Week 1 Quiz

Question 1

T/F:
Standard of living is defined as the necessities, comforts, and luxuries desired by an individual or a family.

Answer 1

True

Question 2

T/F:
The most effective way to achieve financial objectives is through personal financial planning.

Answer 2

True

Question 3

T/F:
The need for financial planning declines as your income increases.

Answer 3

False

Question 4

T/F:
When you get your first job, you should make a good financial plan that you can follow without making changes until you retire.

Answer 4

False

Question 5

T/F:
Saving $400 for a large, flat-screen TV within the next four months is an example of a short-term goal.

Answer 5

True

Question 6

T/F:
Short-term planning should include creating and maintaining an emergency fund with at least six months’ worth of income.

Answer 6

True

Question 7

T/F:
The longer you wait to begin retirement planning, the less you are likely to have in your retirement fund.

Answer 7

True

Question 8

T/F:
Your purchase, saving, investment, and retirement plans and decisions are not influenced by the present state of the economy.

Answer 8

False

Question 9

T/F:
Living costs are constant throughout the country.

Answer 9

False

Question 10

T/F:
Geographic factors affect your earning power.

Answer 10

True

Question 11

T/F:
Marital status affects the income level of individuals.

Answer 11

True

Question 12

T/F:
Setting long- and short-term career goals helps in career planning.

Answer 12

True

Question 13

T/F:
Career plans should not be changed after long- and short-term career goals are set.

Answer 13

False

Question 14

Personal financial planning is important because it:

Answer 14

results in an improved standard of living

Question 15

What is the term for the net total value of all the items that an individual owns?

Answer 15

wealth

Question 16

The purchase of a car is an example of:

Answer 16

consuming

Question 17

The last step in the financial planning process is to:

Answer 17

redefine goals and revise plans and strategies as personal circumstances change

Question 18

Which of the following financial goals is most useful for developing a financial plan?

Answer 18

Make a $12,000 down payment on an automobile in four years.

Question 19

Financial plans include setting goal dates, which are dates in the:

Answer 19

future when the goals are expected to be achieved.

Question 20

Which of the following statements about setting long-term goals is true?

Answer 20

the goals should be realistic

Question 21

Which of the following is one of the most emotional issues in any relationship, including that with a partner, parents, or children?

Answer 21

money

Question 22

Which of the following practices helps an individual survive in a financial crisis?

Answer 22

Establishing an emergency fund with six months’ worth of income

Question 23

Between the ages of 65 and 80, income tends to:

Answer 23

decrease

Question 24

Which of the following represents the three stages of the financial planning life cycle?

Answer 24

Wealth accumulation, wealth preservation, and wealth transfer

Question 25

Which of the following would NOT be considered an asset?

Answer 25

credit card balance

Question 26

Something we owe and that is measured by the amount of debt we incur is:

Answer 26

a liability

Question 27

The financial planning process helps in:

Answer 27

increasing assets

Question 28

Which of the following is an example of a liquid asset?

Answer 28

a savings account

Question 29

Which of the following statements about investments is true?

Answer 29

The length of time for which money is invested is important.

Question 30

Tax planning is most commonly done to:

Answer 30

minimize taxes

Question 31

Estate planning involves:

Answer 31

considering how your wealth can be most effectively passed on to your heirs.

Question 32

Which of the following is true of professional financial planners?

Answer 32

They provide services on a fee or commission basis.

Question 33

The amount of goods and services each dollar buys at a given time is called:

Answer 33

purchasing power

Question 34

Which of the following statements about the earning power of an individual is true?

Answer 34

Income varies across different geographic locations due to varying costs of living.

Question 35

Generally leading to an increase in income potential in one’s career is a person’s:

Answer 35

formal education