Question 1

A complete financial plan consists of budgeting,taxes,financing,and investing.

Accepted Answer

A) True 
 B)False

Question 2

Cash flows are affected by financial planning decisions.Which of the following is not correct?

Accepted Answer

A)  Insurance payments are a cash outflow 
B)  Investing in stock is a cash outflow 
C)  Buying on time results in a cash inflow 
D)  Income is a cash inflow 
A)  Insurance payments are a cash outflow 
B)  Investing in stock is a cash outflow 
C)  Buying on time results in a cash inflow 
D)  Income is a cash inflow

Question 3

Which of the following is not a decision that you would probably encounter in managing your budget?

Accepted Answer

A)  What expenses you should anticipate 
B)  How much money you should attempt to save each month 
C)  How you will allocate your estate among your heirs 
D)  How long you will take to pay off a specific loan 
A)  What expenses you should anticipate 
B)  How much money you should attempt to save each month 
C)  How you will allocate your estate among your heirs 
D)  How long you will take to pay off a specific loan

Question 4

The financial crisis of 2008-09 affected the financial position of individuals in all of the following ways except which of these?

Accepted Answer

A)  There was a reduction in new job opportunities. 
B)  Employers could not afford to give their employees a raise. 
C)  The value of many investments declined. 
D)  The demand for homes increased because more homeowners were trying to sell their homes. 
A)  There was a reduction in new job opportunities. 
B)  Employers could not afford to give their employees a raise. 
C)  The value of many investments declined. 
D)  The demand for homes increased because more homeowners were trying to sell their homes.

Question 5

Potential investments include all of the following instruments except

Accepted Answer

A)  stocks and bonds. 
B)  mutual funds. 
C)  real estate. 
D)  lottery tickets. 
A)  stocks and bonds. 
B)  mutual funds. 
C)  real estate. 
D)  lottery tickets.

Question 6

Use the following two columns of items to answer the matching questions below:
-retirement planning

Accepted Answer

A) determining how your wealth will be distributed before or upon your death 
B) what you owe 
C) forecasting future expenses and savings 
D) source of current information about a variety of topics 
E) value of what you on minus what you owe
F)determining how much money you should set aside for retirement
G)access to funds to cover any short-term cash deficiencies
H)uncertainty on a potential return on an investment
I)decisions regarding how much money to hold in liquid form and how to allocate funds among short term investments
J)what you own 
A) determining how your wealth will be distributed before or upon your death 
B) what you owe 
C) forecasting future expenses and savings 
D) source of current information about a variety of topics 
E) value of what you on minus what you owe
F)determining how much money you should set aside for retirement
G)access to funds to cover any short-term cash deficiencies
H)uncertainty on a potential return on an investment
I)decisions regarding how much money to hold in liquid form and how to allocate funds among short term investments
J)what you own

Question 7

After your financial plan is developed it should be

Accepted Answer

A)  locked in a safe for keeping so it isn't stolen. 
B)  reviewed every five years. 
C)  monitored and updated annually. 
D)  sold to others. 
A)  locked in a safe for keeping so it isn't stolen. 
B)  reviewed every five years. 
C)  monitored and updated annually. 
D)  sold to others.

Question 8

List the six components of a financial plan.

Accepted Answer

(A)BUDGETING AND TAX PLANNING

Question 9

Credit should be used only when necessary,since it usually involves borrowed funds that you will need to pay back with interest.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following could save a smaller proportion of their earnings to achieve the same level of wealth as the others?

Accepted Answer

A)  Social workers 
B)  School teachers 
C)  Medical doctors 
D)  All would save the same percentage of earnings to reach the same level of wealth 
A)  Social workers 
B)  School teachers 
C)  Medical doctors 
D)  All would save the same percentage of earnings to reach the same level of wealth

Question 11

If you do not have access to money to cover cash needs,you may have insufficient liquidity.

Accepted Answer

A) True 
 B)False

Question 12

In the United States the level of savings is about

Accepted Answer

A)  50% of income earned. 
B)  25% of income earned. 
C)  4.5% of income earned. 
D)  less than 1% of income earned. 
A)  50% of income earned. 
B)  25% of income earned. 
C)  4.5% of income earned. 
D)  less than 1% of income earned.

