Exam 1: Understanding the Financial Planning Process

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -[GDP | CPI] is the total of all goods and services produced by workers located within the country.

Sam and Lele are in their late 20s with 3 young children.Their most important financial planning concerns would probably include all of the following except

Accumulating wealth for later years is called estate planning.

Martha is 80 and has a very high net worth.Her most important financial concern is probably her

Spending for your child's private-school education is an example of deferred consumption.

Saving $3,000 for a large,flat-screen TV within the next 3 years is an example of a short-term goal.

Your income is directly related to your

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -[Tax | Liability and insurance] planning is introduced early in the life cycle.

Defining financial goals is an important first step in personal financial planning process.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Your [level of education | age] will usually have no effect on your earning capacity.

For most people working in large firms,employee benefits are an important part of their financial planning.

Long-term goals are typically for periods of over 6 years.

The most effective way to achieve financial objectives is through financial planning.

Your average propensity to consume is the percentage of each dollar of income,on the average,that is spent for current needs rather than savings.

Typically,higher levels of education are rewarded with higher income over the lifetime.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Income tends to [increase | decrease] between the ages of 55 and 75.

Becky graduated with a master degree in Personal Financial Planning.After working two years in a small financial planning firm,Becky earns $60,000 annually and saves $10,000 a year.What is her average propensity to consume?

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -[More than | less than] the majority of Americans believe that money cannot buy happiness.

When setting financial goals,one should typically start by setting

How long you invest is not nearly as important as the rate of interest you can earn on your investments.