Question 1

One aspect of financial planning is to control your use of credit. Which aspect of financial planning does this deal with?

Accepted Answer

A)  Borrowing 
B)  Spending 
C)  Managing Risk 
D)  Investing 
E)  Retirement and Estate Planning 
A)  Borrowing 
B)  Spending 
C)  Managing Risk 
D)  Investing 
E)  Retirement and Estate Planning

Question 2

Which of the following is usually considered a long-term financial strategy?

Accepted Answer

A)  Creating a budget 
B)  Using savings to pay off a loan early 
C)  Renting an apartment to save for the purchase of a home 
D)  Investing in a growth mutual fund to accumulate retirement funds 
E)  Purchasing auto insurance to cover the needs of dependents 
A)  Creating a budget 
B)  Using savings to pay off a loan early 
C)  Renting an apartment to save for the purchase of a home 
D)  Investing in a growth mutual fund to accumulate retirement funds 
E)  Purchasing auto insurance to cover the needs of dependents

Question 3

With an inflation rate of 9 percent, prices would double in about ___________ years.

Accepted Answer

A)  4 
B)  6 
C)  8 
D)  10 
E)  12 
A)  4 
B)  6 
C)  8 
D)  10 
E)  12

Question 4

Lynn Roy wants to travel after she retires as well as pay off the balance of the loan she has on the home she owns. Which step in the financial planning process does this situation demonstrate?

Accepted Answer

A)  Determining her current financial situation 
B)  Developing her financial goals 
C)  Identifying alternative courses of action 
D)  Evaluating her alternatives 
E)  Implementing her financial plan 
A)  Determining her current financial situation 
B)  Developing her financial goals 
C)  Identifying alternative courses of action 
D)  Evaluating her alternatives 
E)  Implementing her financial plan

Question 5

Mary Sheets is considering investing in 30 year Corporate Bonds issued by Duke Energy Company. She knows that she will earn an interest rate of 8% by purchasing these bonds. However, she is concerned because she might need to take her money out of this investment in a year and she has heard that she might have to sell the bonds at a significantly lower price than she will purchase them for. What type of risk is Mary concerned about?

Accepted Answer

A)  Inflation risk 
B)  Interest rate risk 
C)  Income risk 
D)  Personal risk 
E)  Liquidity risk 
A)  Inflation risk 
B)  Interest rate risk 
C)  Income risk 
D)  Personal risk 
E)  Liquidity risk

Question 6

During __________, even though prices decline spending slows because consumers expect prices to continue to decline.

Accepted Answer

A)  deflation 
B)  depreciation 
C)  appreciation 
D)  economic recovery 
E)  inflation 
A)  deflation 
B)  depreciation 
C)  appreciation 
D)  economic recovery 
E)  inflation

Question 7

Financial intermediaries include the following:

Accepted Answer

A)  bank. 
B)  credit unions. 
C)  insurance companies. 
D)  investment companies. 
E)  All of these. 
A)  bank. 
B)  credit unions. 
C)  insurance companies. 
D)  investment companies. 
E)  All of these.

Question 8

The problem of bankruptcy is associated with poor decisions in the ______________ component of financial planning.

Accepted Answer

A)  sharing 
B)  saving 
C)  obtaining 
D)  borrowing 
E)  protecting 
A)  sharing 
B)  saving 
C)  obtaining 
D)  borrowing 
E)  protecting

Question 9

Paul Carter is 43 years old, married and has three children, ages 13, 10 and 5. Which influence on financial planning does this demonstrate?

Accepted Answer

A)  Adult Life Cycle 
B)  Economic Factors 
C)  Global Influences 
D)  Opportunity Costs 
E)  None of these. 
A)  Adult Life Cycle 
B)  Economic Factors 
C)  Global Influences 
D)  Opportunity Costs 
E)  None of these.

Question 10

The risk premium you receive as a saver is based in part on:

Accepted Answer

A)  your credit rating. 
B)  the amount of money you are borrowing. 
C)  the uncertainty associated with getting your money back. 
D)  the expected rate of inflation. 
E)  the uncertainty associated with getting your money back and the expected rate of inflation. 
A)  your credit rating. 
B)  the amount of money you are borrowing. 
C)  the uncertainty associated with getting your money back. 
D)  the expected rate of inflation. 
E)  the uncertainty associated with getting your money back and the expected rate of inflation.

Question 11

Financial planning has specific techniques that will be effective for every individual and household.

Accepted Answer

A) True 
 B)False

Question 12

Inflation reduces the buying power of money.

Accepted Answer

A) True 
 B)False

Question 13

Increased home building results in:

Accepted Answer

A)  increased job opportunities. 
B)  higher wages. 
C)  increased consumer spending. 
D)  overall economic expansion. 
E)  All of these. 
A)  increased job opportunities. 
B)  higher wages. 
C)  increased consumer spending. 
D)  overall economic expansion. 
E)  All of these.

