Question 1

The actual cost of living increase for a household will be:

Accepted Answer

A)   Greater than the inflation rate as reported by the CPI since the index excludes the product or service with the highest inflation rate for the past 12 months
B)   Lower than the inflation rate as reported by the CPI since the index excludes the product or service with the lowest inflation rate for the past 12 months
C)   Equal to the inflation rate as reported by the CPI since it includes all products and services whether or not the prices have changed in the past 12 months
D)   Either greater than or less than the inflation rate as reported by the CPI depending on the household's cost of necessities purchased
E)   Zero since the CPI does not measure consumer price changesF) A) and B)
G) A) and C)

Question 2

Purchasing a car is an example of a durable-product goal.

Accepted Answer

A) True 
 B)False

Question 3

The tangible and intangible factors that create a less than desirable situation is referred to as ____________ risk.

Accepted Answer

A)   interest-rate
B)   inflation
C)   income
D)   liquidity
E)   personalF) C) and D)
G) B) and E)

Question 4

Paul Jacoby wants to deposit money today for a vacation that he plans to take to Asia after he graduates from Graduate School.Which formula should he use to determine the amount of money he will have available for his vacation?

Accepted Answer

A)   Present value of a single amount
B)   Future value of a single amount
C)   Simple interest
D)   Present value of an annuity
E)   Future value of an annuityF) None of the above
G) A) and C)

Question 5

What are the guidelines one can use to set effective financial goals?

Accepted Answer

Each goal should take a SMART ...

Question 6

When prices are increasing at a rate of 6 percent,the cost of products would double in about 12 years.

Accepted Answer

A) True 
 B)False

Question 7

What are the main activities of personal financial planning?

Accepted Answer

The main components of persona...

Question 8

The step in the personal financial planning process that follows "Create and implement your financial action plan" is

Accepted Answer

A)   Review and revise your financial plan
B)   Identify alternative courses of action
C)   Determine your current financial situation
D)   Evaluate your alternatives
E)   Develop your financial goalsF) None of the above
G) B) and E)

Question 9

Risks associated with most financial decisions are easy to measure.

Accepted Answer

A) True 
 B)False

Question 10

Intermediate goals are usually achieved within the next year or so.

Accepted Answer

A) True 
 B)False

Question 11

How do the main activities of personal financial planning fit together?

Accepted Answer

The main components of personal financia...

Question 12

The Rule of 72 is:

Accepted Answer

A)   A tool to determine the number of years until retirement for an employee
B)   Used to estimate how long it takes for prices to double using a given annual inflation rate
C)   The legal code for requiring companies to provide a match on retirement savings
D)   Used to calculate interest rates for savings
E)   The number of steps required to complete a financial planF) A) and E)
G) None of the above

Question 13

The goal of purchasing a long-term care insurance policy would be most appropriate for

Accepted Answer

A)   A young couple without children.
B)   A single mother with a preschool daughter.
C)   A recent college graduate.
D)   A single adult nearing retirement age.
E)   An extremely wealthy executive.F) B) and E)
G) B) and D)

Question 14

The financial activities for a young single will probably be the same as those for an older couple with no dependent children at home.

Accepted Answer

A) True 
 B)False

Question 15

An investor should expect to receive a risk premium for

Accepted Answer

A)   Expanded exports
B)   Lower consumer prices
C)   Higher uncertainty about getting his/her money back
D)   Reduced availability of investments
E)   Expected lower inflationF) A) and B)
G) B) and E)

Question 16

If I can invest a dollar today and earn interest on it,then it should be worth _________ in the future.

Accepted Answer

A)   Less
B)   The same as
C)   More
D)   Either less or the same as
E)   Either the same as or moreF) All of the above
G) A) and E)

Question 17

The potential for difficulty to convert an investment to cash is referred to as ____________ risk.

Accepted Answer

A)   interest-rate
B)   inflation
C)   income
D)   personal
E)   liquidityF) A) and D)
G) C) and D)

Question 18

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?F) A) and E)
G) None of the above

Question 19

If Patty Shoemaker estimates that her $100 weekly grocery bill will increase at an annual inflation rate of 4%,what should her weekly grocery bill be in 3 years?

Accepted Answer

A)   $30.00
B)   $40.00
C)   $112.50
D)   $112.60
E)   $121.60F) A) and D)
G) C) and D)

Question 20

Hope Appleton 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

Students answers will vary.Suggested res...

Exam 1: Personal Financial Planning in Action

The financial activities for a young single will probably be the same as those for an older couple with no dependent children at home.

Correct AnswerverifiedShow Answer

When prices are increasing at a rate of 6 percent,the cost of products would double in about 12 years.

Correct AnswerverifiedShow Answer

How do the main activities of personal financial planning fit together?

Correct AnswerverifiedThe main components of personal financia...View AnswerShow Answer

Paul Jacoby wants to deposit money today for a vacation that he plans to take to Asia after he graduates from Graduate School.Which formula should he use to determine the amount of money he will have available for his vacation?

Correct AnswerverifiedShow Answer

Intermediate goals are usually achieved within the next year or so.

Correct AnswerverifiedShow Answer

The goal of purchasing a long-term care insurance policy would be most appropriate for

Correct AnswerverifiedShow Answer

An investor should expect to receive a risk premium for

Correct AnswerverifiedShow Answer

The step in the personal financial planning process that follows "Create and implement your financial action plan" is

Correct AnswerverifiedShow Answer

If I can invest a dollar today and earn interest on it,then it should be worth _________ in the future.

Correct AnswerverifiedShow Answer

What are the guidelines one can use to set effective financial goals?

Correct AnswerverifiedEach goal should take a SMART ...View AnswerShow Answer

The actual cost of living increase for a household will be:

Correct AnswerverifiedShow Answer

The Rule of 72 is:

Correct AnswerverifiedShow Answer

The tangible and intangible factors that create a less than desirable situation is referred to as ____________ risk.

Correct AnswerverifiedShow Answer

Purchasing a car is an example of a durable-product goal.

Correct AnswerverifiedShow Answer

If Patty Shoemaker estimates that her $100 weekly grocery bill will increase at an annual inflation rate of 4%,what should her weekly grocery bill be in 3 years?

Correct AnswerverifiedShow Answer

Risks associated with most financial decisions are easy to measure.

Correct AnswerverifiedShow Answer

Hope Appleton 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?

Correct AnswerverifiedStudents answers will vary.Suggested res...View AnswerShow Answer

What are the main activities of personal financial planning?

Correct AnswerverifiedThe main components of persona...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The potential for difficulty to convert an investment to cash is referred to as ____________ risk.

Correct AnswerverifiedShow Answer

Correct Answer
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The main components of personal financia...
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Each goal should take a SMART ...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Students answers will vary.Suggested res...
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Correct Answer
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The main components of persona...
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Correct Answer
verified

Correct Answer
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