Exam 1: Overview of a Financial Plan

Alayne is preparing her budget for the first time. At what stage of the financial planning process is she?

For which of the following should you question the accuracy of the information provided?

One of the considerations in determining your investment choices is evaluating the level of risk you are willing to take.

Which of the following would be a long-term goal?

If you spend $20 for your dinner, the opportunity cost is that you have forgone the possibility of using that money to buy gasoline for your car.

In addition to the text, websites and financial magazines are good sources for additional help in financial planning.

Budgets have to be exact and inflexible to work properly.

If you have total assets of $10 000 and your net worth is $4000, how much liabilities should you have?

Your financial plan should include a plan for protecting your assets and income through insurance coverage.

Saving too much for short-term needs does not limit your opportunity for long-term growth.

What is the best measure of a person's or family's net wealth?

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

An understanding of personal finance is necessary to judge the quality of advice that a financial adviser may give.

Explain four of the actions or activities that would take place when you are establishing financial goals.

Alan has been planning for his future and is figuring out what his biggest priorities are. At what stage of the planning process is he?

The major source of cash outflow for most people is the income they receive from employers.

Your net worth will be increased by which of the following actions?

If prepared properly, financial plans are set for life and should not need to be adjusted.

Step 2 of the financial planning process is to consider your current financial position. Explain at least four details about how you would do this.

A complete financial plan does not include