Question 1

One aspect of financial planning is to buy stocks,real estate,and mutual funds with the potential for long-term growth.Which component of financial planning does this deal with?

Accepted Answer

A)  Borrowing
B)  Spending
C)  Managing risk
D)  Investing
E)  Retirement and estate planningF) A) and C)
G) B) and C)

Question 2

Future value calculations involve:

Accepted Answer

A)  discounting.
B)  add-on interest.
C)  compounding.
D)  simple interest.
E)  an annuity.F) A) and B)
G) A) and E)

Question 3

One aspect of financial planning is to make wise decisions using a plan as to what to purchase and when to purchase it.Which component of financial planning does this deal with?

Accepted Answer

A)  Borrowing
B)  Spending
C)  Managing risk
D)  Investing
E)  Retirement and estate planningF) B) and C)
G) D) and E)

Question 4

Analyzing your current financial position is a part of which step of the financial planning process:

Accepted Answer

A)  Step 1,Determine current financial situation
B)  Step 2,Develop financial goals
C)  Step 3,Identify alternative courses of action
D)  Step 4,Evaluate alternatives
E)  Step 5,Create and implement the action planF) A) and D)
G) D) and E)

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)  PlanningF) B) and E)
G) B) and D)

Question 6

Patrick Jones is interested in purchasing a 65" LED TV for his living room.He knows that right now the TV will cost approximately $500.Patrick wants to borrow the money to purchase the TV but is concerned that interest rates are going to fall in the future.He is worried that he might get stuck with a loan at a high interest rate.What type of risk is Patrick worried about?

Accepted Answer

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

Question 7

Reduced spending causes unemployment from staff reduction.

Accepted Answer

A) True 
 B)False

Question 8

When an individual makes a purchase without considering the financial consequences of that purchase,he/she ignores the ________ aspect of financial planning.

Accepted Answer

A)  borrowing
B)  risk management
C)  spending
D)  retirement and estate planning
E)  obtainingF) A) and E)
G) None of the above

Question 9

________ risk refers to the danger of changes in buying power during times of rising or falling prices.

Accepted Answer

A)  Liquidity
B)  Income
C)  Personal
D)  Inflation
E)  Interest RateF) A) and E)
G) A) and D)

Question 10

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.F) B) and C)
G) C) and D)

Question 11

With an inflation rate of 8 percent,prices would double in about ________ years.

Accepted Answer

A)  4
B)  6
C)  9
D)  10
E)  12F) D) and E)
G) C) and E)

Question 12

Which of the following would cause consumer prices to drop?

Accepted Answer

A)  Increased consumer borrowing
B)  Higher spending by consumers
C)  A demand for higher wages
D)  Hidden inflation
E)  Increased supply by business without increased consumer demandF) A) and B)
G) A) and D)

Question 13

William Davis has a goal of "saving $60 a month for vacation." William'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.F) A) and E)
G) A) and D)

Question 14

Interest on savings is calculated by multiplying the principal amount times the opportunity cost times the annual interest rate.

Accepted Answer

A) True 
 B)False

Question 15

Higher consumer prices are likely to be accompanied by:

Accepted Answer

A)  lower union wages.
B)  lower interest rates.
C)  lower production costs.
D)  higher interest rates.
E)  higher exports.F) A) and D)
G) All of the above

Question 16

Who is most likely to benefit from inflation?

Accepted Answer

A)  Retired people
B)  Lenders
C)  Borrowers
D)  Low-income consumers
E)  GovernmentF) D) and E)
G) None of the above

Question 17

________ goals relate to personal relationships,health,and education.

Accepted Answer

A)  Durable-product
B)  Short-term
C)  Consumable-product
D)  Intangible-purchase
E)  IntermediateF) A) and C)
G) B) and E)

Question 18

Sophia Martin wants to travel around the world.Sophia has three options she can pursue: she could continue to work full time to earn the money she needs for her trip,she could work part time so that she can still earn some money but have the time necessary to complete her trip,or she could take full retirement so that she has all the time necessary to complete her trip.Which step in the financial planning process does this scenario 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 planF) B) and E)
G) D) and E)

Question 19

Inflation reduces the buying power of the dollar.

