Question 1

While each person's financial plan is different,some common factors guide all sound financial plans: flexibility,liquidity,protection,and minimization of taxes.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)  Education and skills that you have attained 
B)  Who you know in your company administration 
C)  Your age and years of employment 
D)  The size of the company you work for

Question 3

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

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

Question 4

Which of the following adheres to the financial principle "just do it?"

Accepted Answer

A)  The amount you can spend is what's left after you put aside your savings. 
B)  Pay yourself last. 
C)  It's much easier to save than to spend. 
D)  All of the above

Question 5

The personal financial planning process consists of ________ steps.

Accepted Answer

A)  three 
B)  five 
C)  seven 
D)  ten

Question 6

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

Accepted Answer

A)  your financial needs change over the course of your life. 
B)  your employment situation changes over time. 
C)  your net worth changes over time. 
D)  your family situation might change over time. 
E)  all of the above are good reasons to periodically review your financial plan.

Question 7

What is the significance of the financial life cycle?

Accepted Answer

A)  To help you to compare your situation with other people's situation 
B)  To better understand how your financial needs will most likely change over time 
C)  To allow you to be more proactive in dealing with expected changes in the future and take steps today to prepare for them 
D)  To help you realize that your original plan is sufficient and doesn't need to change 
E)  Both B and C are significant aspects of the financial life cycle.

Question 8

A solid understanding of personal finance will

Accepted Answer

A)  enable you to protect yourself from an incompetent investment advisor. 
B)  allow you to take advantage of changes in the economy. 
C)  give you the ability to make intelligent investments. 
D)  help you understand the importance of planning for your financial future. 
E)  all of the above.

Question 9

One of the most important factors to remember when hunting for your first job is to

Accepted Answer

A)  seize every opportunity. 
B)  wait patiently. 
C)  start early. 
D)  procrastinate.

Question 10

Which of the following statements applies to obtaining an undergraduate college degree?

Accepted Answer

A)  They are expensive and rarely pay off in increased earnings. 
B)  There is no relationship between personal wealth and earning a college degree. 
C)  It may be the single best investment you will ever make. 
D)  All of the above.

Question 11

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

Accepted Answer

The answer of What is the relationship between earnings,education,and standard...

Question 12

List some way to increase your value as an employee.

Accepted Answer

The answer of List some way to increase your value...

Question 13

Suppose you have just retired,have accumulated many luxury goods over the years,still owe a mortgage on your home,still have unpaid travel expenses on your credit cards,and have helped your adult children financially.Your spouse has recently passed away,and you miss his/her contribution to the household income.Which step in the personal financial planning process have you neglected?

Accepted Answer

A)  Develop your financial health. 
B)  Define your financial goals. 
C)  Develop a plan of action. 
D)  Implement your plan. 
E)  Review your progress, reevaluate, and revise your plan.

Question 14

During which stage of the financial life cycle do many people make their biggest investment,the purchase of a home?

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

Question 15

Chapter 1 discusses 10 principles that form the foundation of personal finance.The principle stating that a person can expect to earn additional return for increasing his or her investment risk is the ________ principle.

Accepted Answer

A)  "risk and return go hand in hand" 
B)  "mind games, financial personality, and your money" 
C)  "nothing happens without a plan" 
D)  "the best protection is knowledge"

Question 16

According to the Keown book,you might begin to think about estate planning during this stage of the financial life cycle.

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

Question 17

Evaluating your financial health consists of

Accepted Answer

A)  preparing a personal balance sheet. 
B)  determining what you are worth. 
C)  preparing a personal income statement. 
D)  determining where your money comes from and where it goes. 
E)  all of the above.

Question 18

The major reason to make a financial plan is to

Accepted Answer

A)  account for your spending. 
B)  see where you are overspending or underspending. 
C)  achieve your financial goals. 
D)  allow for a surplus. 
E)  serve as a tax planning guide.

Question 19

The concept of diversification is illustrated by the old saying

Accepted Answer

A)  "Sell eggs high and buy them low." 
B)  "Don't put all your eggs in one basket." 
C)  "Keep all your eggs in one basket." 
D)  "Several baskets of eggs are better than one."

Question 20

While reviewing your current financial plan,you discover that you most likely won't achieve your long term financial goals.What should you do now?

Accepted Answer

A)  Look at increasing your income. 
B)  Look at cutting back on your expenses. 
C)  Look at revising your goals. 
D)  All of these would be realistic things to do.

Exam 1: The Financial Planning Process

While each person's financial plan is different,some common factors guide all sound financial plans: flexibility,liquidity,protection,and minimization of taxes.

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

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

Which of the following adheres to the financial principle "just do it?"

The personal financial planning process consists of ________ steps.

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

What is the significance of the financial life cycle?

A solid understanding of personal finance will

One of the most important factors to remember when hunting for your first job is to

Which of the following statements applies to obtaining an undergraduate college degree?

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

List some way to increase your value as an employee.

During which stage of the financial life cycle do many people make their biggest investment,the purchase of a home?

Chapter 1 discusses 10 principles that form the foundation of personal finance.The principle stating that a person can expect to earn additional return for increasing his or her investment risk is the ________ principle.

According to the Keown book,you might begin to think about estate planning during this stage of the financial life cycle.

Evaluating your financial health consists of

The major reason to make a financial plan is to

The concept of diversification is illustrated by the old saying

While reviewing your current financial plan,you discover that you most likely won't achieve your long term financial goals.What should you do now?