Question 1

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) C) and E)
G) None of the above

Question 2

Time value of money refers to changes in consumer spending when inflation occurs.

Accepted Answer

A) True 
 B)False

Question 3

Higher inflation usually results in lower interest rates.

Accepted Answer

A) True 
 B)False

Question 4

A higher opportunity cost implies a lower current value.

Accepted Answer

A) True 
 B)False

Question 5

How do interest rates influence financial planning?

Accepted Answer

Higher interest rates make buy...

Question 6

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 $2,393? Yr.1 = $500; Yr.2 = $750; Yr.3 = $1,000

Accepted Answer

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

Question 7

Personal financial planning has the main goal of:

Accepted Answer

A)   Savings and investing for future needs.
B)   Reducing a person's tax liability.
C)   Managing money to achieve personal economic satisfaction.
D)   Spending to achieve financial objectives.
E)   Savings,spending,and borrowing based on current needs.F) All of the above
G) C) and D)

Question 8

The time value of money refers to:

Accepted Answer

A)   personal opportunity costs such as time lost on an activity.
B)   financial decisions that require borrowing funds from a financial institution.
C)   changes in interest rates due to changes in the supply and demand for money in our economy.
D)   increases in an amount of money as a result of interest.
E)   changing demographic trends in our society.F) A) and C)
G) C) and E)

Question 9

Who is most likely to benefit by inflation?

Accepted Answer

A)   retired people
B)   lenders
C)   borrowers
D)   low-income consumers
E)   governmentF) A) and B)
G) A) and C)

Question 10

If a person deposited $100 a month for 5 years earning 9 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 depositsF) B) and D)
G) B) and C)

Question 11

A decrease in the demand for a product or service may result in a decrease in wages for people producing that item.

Accepted Answer

A) True 
 B)False

Question 12

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) C) and D)
G) A) and B)

Question 13

You wish to accumulate $15,000 within five years.How much would you have to save each year for five years to attain your goal? Assume an annual interest rate of 4%.Savings occur at the end of each year.

Accepted Answer

A)   $2,662
B)   $2,769
C)   $2,905
D)   $3,000
E)   $3,500F) B) and D)
G) B) and E)

Question 14

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) A) and B)
G) A) and C)

Question 15

The financial planning process is complete once you implement your financial plan.

Accepted Answer

A) True 
 B)False

Question 16

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) A) and E)
G) C) and E)

Question 17

Inflation reduces the buying power of money.

Accepted Answer

A) True 
 B)False

Question 18

When an individual makes a purchase without considering the financial consequences of that purchase,they are ignoring the aspect of financial planning.

Accepted Answer

A)   Borrowing
B)   Risk Management
C)   Spending
D)   Retirement and Estate Planning
E)   ObtainingF) A) and B)
G) B) and E)

Question 19

Simple interest is the interest computed based on the principle,excluding previously earned interest.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 1: Personal Financial Planning in Action

Time value of money refers to changes in consumer spending when inflation occurs.

Correct AnswerverifiedShow Answer

Simple interest is the interest computed based on the principle,excluding previously earned interest.

Correct AnswerverifiedShow Answer

A decrease in the demand for a product or service may result in a decrease in wages for people producing that item.

Correct AnswerverifiedShow Answer

The time value of money refers to:

Correct AnswerverifiedShow Answer

When an individual makes a purchase without considering the financial consequences of that purchase,they are ignoring the aspect of financial planning.

Correct AnswerverifiedShow 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

Personal financial planning has the main goal of:

Correct AnswerverifiedShow Answer

The financial planning process is complete once you implement your financial plan.

Correct AnswerverifiedShow Answer

A higher opportunity cost implies a lower current value.

Correct AnswerverifiedShow Answer

Who is most likely to benefit by inflation?

Correct AnswerverifiedShow Answer

Inflation reduces the buying power of money.

Correct AnswerverifiedShow Answer

If a person deposited $100 a month for 5 years earning 9 percent,this would involve what type of computation?

Correct AnswerverifiedShow Answer

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

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 $2,393? Yr.1 = $500; Yr.2 = $750; Yr.3 = $1,000

Correct AnswerverifiedShow Answer

You wish to accumulate $15,000 within five years.How much would you have to save each year for five years to attain your goal? Assume an annual interest rate of 4%.Savings occur at the end of each year.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The main economic influence that determines prices is:

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

Higher inflation usually results in lower interest rates.

Correct AnswerverifiedShow Answer

How do interest rates influence financial planning?

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

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Higher interest rates make buy...
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