Accepted Answer

A) True 
 B)False

Question 20

The future value of $50 deposited each year for 6 years earning 7 percent would be approximately: Use Exhibit 1-B.(Round time value factors to 3 decimal places and final answer to the nearest dollar amount.)

Accepted Answer

A)  $50
B)  $300
C)  $358
D)  $371
E)  $428F) B) and C)
G) A) and C)

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

Correct Answer
verified

With an inflation rate of 8 percent,prices would double in about ________ years.

Correct Answer
verified

William Davis has a goal of "saving $60 a month for vacation." William's goal lacks:

Correct Answer
verified

________ risk refers to the danger of changes in buying power during times of rising or falling prices.

Correct Answer
verified

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

Correct Answer
verified

One aspect of financial planning is to buy stocks,real estate,and mutual funds with the potential for long-term growth.Which component of financial planning does this deal with?

Correct Answer
verified

The future value of $50 deposited each year for 6 years earning 7 percent would be approximately: Use Exhibit 1-B.(Round time value factors to 3 decimal places and final answer to the nearest dollar amount.)

Correct Answer
verified

Increased home building results in:

Correct Answer
verified

Interest on savings is calculated by multiplying the principal amount times the opportunity cost times the annual interest rate.

Correct Answer
verified

When an individual makes a purchase without considering the financial consequences of that purchase,he/she ignores the ________ aspect of financial planning.

Correct Answer
verified

________ goals relate to personal relationships,health,and education.

Correct Answer
verified

Reduced spending causes unemployment from staff reduction.

Correct Answer
verified

Higher consumer prices are likely to be accompanied by:

Correct Answer
verified

Future value calculations involve:

Correct Answer
verified

Correct Answer
verified

Analyzing your current financial position is a part of which step of the financial planning process:

Correct Answer
verified

One aspect of financial planning is to make wise decisions using a plan as to what to purchase and when to purchase it.Which component of financial planning does this deal with?

Correct Answer
verified

Who is most likely to benefit from inflation?

Correct Answer
verified

Inflation reduces the buying power of the dollar.

Correct Answer
verified

Which of the following would cause consumer prices to drop?

Correct Answer
verified

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

Correct AnswerverifiedShow Answer

With an inflation rate of 8 percent,prices would double in about ________ years.

Correct AnswerverifiedShow Answer

William Davis has a goal of "saving $60 a month for vacation." William's goal lacks:

Correct AnswerverifiedShow Answer

________ risk refers to the danger of changes in buying power during times of rising or falling prices.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

One aspect of financial planning is to buy stocks,real estate,and mutual funds with the potential for long-term growth.Which component of financial planning does this deal with?

Correct AnswerverifiedShow Answer

The future value of $50 deposited each year for 6 years earning 7 percent would be approximately: Use Exhibit 1-B.(Round time value factors to 3 decimal places and final answer to the nearest dollar amount.)

Correct AnswerverifiedShow Answer

Increased home building results in:

Correct AnswerverifiedShow Answer

Interest on savings is calculated by multiplying the principal amount times the opportunity cost times the annual interest rate.

Correct AnswerverifiedShow Answer

When an individual makes a purchase without considering the financial consequences of that purchase,he/she ignores the ________ aspect of financial planning.

Correct AnswerverifiedShow Answer

________ goals relate to personal relationships,health,and education.

Correct AnswerverifiedShow Answer

Reduced spending causes unemployment from staff reduction.

Correct AnswerverifiedShow Answer

Higher consumer prices are likely to be accompanied by:

Correct AnswerverifiedShow Answer

Future value calculations involve:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Analyzing your current financial position is a part of which step of the financial planning process:

Correct AnswerverifiedShow Answer

One aspect of financial planning is to make wise decisions using a plan as to what to purchase and when to purchase it.Which component of financial planning does this deal with?

Correct AnswerverifiedShow Answer

Who is most likely to benefit from inflation?

Correct AnswerverifiedShow Answer

Inflation reduces the buying power of the dollar.

Correct AnswerverifiedShow Answer

Which of the following would cause consumer prices to drop?

Correct AnswerverifiedShow Answer

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