Question 13

On which of the following Web sites should you question the accuracy of the information provided?

Accepted Answer

A)  The Internal Revenue Service's web site lists current tax rates and rules used for tax planning 
B)  The Securities and Exchange Commission's web site explains new regulations for stockbrokers 
C)  A major bank's web site lists new retirement plans rules used for retirement plans 
D)  A free chat room lists recommended stocks for you to buy 
A)  The Internal Revenue Service's web site lists current tax rates and rules used for tax planning 
B)  The Securities and Exchange Commission's web site explains new regulations for stockbrokers 
C)  A major bank's web site lists new retirement plans rules used for retirement plans 
D)  A free chat room lists recommended stocks for you to buy

Question 14

To increase your savings,

Accepted Answer

A)  income must be increased. 
B)  expenses must be increased. 
C)  income must be decreased. 
D)  net worth must be decreased. 
A)  income must be increased. 
B)  expenses must be increased. 
C)  income must be decreased. 
D)  net worth must be decreased.

Question 15

Money management decisions include deciding how much credit to obtain to support your spending and what sources of credit to use.

Accepted Answer

A) True 
 B)False

Question 16

Cash flows are affected by financial planning decisions.Which of the following is correct?

Accepted Answer

A)  Car payments you make are cash outflows 
B)  Investments you make in stock are cash inflows 
C)  Your routine monthly expenses are cash inflows 
D)  Your income is a cash outflow 
A)  Car payments you make are cash outflows 
B)  Investments you make in stock are cash inflows 
C)  Your routine monthly expenses are cash inflows 
D)  Your income is a cash outflow

Question 17

One of the considerations that determines your investment choices is the level of risk you are willing to tolerate.

Accepted Answer

A) True 
 B)False

Question 18

________ management involves decisions regarding how much money to retain in a liquid form and how to allocate funds among short-term investment instruments.

Accepted Answer

A)  Investment 
B)  Money 
C)  Credit 
D)  Liquidity 
A)  Investment 
B)  Money 
C)  Credit 
D)  Liquidity

Question 19

Which of the following is not a step in developing a financial plan?

Accepted Answer

A)  Establish your financial goals 
B)  Consider your current financial position 
C)  Identify and evaluate alternative plans that could achieve your goals 
D)  Put your plan away for six months to a year and then review it for accuracy 
A)  Establish your financial goals 
B)  Consider your current financial position 
C)  Identify and evaluate alternative plans that could achieve your goals 
D)  Put your plan away for six months to a year and then review it for accuracy

Question 20

Most Americans will never be able to understand and develop a personal financial plan.

Accepted Answer

A) True 
 B)False

Exam 1: Overview of a Financial Plan

A complete financial plan consists of budgeting,taxes,financing,and investing.

Cash flows are affected by financial planning decisions.Which of the following is not correct?

Which of the following is not a decision that you would probably encounter in managing your budget?

The financial crisis of 2008-09 affected the financial position of individuals in all of the following ways except which of these?

Potential investments include all of the following instruments except

Use the following two columns of items to answer the matching questions below: -retirement planning

After your financial plan is developed it should be

List the six components of a financial plan.

Credit should be used only when necessary,since it usually involves borrowed funds that you will need to pay back with interest.

Which of the following could save a smaller proportion of their earnings to achieve the same level of wealth as the others?

If you do not have access to money to cover cash needs,you may have insufficient liquidity.

In the United States the level of savings is about

On which of the following Web sites should you question the accuracy of the information provided?

To increase your savings,

Money management decisions include deciding how much credit to obtain to support your spending and what sources of credit to use.

Cash flows are affected by financial planning decisions.Which of the following is correct?

One of the considerations that determines your investment choices is the level of risk you are willing to tolerate.

________ management involves decisions regarding how much money to retain in a liquid form and how to allocate funds among short-term investment instruments.

Which of the following is not a step in developing a financial plan?

Most Americans will never be able to understand and develop a personal financial plan.

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

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