Question 14

Which of the following would increase the risk of a loan?

Accepted Answer

A)  Rising consumer prices 
B)  A short time to maturity 
C)  Lower consumer prices 
D)  Constant interest rates 
E)  A good credit rating 
A)  Rising consumer prices 
B)  A short time to maturity 
C)  Lower consumer prices 
D)  Constant interest rates 
E)  A good credit rating

Question 15

Lynn Roy's goal has been to travel around the world. She has now been traveling for six months and she has decided she is a little tired of living out of a suitcase. She has decided to go home, look for a part time job and take shorter trips to locations around the world that appeal to her. Which step in the financial planning process does this scenario most likely demonstrate?

Accepted Answer

A)  Developing her financial goals 
B)  Identifying alternative courses of action 
C)  Evaluating her alternatives 
D)  Implementing her financial plan 
E)  Reviewing and revising her financial plan 
A)  Developing her financial goals 
B)  Identifying alternative courses of action 
C)  Evaluating her alternatives 
D)  Implementing her financial plan 
E)  Reviewing and revising her financial plan

Question 16

A question associated with the saving component of financial planning is:

Accepted Answer

A)  Do you have an adequate emergency fund? 
B)  Is your will current? 
C)  Is your investment program appropriate to your income and tax situation? 
D)  Do you have a realistic budget for your current financial situation? 
E)  Are your transportation expenses minimized through careful planning? 
A)  Do you have an adequate emergency fund? 
B)  Is your will current? 
C)  Is your investment program appropriate to your income and tax situation? 
D)  Do you have a realistic budget for your current financial situation? 
E)  Are your transportation expenses minimized through careful planning?

Question 17

Gross Domestic Product (GDP) measures the total value of goods and services produced within a country's borders, excluding items produced with foreign resources.

Accepted Answer

A) True 
 B)False

Question 18

Analyzing your current financial position is a part of the first stage of the financial planning process.

Accepted Answer

A) True 
 B)False

Question 19

What are the main components of personal financial planning?

Accepted Answer

Personal financial planning is a process

Question 20

Higher inflation usually results in lower interest rates.

Accepted Answer

A) True 
 B)False

One aspect of financial planning is to control your use of credit. Which aspect of financial planning does this deal with?

Which of the following is usually considered a long-term financial strategy?

With an inflation rate of 9 percent, prices would double in about ___________ years.

Lynn Roy wants to travel after she retires as well as pay off the balance of the loan she has on the home she owns. Which step in the financial planning process does this situation demonstrate?

During __________, even though prices decline spending slows because consumers expect prices to continue to decline.

Financial intermediaries include the following:

The problem of bankruptcy is associated with poor decisions in the ______________ component of financial planning.

Paul Carter is 43 years old, married and has three children, ages 13, 10 and 5. Which influence on financial planning does this demonstrate?

The risk premium you receive as a saver is based in part on:

Financial planning has specific techniques that will be effective for every individual and household.

Inflation reduces the buying power of money.

Increased home building results in:

Which of the following would increase the risk of a loan?

A question associated with the saving component of financial planning is:

Gross Domestic Product (GDP) measures the total value of goods and services produced within a country's borders, excluding items produced with foreign resources.

Analyzing your current financial position is a part of the first stage of the financial planning process.

What are the main components of personal financial planning?

Higher inflation usually results in lower interest rates.

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

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Exam 1: Personal Finance Basics and the Time Value of Money

One aspect of financial planning is to control your use of credit. Which aspect of financial planning does this deal with?

Which of the following is usually considered a long-term financial strategy?

With an inflation rate of 9 percent, prices would double in about ___________ years.

Lynn Roy wants to travel after she retires as well as pay off the balance of the loan she has on the home she owns. Which step in the financial planning process does this situation demonstrate?

During __________, even though prices decline spending slows because consumers expect prices to continue to decline.

Financial intermediaries include the following:

The problem of bankruptcy is associated with poor decisions in the ______________ component of financial planning.

Paul Carter is 43 years old, married and has three children, ages 13, 10 and 5. Which influence on financial planning does this demonstrate?

The risk premium you receive as a saver is based in part on:

Financial planning has specific techniques that will be effective for every individual and household.

Inflation reduces the buying power of money.

Increased home building results in:

Which of the following would increase the risk of a loan?

A question associated with the saving component of financial planning is:

Gross Domestic Product (GDP) measures the total value of goods and services produced within a country's borders, excluding items produced with foreign resources.

Analyzing your current financial position is a part of the first stage of the financial planning process.

What are the main components of personal financial planning?

Higher inflation usually results in lower interest rates.

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters