Question 1

John Gleason is interested in purchasing a 46" rear projection TV for his living room.John knows that right now the TV will cost approximately $1500.John is not sure he can afford this TV right now but is worried that if he waits,the cost of the TV will rise to $1800.Which type of risk is John worried about?

Accepted Answer

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

Question 2

.Brad Johnson has a goal of "saving $50 a month for vacation." Brad's goal lacks:

Accepted Answer

A) measurable terms. 
B) a realistic perspective. 
C) specific terms. 
D) the type of action to be taken. 
E) a time frame.

Question 3

Present value is also referred to as compounding.

Accepted Answer

A) True 
 B)False

Question 4

What are the six steps in the financial planning process?

Accepted Answer

The answer of What are the six steps in the...

Question 5

Developing and using a budget is part of which component of financial planning?

Accepted Answer

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

Question 6

The ability to readily convert financial resources into cash without loss of value is referred to as:

Accepted Answer

A) bankruptcy. 
B) liquidity. 
C) investing. 
D) saving. 
E) opportunity cost.

Question 7

One aspect of financial planning is to make sure you maintain adequate insurance coverage for your needs.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

Question 8

Describe the relationship between the annual inflation rate and prices using the Rule of 72.

Accepted Answer

The answer of Describe the relationship between the annual inflation...

Question 9

Changes in personal,social,and economic factors make it necessary to:

Accepted Answer

A) review and revise your financial plan. 
B) implement the financial plan. 
C) develop financial goals. 
D) determine your current financial situation. 
E) create a financial action plan.

Question 10

Lenders benefit more than borrowers in times of high inflation.

Accepted Answer

A) True 
 B)False

Question 11

Opportunity costs may be viewed only in terms of financial resources.

Accepted Answer

A) True 
 B)False

Question 12

Linda Ashworth is trying to decide whether to keep her money in a savings account or in a mutual fund.What would you tell her to help her analyze her decision?

Accepted Answer

The answer of Linda Ashworth is trying to decide whether...

Question 13

The main responsibility of The Fed is to:

Accepted Answer

A) maintain an adequate supply of money. 
B) approve spending by Congress. 
C) set federal income tax rates. 
D) determine illegal business activities. 
E) maintain a balanced budget for the federal government.

Question 14

When prices are rising at a rate of 2 percent,the cost of products and services would double in ______ years.

Accepted Answer

A) 3 
B) 6 
C) 18 
D) 36 
E) 72

Question 15

Using the services of financial institutions will be most evident in your effort to:

Accepted Answer

A) develop financial goals. 
B) review and revise your financial plan. 
C) Determine your current financial situation. 
D) evaluate your alternatives. 
E) create a financial action plan.

Question 16

If a person deposited $50 a month for 6 years earning 8 percent,this would involve what type of computation?

Accepted Answer

A) Simple interest 
B) Future value of a single amount 
C) Future value of a series of deposits 
D) Present value of a single amount 
E) Present value of a series of deposits

Question 17

More recently,the annual price increase for most goods and services as measured by the consumer price index has been less than ____ percent.

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
E) 5

Question 18

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.

Question 19

A formalized report that summarizes your current financial situation,analyzes your financial needs,and recommends future financial activities is a(n):

Accepted Answer

A) insurance prospectus. 
B) financial plan. 
C) budget. 
D) investment forecast. 
E) statement.

Question 20

The main goal of personal financial planning is managing your money to:

Accepted Answer

A) save and invest for future needs. 
B) reduce a person's tax liability. 
C) achieve personal economic satisfaction. 
D) spend to achieve financial objectives. 
E) save, spend, and borrow based on current needs.

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

.Brad Johnson has a goal of "saving $50 a month for vacation." Brad's goal lacks:

Present value is also referred to as compounding.

What are the six steps in the financial planning process?

Developing and using a budget is part of which component of financial planning?

The ability to readily convert financial resources into cash without loss of value is referred to as:

One aspect of financial planning is to make sure you maintain adequate insurance coverage for your needs.Which aspect of financial planning does this deal with?

Describe the relationship between the annual inflation rate and prices using the Rule of 72.

Changes in personal,social,and economic factors make it necessary to:

Lenders benefit more than borrowers in times of high inflation.

Opportunity costs may be viewed only in terms of financial resources.

Linda Ashworth is trying to decide whether to keep her money in a savings account or in a mutual fund.What would you tell her to help her analyze her decision?

The main responsibility of The Fed is to:

When prices are rising at a rate of 2 percent,the cost of products and services would double in ______ years.

Using the services of financial institutions will be most evident in your effort to:

If a person deposited $50 a month for 6 years earning 8 percent,this would involve what type of computation?

More recently,the annual price increase for most goods and services as measured by the consumer price index has been less than ____ percent.

Increased home building results in:

A formalized report that summarizes your current financial situation,analyzes your financial needs,and recommends future financial activities is a(n) :

The main goal of personal financial planning is managing your money to: