Question 1

The first step of the financial planning process is to

Accepted Answer

A)   develop financial goals.
B)   implement the financial plan.
C)   determine your current personal and financial situation.
D)   evaluate and revise your actions.
E)   create a financial plan of action.F) A) and B)
G) C) and D)

Question 2

As Jeanne Taillefer plans to set aside funds for her young children's college education, she is setting a(n)  ____________ goal.

Accepted Answer

A)   intermediate
B)   short term
C)   long-term
D)   intangible
E)   durableF) D) and E)
G) A) and B)

Question 3

How do interest rates influence financial planning?

Accepted Answer

Higher interest rates make buy...

Question 4

Opportunity costs refer to time, money, and other resources that are given up when a decision is made.

Accepted Answer

A) True 
 B)False

Question 5

A risk premium associated with interest rates refers to:

Accepted Answer

A)   higher earnings due to uncertainty.
B)   lower consumer prices.
C)   the opportunity cost of borrowing
D)   a loan with a short maturity.
E)   expected lower inflation.F) A) and C)
G) A) and B)

Question 6

Samara Banks, 35, has set a goal of having $1,500,000 by the time she retires in 30 years. She plans to achieve this by saving $5,500 per year, which she will invest in term deposits at the end of each year. The term deposits are expected to generate an average return of 10% for the next 30 years. Will she achieve her goal? (show calculations) If not, what can she do in order to reach her goal? List all the possible alternatives of action.

Accepted Answer

No, she will not achieve her goal. 5,500...

Question 7

Anne has a goal of "saving some money month for vacation next summer." Anne's goal lacks

Accepted Answer

A)   measurable terms.
B)   a realistic perspective.
C)   specific actions.
D)   a tangible end.
E)   a time frame.F) C) and E)
G) C) and D)

Question 8

An individual invests $10,000 at a rate of 5% per annum. What will be its value in 10 years' time?

Accepted Answer

A)   $15,000
B)   $15,853
C)   $16,289
D)   $18,000
E)   $19,000F) C) and E)
G) A) and B)

Question 9

If you put $1,000 in a saving account and make no further deposits, what type of calculation would provide you with the value of the account in 20 years?

Accepted Answer

A)   future value of a single amount
B)   simple interest
C)   present value of a single amount
D)   present value of a series of deposits
E)   future value of a series of depositsF) A) and B)
G) A) and C)

Question 10

Liquidity refers to

Accepted Answer

A)   the earnings on savings.
B)   the risk of an investment.
C)   the ease of converting a financial resource into cash.
D)   the amount of insurance coverage a person has.
E)   a person's inability to pay his or her debts.F) None of the above
G) B) and E)

Question 11

Gross domestic product (GDP) can be described as the difference between a country's exports and its imports.

Accepted Answer

A) True 
 B)False

Question 12

Which type of computation would a person use to determine current value of a desired amount for the future?

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 depositsF) A) and D)
G) C) and E)

Question 13

Your goal is to pay down your student loan in 3 years. The balance today is $9,434. If you are charged a rate of 4%, compounded monthly, what will be your monthly, end-of-period payment?

Accepted Answer

A)   $262
B)   $406
C)   $279
D)   $377
E)   $300F) A) and D)
G) A) and E)

Question 14

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

Accepted Answer

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

Question 15

The main economic influence that determines prices is:

Accepted Answer

A)   the stock market.
B)   supply and demand.
C)   employment.
D)   government spending.
E)   interest ratesF) D) and E)
G) A) and B)

Question 16

Some savings and investment choices have the potential for higher earnings. However, these may also be difficult to convert to cash when you need the funds. This problem refers to:

Accepted Answer

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

Question 17

What is the future value of $20,000 received in 10 years if it is invested at 6% compounded annually for the next six years and 5%, compounded semi-annually for the remaining four years?

Accepted Answer

A)   $25,000
B)   $31,000
C)   $32,772
D)   $34,567
E)   $38,817F) B) and E)
G) A) and D)

Question 18

The financial planning process concludes with efforts to:

Accepted Answer

A)   develop financial goals.
B)   create a financial plan of action.
C)   analyze your current personal and financial situation.
D)   implement the financial plan.
E)   revaluate and revise your actions.F) A) and B)
G) B) and E)

Question 19

Assume the following future values will be received at the end of each year. What is the interest rate if the future value of these amounts at the end of year 3 is equal to $2,006? Yr. 1 = $400; Yr. 2 = $500; Yr. 3 = $1,000

Accepted Answer

A)   6.5%
B)   6.8%
C)   7.0%
D)   8.0%
E)   8.9%F) A) and B)
G) A) and E)

Question 20

Household size is a major influence on personal financial planning decisions.

Accepted Answer

A) True 
 B)False

Exam 1: Personal Financial Planning: An Introduction

Some savings and investment choices have the potential for higher earnings. However, these may also be difficult to convert to cash when you need the funds. This problem refers to:

Correct Answer
verified

Opportunity costs refer to time, money, and other resources that are given up when a decision is made.

Correct Answer
verified

Liquidity refers to

Correct Answer
verified

The first step of the financial planning process is to

Correct Answer
verified

Gross domestic product (GDP) can be described as the difference between a country's exports and its imports.

Correct Answer
verified

Which type of computation would a person use to determine current value of a desired amount for the future?

Correct Answer
verified

The main economic influence that determines prices is:

Correct Answer
verified

Correct Answer
verified
No, she will not achieve her goal. 5,500...
View Answer

A risk premium associated with interest rates refers to:

Correct Answer
verified

The financial planning process concludes with efforts to:

Correct Answer
verified

Household size is a major influence on personal financial planning decisions.

Correct Answer
verified

What is the future value of $20,000 received in 10 years if it is invested at 6% compounded annually for the next six years and 5%, compounded semi-annually for the remaining four years?

Correct Answer
verified

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

Correct Answer
verified

Anne has a goal of "saving some money month for vacation next summer." Anne's goal lacks

Correct Answer
verified

How do interest rates influence financial planning?

Correct Answer
verified
Higher interest rates make buy...
View Answer

As Jeanne Taillefer plans to set aside funds for her young children's college education, she is setting a(n) ____________ goal.

Correct Answer
verified

An individual invests $10,000 at a rate of 5% per annum. What will be its value in 10 years' time?

Correct Answer
verified

If you put $1,000 in a saving account and make no further deposits, what type of calculation would provide you with the value of the account in 20 years?

Correct Answer
verified

Your goal is to pay down your student loan in 3 years. The balance today is $9,434. If you are charged a rate of 4%, compounded monthly, what will be your monthly, end-of-period payment?

Correct Answer
verified

Assume the following future values will be received at the end of each year. What is the interest rate if the future value of these amounts at the end of year 3 is equal to $2,006? Yr. 1 = $400; Yr. 2 = $500; Yr. 3 = $1,000

Correct Answer
verified

Exam 1: Personal Financial Planning: An Introduction

Some savings and investment choices have the potential for higher earnings. However, these may also be difficult to convert to cash when you need the funds. This problem refers to:

Correct AnswerverifiedShow Answer

Opportunity costs refer to time, money, and other resources that are given up when a decision is made.

Correct AnswerverifiedShow Answer

Liquidity refers to

Correct AnswerverifiedShow Answer

The first step of the financial planning process is to

Correct AnswerverifiedShow Answer

Gross domestic product (GDP) can be described as the difference between a country's exports and its imports.

Correct AnswerverifiedShow Answer

Which type of computation would a person use to determine current value of a desired amount for the future?

Correct AnswerverifiedShow Answer

The main economic influence that determines prices is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNo, she will not achieve her goal. 5,500...View AnswerShow Answer

A risk premium associated with interest rates refers to:

Correct AnswerverifiedShow Answer

The financial planning process concludes with efforts to:

Correct AnswerverifiedShow Answer

Household size is a major influence on personal financial planning decisions.

Correct AnswerverifiedShow Answer

What is the future value of $20,000 received in 10 years if it is invested at 6% compounded annually for the next six years and 5%, compounded semi-annually for the remaining four years?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Anne has a goal of "saving some money month for vacation next summer." Anne's goal lacks

Correct AnswerverifiedShow Answer

How do interest rates influence financial planning?

Correct AnswerverifiedHigher interest rates make buy...View AnswerShow Answer

As Jeanne Taillefer plans to set aside funds for her young children's college education, she is setting a(n) ____________ goal.

Correct AnswerverifiedShow Answer

An individual invests $10,000 at a rate of 5% per annum. What will be its value in 10 years' time?

Correct AnswerverifiedShow Answer

If you put $1,000 in a saving account and make no further deposits, what type of calculation would provide you with the value of the account in 20 years?

Correct AnswerverifiedShow Answer

Your goal is to pay down your student loan in 3 years. The balance today is $9,434. If you are charged a rate of 4%, compounded monthly, what will be your monthly, end-of-period payment?

Correct AnswerverifiedShow Answer

Assume the following future values will be received at the end of each year. What is the interest rate if the future value of these amounts at the end of year 3 is equal to $2,006? Yr. 1 = $400; Yr. 2 = $500; Yr. 3 = $1,000

Correct AnswerverifiedShow Answer

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No, she will not achieve her goal. 5,500...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Higher interest rates make buy...
View Answer

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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