning does not have specific techniques that will be effective for every individual and household.

An individual invests $5,000 at a rate of 5% per annum. What will be its value in 10 years' time?

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

The Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source Credit: the Costs of Credit Alternatives

The Finances of Housing

Home and Automobile Insurance

Life, Health, and Disability Insurance

Fundamentals of Investing

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

Filters