Question 1

Which of the following is not a personal finance issue?

Accepted Answer

A)  Consumption and savings 
B)  Risk management 
C)  Investments 
D)  Financing 
E)  All of the above are personal finance issues

Question 2

Which of the following is not a reason why financial planning procedures must be monitored and reviewed periodically?

Accepted Answer

A)  Incomes change 
B)  Life situations change 
C)  Individual goals change 
D)  The financial environment changes 
E)  All of the above are reasons why financial planning procedures must be monitored and reviewed periodically

Question 3

Which of the following best defines household finance?

Accepted Answer

A)  The study of how a household and the people in it develop the cash flows necessary to support operations and provide for the well-being of its members. 
B)  The study of how much it costs to purchase a home. 
C)  The study of how a household and the people in it can minimize the risk of bankruptcy. 
D)  The study of how the number of people in a household can be maximized. 
E)  The study of how a household and the people in it limit expenditures and maximize cash inflows.

Question 4

Which of the following is the market-established worth of a product or a financial instrument?

Accepted Answer

A)  Market value 
B)  Fair value 
C)  Cash flow 
D)  Investments 
E)  Book value

Question 5

What factor explains expanded financial planning services in the 1970s?

Accepted Answer

A)  A middle class with increased discretionary income. 
B)  The growing complexity of financial instruments and services. 
C)  Personal financial planning developing as a profession. 
D)  Magazines and other media that increased awareness of personal finance issues. 
E)  All of the above.

Question 6

Outline the origins of personal financial planning. Your outline should include details regarding finance tools, other disciplines used in financial planning, personal finance categories, and the parts of personal financial planning.

Accepted Answer

The answer of Outline the origins of personal financial planning....

Question 7

Financial planners are best characterized as:

Accepted Answer

A)  People with designations, education, and experience, who are trained to practice personal financial planning. 
B)  People with households that recognize that they must plan for their household's financial future. 
C)  People that integrate macroeconomic theories into capital budgeting decisions using a logical, scientific approach. 
D)  People that integrate psychology and sociology theories into investment decisions using a behavioral approach. 
E)  None of the above characterizes financial planners.

Question 8

Which of the following is not a finance tool?

Accepted Answer

A)  Time value of money 
B)  Cash flow analysis 
C)  Investment models of behavior 
D)  Optimization 
E)  All of the above are finance tools

Question 9

Similar to a medical doctor, a financial planner:

Accepted Answer

A)  Is typically compensated through an insurance company. 
B)  Must be familiar with the overall state of the client's financial health, regardless of the service being provided. 
C)  Must specialize in one area. 
D)  All of the above. 
E)  None of the above.

Question 10

What is the goal of cash flow planning?

Accepted Answer

A)  To plan income and expense flows so that work, cost of living, savings and investment and financing issues interact in an optimal way to provide the highest returns possible. 
B)  To minimize payments to the government. 
C)  To enable our net cash flows to grow as rapidly as possible, subject to our tolerance for risk. 
D)  To present a current picture of the household's financial condition. 
E)  None of the above.

Question 11

The underlying goal of a household when making personal financial planning decisions is to:

Accepted Answer

A)  Minimize expenditures 
B)  Minimize risk 
C)  Maximize cash inflows 
D)  Maximize leisure time 
E)  Maximize standard of living

Question 12

Which of the following characterizes personal financial planning services before 1970?

Accepted Answer

A)  It was widely available to the general population. 
B)  It was primarily available to the very wealthy. 
C)  It primarily focused on tax issues. 
D)  It primarily focused on insurance issues. 
E)  None of the above characterizes personal financial planning services before 1970.

Exam 1: Introduction to PFP