Question 1

The loss of a job or encountering an illness results in ____________ risk.

Accepted Answer

A)  interest-rate 
B)  inflation 
C)  income 
D)  liquidity 
E)  personal 
A)  interest-rate 
B)  inflation 
C)  income 
D)  liquidity 
E)  personal

Question 2

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 3

The 'borrowing' component in a financial plan relates to

Accepted Answer

A)  Acquiring adequate insurance coverage 
B)  Investing for long-term growth 
C)  Setting up a budget 
D)  Obtaining financial resources from employment, investments or ownership 
E)  Maintaining control over credit-buying habits 
A)  Acquiring adequate insurance coverage 
B)  Investing for long-term growth 
C)  Setting up a budget 
D)  Obtaining financial resources from employment, investments or ownership 
E)  Maintaining control over credit-buying habits

Question 4

A savor or an investor should expect to receive a risk premium for

Accepted Answer

A)  Higher interest rates 
B)  Lower consumer prices 
C)  Higher uncertainty about getting his/her money back 
D)  Reduced credit ratings 
E)  Expected lower inflation 
A)  Higher interest rates 
B)  Lower consumer prices 
C)  Higher uncertainty about getting his/her money back 
D)  Reduced credit ratings 
E)  Expected lower inflation

Question 5

$500 on deposit at 6% for 6 months would earn $20.

Accepted Answer

A) True 
 B)False

Question 6

Present value computations are also referred to as

Accepted Answer

A)  Discounting. 
B)  Future value. 
C)  Compounding. 
D)  Simple interest. 
E)  An annuity. 
A)  Discounting. 
B)  Future value. 
C)  Compounding. 
D)  Simple interest. 
E)  An annuity.

Question 7

The Rule of 72 is:

Accepted Answer

A)  A tool to determine the number of years until retirement for an employee 
B)  Used to estimate how fast prices will double using a given annual inflation rate 
C)  The legal code for requiring companies to provide a match on retirement savings 
D)  Used to calculate interest rates for savings 
E)  The number of steps required to complete a financial plan 
A)  A tool to determine the number of years until retirement for an employee 
B)  Used to estimate how fast prices will double using a given annual inflation rate 
C)  The legal code for requiring companies to provide a match on retirement savings 
D)  Used to calculate interest rates for savings 
E)  The number of steps required to complete a financial plan

Question 8

The time value of money refers to

Accepted Answer

A)  Personal opportunity costs such as time lost on an activity. 
B)  Financial decisions that require borrowing funds from a financial institution. 
C)  Changes in interest rates due to changes in the supply and demand for money in our economy. 
D)  Increases in an amount of money as a result of interest earned. 
E)  Changing demographic trends in our society. 
A)  Personal opportunity costs such as time lost on an activity. 
B)  Financial decisions that require borrowing funds from a financial institution. 
C)  Changes in interest rates due to changes in the supply and demand for money in our economy. 
D)  Increases in an amount of money as a result of interest earned. 
E)  Changing demographic trends in our society.

Question 9

A financial plan can only be created using a money management software package.

Accepted Answer

A) True 
 B)False

Question 10

Tim Taylor received a $500 gift from his grandparents. He wants to invest this money for the down payment of a house that he plans to purchase in 3 years. What type of computation should he use?

Accepted Answer

A)  Present value of a single amount 
B)  Future value of a single amount 
C)  Simple interest 
D)  Present value of an annuity 
E)  Future value of an annuity 
A)  Present value of a single amount 
B)  Future value of a single amount 
C)  Simple interest 
D)  Present value of an annuity 
E)  Future value of an annuity

Question 11

If you want $1,000 three years from now and you earn 4 percent on your savings, how much do you need to deposit?

Accepted Answer

A) $885 
B) $889 
C) $1,000 
D) $1,030 
E) $1,040 
A) $885 
B) $889 
C) $1,000 
D) $1,030 
E) $1,040

Question 12

Jim Johnson was laid off from his job two months ago. He just received an offer for a position that pays 3/4 the salary of his old job. Why should he set up a financial plan?

Accepted Answer

A)  To increase the effectiveness of obtaining, using, and protecting his financial resources. 
B)  To decrease control of his financial affairs regarding debt. 
C)  To accept the loss of freedom from financial worries due to his new position. 
D)  To learn how to manage depending more on others. 
E)  To find out why he was laid off. 
A)  To increase the effectiveness of obtaining, using, and protecting his financial resources. 
B)  To decrease control of his financial affairs regarding debt. 
C)  To accept the loss of freedom from financial worries due to his new position. 
D)  To learn how to manage depending more on others. 
E)  To find out why he was laid off.

Question 13

The goal of investing $50 per month for the next 12 years for your nephew's college fund is a(n) __________ goal.

Accepted Answer

A)  Short-term 
B)  Intermediate 
C)  Long-term 
D)  Intangible 
E)  Durable 
A)  Short-term 
B)  Intermediate 
C)  Long-term 
D)  Intangible 
E)  Durable

Question 14

Which of the following would increase the interest rate for a loan?

Accepted Answer

A)  Poor credit rating 
B)  Higher down payment 
C)  Expected lower inflation 
D)  Lower consumer prices 
E)  Short time to maturity 
A)  Poor credit rating 
B)  Higher down payment 
C)  Expected lower inflation 
D)  Lower consumer prices 
E)  Short time to maturity

Question 15

Which of the following is correct?

Accepted Answer

A)  A car purchase is a consumable-product goal 
B)  Entertainment is a durable-product goal 
C)  Appliances and sporting equipment are intangible-purchase goals 
D)  Leisure and education are durable-product goals 
E)  Food and clothing are consumable-product goals 
A)  A car purchase is a consumable-product goal 
B)  Entertainment is a durable-product goal 
C)  Appliances and sporting equipment are intangible-purchase goals 
D)  Leisure and education are durable-product goals 
E)  Food and clothing are consumable-product goals

Question 16

If I can invest a dollar today and earn interest on it, then it should be worth _________ in the future.

Accepted Answer

A)  Less 
B)  The same as 
C)  More 
D)  Either less or the same as 
E)  Either the same as or more 
A)  Less 
B)  The same as 
C)  More 
D)  Either less or the same as 
E)  Either the same as or more

Question 17

If a $10,000 investment earns a 4 % annual return, what should its value be after one year?

Accepted Answer

A)  $100 
B)  $400 
C)  $4,000 
D)  $10,000 
E)  $10,400 
A)  $100 
B)  $400 
C)  $4,000 
D)  $10,000 
E)  $10,400

Question 18

Planned spending through budgeting is part of the "spending" component of financial planning activities.

Accepted Answer

A) True 
 B)False

Question 19

Inflation is most harmful to people with incomes expected to increase.

Accepted Answer

A) True 
 B)False

Question 20

Every decision involves uncertainty, which is referred to as

Accepted Answer

A)  Consequences of choices. 
B)  Alternative courses of action. 
C)  Financial goals. 
D)  Personal values. 
E)  Evaluating risk. 
A)  Consequences of choices. 
B)  Alternative courses of action. 
C)  Financial goals. 
D)  Personal values. 
E)  Evaluating risk.

The loss of a job or encountering an illness results in ____________ risk.

Opportunity cost refers to

The 'borrowing' component in a financial plan relates to

A savor or an investor should expect to receive a risk premium for

$500 on deposit at 6% for 6 months would earn $20.

Present value computations are also referred to as

The Rule of 72 is:

The time value of money refers to

A financial plan can only be created using a money management software package.

Tim Taylor received a $500 gift from his grandparents. He wants to invest this money for the down payment of a house that he plans to purchase in 3 years. What type of computation should he use?

If you want $1,000 three years from now and you earn 4 percent on your savings, how much do you need to deposit?

Jim Johnson was laid off from his job two months ago. He just received an offer for a position that pays 3/4 the salary of his old job. Why should he set up a financial plan?

The goal of investing $50 per month for the next 12 years for your nephew's college fund is a(n) __________ goal.

Which of the following would increase the interest rate for a loan?

Which of the following is correct?

If I can invest a dollar today and earn interest on it, then it should be worth _________ in the future.

If a $10,000 investment earns a 4 % annual return, what should its value be after one year?

Planned spending through budgeting is part of the "spending" component of financial planning activities.

Inflation is most harmful to people with incomes expected to increase.

Every decision involves uncertainty, which is referred to as

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Saving Plans and Payment Accounts

Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Insurance

Financial Planning With Life Insurance

Investing Fundamentals and Bonds

Investing in Stocks

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

Filters

Exam 1: Personal Financial Planning in Action

The loss of a job or encountering an illness results in ____________ risk.

Opportunity cost refers to

The 'borrowing' component in a financial plan relates to

A savor or an investor should expect to receive a risk premium for

$500 on deposit at 6% for 6 months would earn $20.

Present value computations are also referred to as

The Rule of 72 is:

The time value of money refers to

A financial plan can only be created using a money management software package.

Tim Taylor received a $500 gift from his grandparents. He wants to invest this money for the down payment of a house that he plans to purchase in 3 years. What type of computation should he use?

If you want $1,000 three years from now and you earn 4 percent on your savings, how much do you need to deposit?

Jim Johnson was laid off from his job two months ago. He just received an offer for a position that pays 3/4 the salary of his old job. Why should he set up a financial plan?

The goal of investing $50 per month for the next 12 years for your nephew's college fund is a(n) __________ goal.

Which of the following would increase the interest rate for a loan?

Which of the following is correct?

If I can invest a dollar today and earn interest on it, then it should be worth _________ in the future.

If a $10,000 investment earns a 4 % annual return, what should its value be after one year?

Planned spending through budgeting is part of the "spending" component of financial planning activities.

Inflation is most harmful to people with incomes expected to increase.

Every decision involves uncertainty, which is referred to as

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Saving Plans and Payment Accounts

Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Insurance

Financial Planning With Life Insurance

Investing Fundamentals and Bonds

Investing in Stocks

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

Filters